Reuters reports that shipments of copper from the Oyu Tolgoi mine will begin on Friday, June 14th. Oyu Tolgoi is critical to Rio Tinto, which is the majority owner of the mine, not only because of the scale of the operation—which is expected to produce 330,000 tons of copper each year for the next ten years, as well as 495,000 ounces of gold—but also because the company would like to reduce its dependence on iron ore and rid itself of small and unprofitable assets.
The Oyu Tolgoi mine has become even more important to Rio Tinto as a result of a landslide at its copper producing Bingham Canyon mine in Utah, which has been forced to shut down operations. An accident at a training facility at Grasberg mine in Papua, Indonesia which led to the deaths of more than 20 people has added to the pressure on Rio Tinto to begin production at Oyu Tolgoi. Rio Tinto owns 40 percent of the Grasberg mine, which holds one of the largest reserves in the world of both copper and gold.
Oyu Tolgoi has been producing copper for the past several months, but has stated that it will not export copper concentrate until it resolves issues with the Mongolian government related to “royalties, costs, management fees, and project financing.”
The Oyu Tolgoi project is also vital to the Mongolian economy. The project is expected to account for one-third of the Mongolian economy by 2020.
Rio Tinto is seeking billions in additional financing to expand its underground operations at Oyu Tolgoi. Already more than $6 billion has been invested in the project.
(Edited from Reuters)