RIO.., Increases Costs ??!! Canada,Mongolia,United States : RIO TINTO increases its cost to develop its MONGOLIAN copper venture with its partner TURQUOISE HILL
September 23, 2014
Rio Tinto revealed an increase to the cost of developing its Mongolian copper venture and warned that it was yet to accept a recent tax ruling from the Mongolian government.
Both, Rio and the Mongolian government are working on their differences over the Oyu Tolgoi mine.
Rio published a feasibility study that was being delayed, and is a crucial step for the company and country, as they try to get the project back on track.
Rio and the Canadian subsidiary that is building the mine, Turquoise Hill Resources, believes that development of the second stage, which contains most of the project's wealth, will cost US $5.4 billion including the US $500 million spent to date.
This is slightly higher than the most recent estimate for the project cost, there have been several cost estimates over the life of the project.
The mine will begin underground block cave that can produce 95,000 tonnes of copper ore.
Rio based the study on long term copper prices US $3.08 per pound, and long term gold prices being US $1,250 per ounce.
The new mine require approval from the Mongolian government, which is a 34% partner in the mine and has been concerned about the cost estimates predicted by Rio and Turquoise.
The relationship appears to be thawing, with Mongolia agreeing to reduce Rio and Turquoise's outstanding tax bill from US $127 million to US $30 million, but Turquoise issued that the tax requires clarification, and several other issues were unresolved.
Rio raised over US $4 billion from lenders to help develop the second stage of Oyu Tolgoi, and offers have an acceptance deadline which is September 30