The world’s second largest miner reported a $4.93 billion underlying profit in the six months to June, up 12% on the same period last year — its best half-year earnings since 2014.

It also said it would raise its interim dividend to $1.51 a share from $1.27 a share a year ago, continuing to benefit mining investors amid prices for iron ore trading above $120 a tonne, their highest in more than five years.

Net profit, however, dropped by 6% to $4.13 billion as Rio wrote down $800 million from its investment in an underground expansion at Oyu Tolgoi, located in Mongolia’s southern Gobi Desert.

The impairment was considerably higher than the $597 million booked on Wednesday by the mine’s operator, Canada’s Turquoise Hill (TSX, NSYE: TRQ), which is 50.8% owned by Rio and holds a 66% stake in Oyu Tolgoi..

Rio warned last month the project would take 16-30 months longer than expected and cost as much as an additional $1.9 billion to the projected $5.3 billion investment, due mainly to a heightened risk of rockfalls.

The company has also faced challenges at its iron ore mines in the Pilbara, with its production guidance previously downgraded for 2019 because of severe weather and mine planning issues at its Greater Brockman Hub.

“We have operational issues, but this is mining,” chief executive Jean-Sébastien Jacques said.

Despite the problems, most of Rio’s revenue in the period was generated by its iron ore operations, with underlying earnings from the division up a whopping 33%, compared to the same period last year, to $7.55 billion.

Under Jacques, who took over from former boss Sam Walsh in July 2016, Rio has focused on cutting costs, generating cash and returning as much of it as possible to investors through dividends and share buybacks.

Copper boost
The mining giant also provided an update on its Winu discovery in Western Australia, which could be the company’s next major copper project.

It has so far drilled 42 holes at the site and will continue extensive drilling in months to come as part of its $250 million exploration program. The objective is to determine whether Winu is “Tier 1” asset.

The copper-gold-silver asset is about 130 km. from Newcrest’s Telfer copper-gold mine in the East Pilbara. It’s also close to numerous copper prospects discovered recently by juniors and 350 km southeast of Port Hedland, the world’s largest bulk export port.

Rio Tinto believes the copper market will go into deficit by 2020 amid expectations that bigger power grids around the world and an electric-vehicle boom will boost demand, while supplies will remain constrained.

The DPF (MoCobee СТ-3), the system produced in Japan, can capture up to 99.9 percent of the harmful soot emitted from the exhaust pipe and purifies the exhaust. It has been in use since 2003 and been installed in different vehicles, such as diesel engine buses and trucks.

The project aimed at decreasing the PM emissions established in 2017 by the Mongolian Ministry of Road Transport and Development, Ulaanbaatar Governor’s Office and JICA has been successfully completed by equipping buses of Ulaanbaatar city with these devices. The First Deputy of Development Policy of the Ulaanbaatar City Mayor J.Batbayasgalan underlined that the quality of the device was confirmed for further use as the soot emissions in public transport were decreased by up to 97 percent and the employees to be in charge of installing and operating the device were also trained within the project. The ceremony to hand over the devices was attended by delegates of Air Pollution Reduction Department of the capital city, public transportation companies, Japanese Embassy in Ulaanbaatar, Chief Representative of the JICA to Mongolia Tamura Eriko, and project leader Komori Masanori.

The Mongolian delegation included Mongolian Foreign Minister D.Tsogtbaatar, MPs D.Oyunkhorol and Z.Narantuya, Chief of Staff to the President Z.Enkhbold as well as A.Gansukh, presidential advisor on national security, G.Tegshjargal, presidential advisor on foreign policy and advisor D.Davgadorj, according to official source.

Not on the original delegation list was Attorney General B.Jargalsaikhan; a recent event explains why:

One day ago, Mongolia’s Independent Authority against Anti-Corruption (IAAC) reported that officials were working to return a former judge S.Tumurbat, who managed to escape with his family to the United States where he applied for asylum. S.Tumurbat is one of 17 judicial individuals who has been convicted a corruption case. According to sources, he was detained by US border officers carrying a very substantial sum in US dollars.

Evidently, corruption runs in the family: S.Tumurbat’s mother was the late judge L.Byambaa who was investigated by the anti-corruption body over an illegal financial arrangement with the Salkhit silver mine.

The Pentagon chief is planning to sign deals with countries of Asia-Pacific region on trade and security as well discuss the complex relations with North Korea and Iran.

Previously, Trump’s national security adviser, John Bolton travelled to the capital, Ulaanbaatar, in late June for meetings with President Kh.Battulga, the prime minister and other leading government officials.

Turquoise Hill, which owns 66% of the mine, reported a loss of $736.7 million, or 22 cents a share, in the three months ended June 30, compared with a profit of $204 million, or 9 cents, a year earlier. That compared with analyst expectations for earnings of 3 cents a share.

Oyu Tolgoi, operated by Rio Tinto PLC and expected to become one of the mining company’s most lucrative properties, produced 39,156 tonnes of copper and 71,825 ounces of gold during the quarter.

