Giant Miner Rio Tinto (NYSE:RIO) Resumes Talks With Mongolia Government
The government is pushing Rio Tinto to continue developing underground mining shafts in the Oyu Tolgoi mine, the construction of which was halted by the mining giant in August due to the government’s rejection of its financing proposal on the project.
During the talks, both parties are expected to discuss the project cost overruns, the updating of the feasibility study, a major source of conflict and most importantly, the project financing program proposed by Rio Tinto.
The Mongolian government claims that Rio Tinto, which is in charge of the Copper/Gold mining project in South Gobi region of Mongolia, has exceeded the cost limit initially approved by US$ 2-B.
Rio Tinto has been trying to get approval from the Mongolian government for its financing proposal since last Winter, but the government never offered a direct reply.
According to the proposal, Rio was to get a financing package worth US$ 4-B from several leading global banks, such as International Finance Corporation (IFC), European Bank for Reconstruction and Development and Standard Chartered Bank (LO:STAN)
Faced with deteriorating economic conditions and a shortage of hard money, the Mongolian government is now attempting to bring the global miner back to its investment in the country.
Earlier this month, 3 Mongolian board members of the Oyu Tolgoi LLC, the Joint Venture between Rio Tinto and the Mongolian government, visited the London headquarters of Rio Tinto for talks on the disputed issues.
Otgochuluu Chuluuntseren, a board member of the Joint Venture and director general of strategic policy and planning of the country’s mining ministry, said the talks in Ulan Bator will continue until December.
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