Rio Tinto Says Covid-19 Adding to Mongolian Copper Project Delays, Costs
October 14 2021 - 07:20PM
Dow Jones News
By Rhiannon Hoyle
Rio Tinto PLC Friday said the development of an underground
operation at the Oyu Tolgoi copper mine in Mongolia's South Gobi
region continues to be significantly constrained by Covid-19
related restrictions, and that costs linked to pandemic delays are
mounting.
The world's No. 2 miner by market value now expects first
sustainable production from the project no sooner than January
2023, versus an earlier projection of October 2022. In addition to
pandemic-related setbacks, parts of the project are being held up
because its owners haven't approved additional funds needed for the
development, Rio Tinto said.
Oyu Tolgoi is 66% owned by Turquoise Hill Resources Ltd., in
which Rio Tinto has a majority stake. The Mongolian government owns
34%.
Rio Tinto estimated the commissioning of shafts three and four
at the site would be delayed by roughly nine months because of
pandemic-related restrictions including difficulties getting
experts to the mine. The impact on project costs of the additional
restrictions related to Covid-19 to the end of September 2021 are
estimated at $140 million, Rio Tinto said in a quarterly
operational report.
Oyu Tolgoi is one of the largest known copper and gold deposits
in the world. A Rio Tinto-led venture plans to build a vast network
of underground tunnels at the site, where it has already built an
open-cut mine, to turn it into one of the world's largest
copper-mining operations.
However, the project has been repeatedly delayed, not just by
Covid-19 but by negotiations with Mongolia's government over how to
split the profits from the mine.
Mined copper production from the existing open pit at Oyu Tolgoi
was up 16% in the third quarter of 2021 versus the same period a
year ago, as the operation sought to recover from geotechnical
issues in the first half of the year despite a thinned workforce
due to Covid-19, Rio Tinto said in its operational report.
While the transport of copper concentrate to China from Mongolia
has resumed, a force majeure declared on shipments from March 30
remains in place because of uncertainties in moving commodities
across the Mongolia-China border, Rio Tinto said.
"We continue to work closely with the Mongolian and Chinese
authorities and our customers to manage the risk of supply chain
disruptions," it said.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
October 14, 2021 19:05 ET (23:05 GMT)
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