ULAANBAATAR Oct 7 Rio Tinto is waiting for word
on the Mongolian government's efforts to attract investment for
railway and power infrastructure projects that will boost the
global miner's Oyu Tolgoi copper-gold mine, Chief Executive
Jean-Sebastien Jacques said.
The land-locked country sits on vast, untapped mineral
wealth but inadequate transportation infrastructure has held
back development, with several proposed railway projects to ship
copper, coal and gold to China long out of reach because of
prohibitive costs and arguments over security.
The country will pitch railway projects to the
China-initiated Asian Infrastructure Investment Bank and other
investors to support its mining industry, regional trade, as
well as bring in foreign investment. (here)
"We're looking very carefully at the situation about
railways because we have a vested interest," Jacques told
Reuters on Thursday.
Jacques said he was also looking at the development of a new
power source at Mongolia's Tavan Tolgoi coal mine that will
replace energy imported from China.
The country is mired in debt following a slump in its chief
export commodities coal and copper, a drop in foreign investment
and a declining currency, forcing the government to hike
interest rates and slash spending.
One source of foreign investment will be the $5 billion Rio
Tinto will spend over the next five years digging tunnels to
access the bulk of the copper and gold at Oyu Tolgoi, and will
expand the mine life to 75 years, Jacques said after returning
from a tour of the mine for Rio's board of directors.
Oyu Tolgoi is a flagship for foreign direct investment (FDI)
in Mongolia, Jacques said. "If Oyu Tolgoi doesn't work, there
won't be further FDI," he added.
The launch of Oyu Tolgoi in 2009 helped kick-start a
mining-driven economic boom in Mongolia.
But Rio put the project on ice in 2013 after Mongolia raised
concerns about costs and repeated attempts to amend an
investment agreement signed in 2009 for the project.
Construction finally resumed last May following the release of
$4.4 billion in project financing from lenders in December 2015.
Jacques would not disclose planned spending for next year,
but said a budget was up for approval by Oyu Tolgoi's board in
late November or early December.
"When we start spending and building the mine, the sooner
the mine is up and running, the better it is for the returns of
the government of Mongolia, for Rio Tinto," he said.
Rio Tinto's majority-owned Turquoise Hill Resources
has a 66 percent stake in the mine, with the Mongolian
government holding the rest.
(Editing by Susan Thomas)