Breakthrough for Mongolian copper border snag

The first shipments of copper concentrate from Rio Tinto’s giant Oyu Tolgoi mine in Mongolia can now move into China after a three-month bureaucratic hold-up at a remote border crossing in the Gobi desert.

The release solves a snag in Rio’s operations at Oyu Tolgoi, which began production in July, but the miner still faces more hurdles ahead.

Rio has put the second $6bn phase of the mine on hold as it negotiates financing and other terms with the government of Mongolia.
Revenues from Oyu Tolgoi could account for about one-third of Mongolia’s GDP but the problems in developing the mine have helped shape other foreign miners’ willingness to invest in the country.
Rio Tinto said this week that the hold-up in the copper concentrate shipments had prevented it from booking revenues on the first quarter of production from the mine. About 38,000 tonnes of copper concentrate were in the bonded warehouse at the port and another 122,000 tonnes stockpiled at the mine as the company and its Chinese customers sought to resolve the problem.

Importers of the concentrate had submitted the required tax paperwork, allowing the concentrate to be released from bonded warehouses where it had been stored since July 9, said Yu Juyang, a customs officer at the Urad bureau that controls the tiny Gants Mod border post.
The bureaucratic hold-up stemmed from the fact that the border crossing could only handle trade between Chinese and Mongolian companies but a party named on the contracts belonged to a third country, according to an official at the Hohhot customs bureau.
Rio is in intense negotiations with the Mongolian government over the terms of the second phase.
Mongolia will only see revenues from the mine after the miner has recouped its costs but with the price of coal – its other major export – declining, the country is eager to realise returns from its 34 per cent share of the project.

Source:Financial Times


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