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Rio Warns of Further Delay to Troubled Mongolian Copper Project www.bloomberg.com
(Bloomberg) -- Rio Tinto Group has delayed the start up of
its $6.75 billion Oyu Tolgoi underground copper project in
Mongolia by at least three months after Covid-related
restrictions hampered progress, further adding to cost overruns
at the troubled venture.
First sustainable production will be no earlier than
January 2023, the company said in a quarterly update on Friday,
later than the previous forecast of an October 2022 start. The
cost of additional pandemic-related constraints is estimated at
about $140 million, Rio said, while it continues to assess the
full impact on the cost of the project from the latest delay.
Rio said in December that development costs were expected
to be to be about $1.4 billion more than originally planned
after stability risks were identified underground. Meanwhile,
revised plans to cover the extra cost have led to the Mongolian
government threatening to cancel a 2015 agreement with Rio that
underpins the mine development. Mongolia holds a 34% stake in
the project.
“All key stakeholders have stated that they remain
committed to moving the project forward and reaching a long-term
solution to the issues under discussion,” Rio said. Still, the
company said it needed government agencies to sign off on an
updated feasibility study before it could start work on crucial
elements of the project. The board of Oyu Tolgoi also needed to
approve the additional investment needed to bring the mine into
operation.
Rio is looking to expand its copper output in the years
ahead to tap into a bullish long-term demand outlook for the
metal, which is a key material in the clean energy transition.
As well as headwinds in Mongolia, its Resolution Copper project
-- potentially one of the biggest copper resources in the U.S. -
- faces opposition from Native American tribes as well as
potential legal hurdles.
By James Thornhill
Published Date:2021-10-16
