LONDON May 1 The impasse between Rio Tinto
and the Mongolian government over a giant copper mine in
the country should be resolved by September, with underground
mining beginning within two years, a government official told
Construction of the underground mine at Oyu Tolgoi, one of
the world's largest undeveloped copper deposits, was put on hold
last year when the government said financing had to be approved
by parliament because it was concerned cost over-runs would
delay when the country began receiving its share of profits.
But Mongolia's vice minister for economic development,
Chuluunbat Ochirbat, said the government had learnt from its
mistakes and progress was now being made.
"We are under arrangements and negotiations with Rio Tinto
now to complete the process by September this year," he said on
the sidelines of a conference in London. "Underground mining
will be put into operation in a year and a half or two years
time," he added.
Open-pit mining has already started at the site, but the
real step-up in production requires mining to move underground.
The stakes are massive with the mine potentially accounting for
20-30 percent of Mongolia's economy.
In a stark change of tone, Ochirbat said disagreements with
Rio Tinto had damaged the country's image.
"The ongoing negotiation process with Rio Tinto has really
hurt the reputation of Mongolia as a reliable partner for
businesses and investors," he said.
The Mongolian government owns 34 percent equity in the
copper mine, while Rio Tinto owns 51 percent of Canadian company
Turquoise Hill which has the remaining 66 percent stake
in Oyu Tolgoi.
"We have made the conclusion that we have made some mistakes
in the legislation, we tightened regulations in the mining
industry too much and that was the reason why we showed weaker
performances (last year)," Ochirbat said, referring to a
slowdown in GDP growth for the country in 2013.
He added that the feasibility study for the underground part
of the mine was now finished, with financing set to start in
"We are not going to blame Rio Tinto for the situation that
occurred between the government and Rio Tinto. There are also a
lot of things the government has done in the wrong way,"
(Editing by Pravin Char)