UPDATE 1-Turquoise Hill's Oyu Tolgoi declares force majeure on some Chinese contracts

(Adds details on COVID-19 cases at mine, background)

March 30 (Reuters) - Canada’s Turquoise Hill Resources Ltd said on Tuesday its Oyu Tolgoi mining unit in Mongolia declared force majeure on some Chinese contracts, after shipments to China were suspended due to COVID-19 related restrictions.

The force majeure compounds problems at one of the world’s largest copper-gold-silver mine Oyu Tolgoi, which is already at the center of a protracted dispute between Turquoise and its top shareholder, Rio Tinto, over funding for the underground expansion of the mine.

Force majeure refers to unexpected external circumstances that prevent a party to a contract from meeting its obligations.

Rio owns 51% of Turquoise Hill, which owns 66% of the Oyu Tolgoi mine. The rest of the mine is owned by the government of Mongolia.

The force majeure is related to coronavirus-related restrictions at the Chinese-Mongolian border crossings, Turquoise Hill said on Tuesday, adding that it was working with Chinese officials to resume the shipments of copper concentrates to its Chinese customers.

Turquoise said that Oyu Tolgoi also confirmed two cases of COVID-19 at the site that were managed in compliance with public health guidelines. It also said it has completed over 9,700 PCT tests at the site that have all confirmed negative.

Underground work at the mine was halted for the testing, while ongoing travel restrictions hit people’s movement from Mongolian capital Ulaanbaatar to the mine site, Turquoise said, adding Oyu Tolgoi is developing contingency plans to mitigate related risk.

Open pit mining continues to operate uninterrupted at Oyu Tolgoi, Turquoise Hill said.

Reporting by Shariq Khan and Arathy S Nair in Bengaluru; Editing by Shinjini Ganguli