Rio Tinto Mongolia copper output climbs, but China import snag drags on

SYDNEY Mon Oct 14, 2013 9:01pm EDT

SYDNEY Oct 15 (Reuters) - Global miner Rio Tinto could be forced to amass a mountain of copper concentrate at its new $6 billion Oyu Tolgoi mine in Mongolia while Chinese buyers resolve a lengthy customs impasse with their government.

The Oyu Tolgoi concentrator continued to ramp up production in the third quarter and is now operating at maximum processing capacity of 100,000 tonnes of ore per day, said Toronto-listed Turquoise Hill Resources, which runs Oyu Tolgoi and is 66-percent owned by Rio Tinto.

Oyu Tolgoi was supposed to start shipping copper concentrate to China shortly after the mine opened in July. But instead has been forced to stockpile the material while buyers negotiate with Chinese customs officials over import approvals.

"Oyu Tolgoi's customers are making good progress with Chinese customs officials to resolve matters with purchased concentrate at the border," Turquoise Hill Chief Executive Kay Priestly said in a statement.

Turquoise Hill said it was sticking to a forecast to produce between 75,000 and 85,000 tonnes of copper in concentrates at Oyu Tolgoi in 2013

"Shipments of concentrate are expected to be aligned with production rates by the end of 2013," it said.

The mine shipped 38,000 tonnes of concentrate to a bonded warehouse in China between July and Sept. 18 and another 122,000 tonnes was being held in inventory at the mine, the company said previously

Data from Turquoise Hill on Tuesday showed the concentrate contained 43,700 tonnes of copper metal.

The mine also yielded 83,000 ounces of gold and 281,000 ounces of silver in the first nine months of 2013, it said.

Given the mine and concentrator are still early in development and operation, ore grades and recovery rates are expected to improve throughout the fourth quarter, according to Turquoise Hill.

The concentrate is destined for Chinese smelters. Buyers are seeking the necessary approvals to enable them to collect the material from the warehouse.

Mongolia has a 34-percent stake in Oyu Tolgoi, but will not share in any profits until Turquoise Hill recovers all the costs of the project.

Economic growth in the sparsely populated and landlocked country is heavily tied to its vast copper and coal resources, and reinvigorating foreign investment has been a top priority for its government.

Rio Tinto, which releases its third quarter production data later on Tuesday, is expected to provide an update on efforts to resume normal operations at its Kennecott copper mine in Utah, following a pit collapse in April.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article