Rio Tinto is aiming to resolve its differences with Mongolia’s government over a vast copper mine expansion within the next five months, after asking potential lenders to extend a deadline to arrange financing for the project.
The European Bank for Reconstruction and Development, one of the multilateral banks that would help to fund growth of the Rio-run Oyu Tolgoi mine, confirmed that it would push the project finance deadline out until the end of September.
Turquoise Hill, the Rio-controlled Canadian company that owns most of Oyu Tolgoi, said all parties had requested the extension of the deadline, which had passed last month.
The statement suggested there was agreement over the request between Turquoise Hill and Mongolia, the minority investor in Oyu Tolgoi.
“Significant progress” had been made, said Kay Priestly, Turquoise Hill’s chief executive. Sam Walsh, Rio’s chief executive, said the miner “remained keen to proceed”.
Rio has been wrangling with Mongolia over the costs of developing the next phase of the mine, which is hugely significant for the miner – as its largest new copper development – and for the country, since it will generate up to one-third of Mongolian gross domestic product.
In Rio’s case, investment in copper could also help to diversify the group away from heavy reliance on iron ore.
After Rio last year sanctioned a further expansion of its iron ore mines in Australia, output grew 8 per cent in the first quarter compared with the same period a year ago, while shipments were up 16 per cent. Output was down 8 per cent compared with the last quarter of 2013, the group said, as weather affected operations.
Rio maintained its full-year guidance for iron ore output and copper. “Rio Tinto delivered a mixed first quarter result with iron ore and coal production exceeding our expectations but with most other commodities falling short,” said analysts at Investec. “The key takeaway . . . is that guidance across all of the key commodities is maintained.” Shares fell 3 per cent in London.
Speaking at Rio’s annual meeting on Tuesday, Mr Walsh and chairman Jan du Plessis faced anger from some investors and community groups over the miner’s environmental and safety record, but was praised by the Natural Resources Defense Council in the US for pulling out of Pebble, a copper project in Alaska that is controversial because of its potential impact on salmon fisheries.
Among the criticism aimed at Rio was its participation in Grasberg, an Indonesian mine where 33 workers were killed last year, most of them in a tunnel collapse.
Rio is a minority partner in Grasberg alongside Freeport-McMoRan, which operates the mine. Mr du Plessis said Rio did not intend to sell its stake.