That came at an all-in sustaining cost of $1.54 per pound of copper produced, compared with $2.42 a year earlier.

Oyu Tolgoi’s underground expansion has been beset by delays, cost overruns and political squabbles, prompting the government of Mongolia, which owns 34% of the mine, to set a vote for August to cancel parts of an investment agreement with Rio Tinto. This would reduce the company’s future profits while benefiting Mongolia.

Turquoise Hill shares have slumped 46% since it said this month it could spend as much as $1.9 billion more than the $5.3 billion previously announced on the underground expansion of Oyu Tolgoi, and that first production would be delayed by up to 30 months.

The impairment causing its quarterly loss was related to that increase in expected spending and delays, the company said on Wednesday.

Turquoise Hill, which is also listed on the New York Stock Exchange, said its share price decline to below $1 meant it is no longer in compliance with the exchange’s listing rules, and that it intends to “pursue measures to cure the share price non-compliance.”

Turquoise Hill spent $292 million on the expansion during the quarter, bringing total expenditure on the underground project since January 1, 2016, to $2.9 billion.

Turquoise Hill posted revenue of $382.7 million, down from $341.7 million a year ago and compared with analysts’ expectations of $307.5 million.

(By Nichola Saminather; Editing by Grant McCool and Jonathan Oatis)

The President's 13-year-old son hasn't actually taken possession of the small-breed Mongolian horse, which President Battulga Khaltmaa symbolically gifted last month.
But Battulga arrived eager to learn whether the animal had been named, according to a senior administration official.
It has, according to Trump: "Victory."
"Did you see a picture of the horse?" Trump asked reporters. "Beautiful."
The tiny breed is a symbol of the country, where they outnumber people. Genghis Khan was said to ride one. They've been given to visiting dignitaries before, including then-Defense Secretary Chuck Hagel.
The Trump administration hoped to send a message to Beijing and Moscow by inviting Mongolia's leader for talks at the White House.

The landlocked country's borders with Russia and China make it an ideal place for listening and strategic relations, a senior administration official said. The official claimed it is hard to envision a country better placed to develop US relations.
Officials said the visit would give the US leverage in the ongoing trade negotiations with China, the latest round of which wrapped this week. More than 90% of Mongolia's trade goes through China, the official said, and the US is looking to help Mongolia develop other options.
Cashmere was a main topic of discussion. Mongolia is one of the world's leading producers of cashmere and right now most of Mongolia's raw cashmere is sent to China, where it is made into products and exported. Alternatives to that process could be created -- Mongolia could develop the wool itself, with the help of the US, and export it in a way that would more economically favor Mongolians.
The leaders were also expected to discuss a number of other topics, including military cooperation between the US and Mongolia and investment in Mongolian minerals.
It was the first visit of a Mongolian president to the US since 2011. The Trump administration sees Mongolia as having been long neglected by the US. Now, the administration is tending to the relationship, the official said.

Trump called a photo of the animal “beautiful,” and praised the fighting spirit of Mongolians.

“Mongolia — they’re great fighters. You know, they’re great fighters, great wrestlers, great champions,” the president told Battulga, a former judo champ who brought a sumo wrestling champ along with him to the US.

“And we have the grand champion of sumo wrestling with us, from a couple of years ago. And he’s here from Mongolia. I was told that in Japan, actually, that they’ve had four grand champions from Mongolia. So they’re great, great fighters. Your people are great fighters,” said Trump, who attended a sumo match on a recent trip to Japan.

“We need great fighters too.”

The vast northern nation locked between Russia and China is known for its ancient breed of tough, tiny horses ridden by Genghis Khan and other warlords — and often gives horses to visiting dignitaries.

The horse is unlikely to make the long trip to the US, a senior administration official told reporters, though Mongolian officials are eager that it be given a name.

Other US dignitaries to receive a symbolic horse in the past include former Vice President Biden, and former defense secretaries Chuck Hagel and Donald Rumsfeld.

Trump administration officials were eager to highlight the visit of Battulga, a champion wrestler and businessman who leads the democratic nation of only 3 million people, strategically located between two U.S. rivals. It is the first White House visit of a Mongolian president since 2011.

“We sometimes say that Mongolia has only got two physical neighbors – that it’s like a pearl between two oyster shells,” a second official told reporters.

Mongolia is concerned about its dependence on China, through which most of its goods move, and does not want to be subsumed by Chinese investments in infrastructure, telecommunications and banking.

The nation would like to find more investment from the United States and other countries it considers “third neighbors” for its cashmere, produced by nomadic goat-herders.

Mongolia would also like more trade in weapons and help with its cybersecurity.

The country is home to rich deposits of coal, uranium, and rare earth minerals used in weapons, consumer electronics and other goods, but suffers from a lack of transportation options. A rail link north to the Trans Siberian Railway could be one option.

Mongolia, a former Communist country, has also volunteered to play a part in Trump’s diplomatic overtures to Pyongyang, offering to host Trump and North Korean leader Kim Jong Un for a summit.