* Oyu Tolgoi has all permits in hand
* Mongolia had pressed Rio to keep export revenue in country
* Oyu Tolgoi to boost Mongolia economy by a third by 2020
* Mongolia miners' shares sag on Oyu Tolgoi uncertainty
ULAN BATOR, June 21 Rio Tinto
said its plan to start exporting copper from the $6.2 billion
Oyu Tolgoi mine on Friday has been delayed at the request of the
Mongolian government, heightening investor concerns about the
risks of mining in the country.
Uncertainty over what was behind the delay sparked an exodus
out of shares in other Mongolian miners on Friday, with Canadian
and Australian listed miners exposed to the country sliding
between 10 and 20 percent.
Journalists had been invited last week to attend a ceremony
at the copper and gold mine on June 14 to mark the first
exports. That was postponed to June 21, but the event was again
cancelled at the last minute. Mongolia is due to hold a
presidential election on June 26.
"Oyu Tolgoi is ready to start its first shipments of copper
concentrate from its Mongolian mine and all necessary permits to
do so have been received from relevant authorities," Rio Tinto
spokesman Bruce Tobin said on Friday.
"However, plans to start shipping on Friday 21 June have
been postponed at the request of the government of Mongolia."
The company declined to comment on what was behind the
The event on June 14 had been postponed due to a demand from
the government that Rio Tinto keep all export revenue in
Mongolia, Prime Minister Norov Altankhuyag said earlier this
That issue has been resolved, people familiar with the
situation said. The agreement that governs the Oyu Tolgoi
project gives Rio Tinto the freedom to put the export revenue
anywhere it wants, they added.
The government earlier this year briefly froze the accounts
of Rio Tinto and Canada's SouthGobi Resources, making
investors nervous about their ability to repatriate earnings.
Rio, operator of the mine, has been producing at Oyu Tolgoi
for several months, and has been aiming to start exports by the
end of June.
"Rio Tinto is keen to start shipping as soon as possible in
order for the benefits from Oyu Tolgoi to start flowing to all
parties, including the people of Mongolia," Tobin said.
"Shipping will commence as soon as the government indicates
its support for us to do so."
Rio has said since February it would not begin exporting
until it resolved disputes with the Mongolian government over
royalties, costs, management fees and project financing. Rio's
Turquoise Hill Resources unit owns 66 percent of the
mine, with the remainder owned by the Mongolian government.
The latest delay may be to stave off controversy ahead of
the presidential poll, as Oyu Tolgoi is the biggest foreign
investment in the country and resource nationalism has been a
major election issue.
"Rather than speculating on what may or might be going on
behind the scenes it is obvious that this continued uncertainty
is having an impact on stocks with Mongolian exposure, albeit in
very difficult macro conditions," said Sam Spring, chief
executive of Kincora Copper, which is exploring near Oyu
Among stocks that were dumped, Aspire Mining, with
a coal project in northern Mongolia, slumped 15 percent, and
Xanadu Mines with copper interests, dropped 20 percent,
in a broader market down 0.4 percent.
Turquoise Hill itself fell 4 percent overnight.
"If the delay comes down to where cash proceeds from sales
are held, you can understand why this is an issue (for
investors), given the government of Mongolia's recent history of
freezing bank accounts," he added.
President Tsakhia Elbegdorj, seen as more friendly to
foreign investors, is expected to win re-election.
By 2020, Oyu Tolgoi is expected to boost Mongolia's economy
by about a third. In the first 10 years, its annual output is
expected to average 330,000 tonnes of copper and 495,000 ounces