Oyu Tolgoi will meet June deadline: Rio Tinto

Rio Tinto Ltd is confident it can meet the June commissioning deadline for its Mongolian Oyu Tolgoi copper and gold project, despite ongoing disagreements with the Mongolian government, according to The Australian Financial Review.

As of December 31, Rio had spent $US6 billion ($A5.9 billion) on the project, with a forecast and approved spend of $US6.2 billion.

The Mongolian government had reportedly been spooked by speculation of a $US400 million cost blowout tied to exploration costs, management fees, tax pre-payments and foreign exchange gains or losses.

The Mongolian government must earn its 34 per cent stake in Oyu Tolgoi once revenue starts coming in, but capital cost issues have sparked tensions between the government and the miner.

Mongolia"s deputy minister earlier this week said he was concerned that Rio could stop funding the project.

“Rio is funding the project for daily, weekly, monthly operations but not for the big structural investment,” Ochirbat Chuluunbat reportedly told Bloomberg.

“It will be a catastrophe if it stops.”

The Australian reported that a source close to Rio said it is working with the Mongolian government to sort out misunderstandings and is conducting studies to determine the cost of a second phase of the project"s development.

Source: Business Spectator