Push to draw Chinalco into Oyu Tolgoi project

THE governments of China and Mongolia are discussing a potential labour agreement which, if finalised, will transfer 2500 Chinese to work for the copper-gold mining project Oyu Tolgoi in Mongolia, the 21st Century Business Herald reported yesterday.

A person involved in the talks, who was not named, said the earliest a decision about whether Chinalco could participate in the development of the Oyu Tolgoi project may come next month.

If the government labour agreement is signed, the person said in the report that the chance for Chinalco to take part in the project would be higher.

Chinalco is now an indirect participant of the mine because it has roughly 9 per cent stake in Rio Tinto, which has a 22.4 per cent stake in Ivanhoe, the operator of Oyu Tolgoi project -- the largest under-developed gold-copper mine in the world.

Rio has an option to increase its stake in Ivanhoe to 46.6 per cent eventually.

Ivanhoe Mines has increased the expected production from the $US4.6 billion ($5.1bn) Oyu Tolgoi copper and gold mine in Mongolia.

It puts average annual output from the South Gobi desert mine at 540,000 tonnes of copper and 670,000 ounces of gold over a 27-year life, with first production in 2013.

Ivanhoe executive chairman Robert Friedland has said the company expects these results will continue to improve to where Oyu Tolgoi will rank alongside Grasberg and Escondida.

Ivanhoe has appointed Citi to review its options, including debt or equity raisings, sale of subsidiaries, project financing or other corporate transactions.

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