Saturday, September 19, 2015
Don't forget about Mongolia
Rio Tinto said it is committed to expanding its Oyu Tolgoi copper mine in Mongolia based on a positive outlook for the metal and confidence that low production costs can buoy profits even as competitors cut output.
The miner wants to lock in up to $4.2 billion in project financing by November to build more than 200 km of tunnels to access higher-quality ores at the deposit over the next five to seven years, Craig Kinnell, Rio's chief development officer for copper and coal, said during a media tour of the mine this week.
The expansion should extend the mine's lifespan past 2100 and open up 80 percent of the resources available, making it the world's third-largest mine for copper and gold.
With new project approvals slowing elsewhere, Kinnell said he was confident demand would hold up, particularly in China.
"I can't see anything to reconsider given the quality of our resource," he said. "Our commitment is to bring this on as soon as possible".
I am still hopeful long term on Mongolia. The recent weakness in China and commodity markets has taken its toll on the Mongolian economy. Of course that means no one is talking about it or interested in it. That means its cheap. When Rio Tinto gets the financing and starts the development of the underground part of the mine the economy of Mongolia should recover. We need to remember that the entire GDP of Mongolia is only around $12 billion per year. So pumping in $4 billion to develop the mine will have a ripple effect throughout the economy.