Rio Tinto Says Covid-19 Adding to Mongolian Copper Project Delays, Costs

   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 [e-mail]

(END) Dow Jones Newswires

October 14, 2021 19:05 ET (23:05 GMT)

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