(Reuters) - Mining firm Rio Tinto Ltd has pledged to invest at least $250 million to $300 million in the construction of the underground section of the massive Oyu Tolgoi copper and gold mine in Mongolia this year, Mongolia’s prime minister said on Friday.
The second phase of construction at the mine is expected to begin this year, Prime Minister Chimed Saikhanbileg told Reuters in an interview, marking progress for the long-stalled $5 billion mine that is expected to boost Mongolia’s economy by a third when it reaches full capacity in 2021.
Saikhanbileg’s comments came during a trip to meet U.S. political and business leaders in a bid to revive foreign investment in Mongolia after it fell 74 percent in 2014 as a dispute with Rio Tinto over taxes and cost overruns deterred investors.
In visits to New York and Washington, D.C. this week, Saikhanbileg, who took office in November, is touting the success of a deal reached with Rio Tinto last month to resume work on the mine.
“Mongolia is back for business,” he said. “This should be one of the hottest destinations for investors.”
During the trip, Saikhanbileg said he met with Vice President Joe Biden, held an event at the U.S. Chamber of Commerce that attracted more than 160 attendees, visited the New York Stock Exchange and held individual meetings with investment companies.
He added that 14 different international organizations and banks are involved in the financing of the next phase of the Oyu Tolgoi mine, including the World Bank’s International Finance Consortium and the Multilateral Investment Guarantee Agency.
The mine, operated by Rio Tinto, is expected to produce an average of 430,000 tonnes of copper and 425,000 ounces of gold annually, but still needs an additional $4 billion in project financing.
Saikhanbileg added that he expects a resolution with the country’s parliament over the fate of Mongolia’s giant Tavan Tolgoi coal mine before a legislative recess on July 11.
The administration was close to an agreement with a consortium of foreign companies to invest $4 billion in the 1.8 billion tonne coal mine before parliament halted the deal in April, saying it may breach Mongolian law.
In addition, Saikhanbileg said plans were underway to set up a public investment entity modeled after Singapore’s Temasek Holdings, providing few details but saying he hoped to establish it “as soon as possible.”
Reporting by Luc Cohen in New York; Editing by Lisa Shumaker