By Alex MacDonald
LONDON--Mongolia's massive Oyu Tolgoi copper and gold mine has already begun to receive payments for copper concentrate shipped to a warehouse in China but hasn't yet recorded any revenue due to Chinese customs approval delays, a majority-owned unit of Anglo Australian miner Rio Tinto PLC (RIO) said Monday.
The delay represents another stumbling block for the project which has been mired in years of spats over matters, including how to maximize returns and the ratio of foreigners in its workforce. The $6.2 billion Oyu Tolgoi project represents a key pillar of the Mongolian government's economic growth plans but recent attempts to change the terms of the project following the introduction of a more restrictive foreign investment policy has taken its toll on the Mongolian economy. Foreign direct investment is down 43% in the first half of the year, according to a Renaissance Capital note.
Turquoise Hill Resources Ltd (TRQ.T), which owns 66% of Oyu Tolgoi and is majority owned by the project's operator, Rio Tinto PLC (RIO), said the mine "has begun to receive payments from customers. However, as revenue is recognized [only] when customers withdraw concentrate from the warehouse, to date Oyu Tolgoi has not recorded any revenue."
Oyu Tolgoi has produced 160,000 metric tons of copper concentrate and shipped approximately 38,000 tons of concentrate to a bonded warehouse in China between the time it began its first shipments in July and Sept. 18. Another 122,000 tons is currently being held in inventory at the mine, the company said.
Although Oyu Tolgoi has established the logistics process with Mongolian customs officials enabling concentrate to be delivered to the bonded warehouse in China, Oyu Tolgoi's customers are currently engaged with Chinese customs officials to receive the necessary approvals to enable them to collect purchased concentrate from the warehouse, the company said.
Production at the mine has not been affected while customers work through the Chinese customs process, the company added. Oyu Tolgoi's concentrator continues to ramp up and is currently running at full capacity or approximately 100,000 tons of ore processed a day. "Turquoise Hill continues to expect Oyu Tolgoi sales to be aligned with production rates by the end of this year," it added.
Earlier this summer, Rio Tinto decided to put on hold the next stage of Oyu Tolgoi's development and begin laying off some 1,700 workers and contractors after the Mongolian government said project financing for Oyu Tolgoi's next expansion phase would need to be pre-approved by its parliament.
The Mongolian government, which owns a 34% stake in the project, is keen to resolve outstanding issues. Chimed Saikhanbileg, a government minister and chief of the Cabinet Secretariat said last week that Oyu Tolgoi's board, which includes representatives from the Mongolian government, would meet in London this week to discuss the outstanding issues.
At full output, Oyu Tolgoi is set to produce an average of 450,000 tons of copper and 330,000 ounces of gold a year, as well as silver and molybdenum. The International Monetary Fund has estimated that the mine will generate up to one-third of Mongolia's gross domestic product when it reaches full production, which had been expected in 2021.
Write to Alex MacDonald at alex.macdonald@wsj.com
Source: WSJ.COM
0 comments:
Post a Comment