Rio Tinto has announced the signing of a long awaited investment agreement with the Government of Mongolia to develop the Oyu Tolgoi copper-gold complex in the country’s South Gobi region.
Co-signed with Canadian partner Ivanhoe Mines, the US$4 billion deal comes after three years of negotiations.
The Oyu Tolgoi mine is said to be part of a push by Rio to invest in more ‘frontier’ projects, rather than only in developed countries where the vast majority of large deposits have been discovered.
Mongolia is considered one of the last undeveloped mineral rich regions in the world.
“We now look forward to working together to develop what I firmly believe is the best undeveloped copper deposit in the world,” chief executive of Rio’s copper and diamonds group Bret Clayton said at yesterday’s signing ceremony in Ulaanbaatar.
“We are also excited by significant exploration upside that still remains and we plan to be a partner here in Mongolia for decades to come.”
The finalising of the deal was often delayed after heated debate in Mongolia over whether the country was receiving an adequate deal for its mineral resources.
Under the terms of the agreement, the Mongolian Government will own 34% of the mine and receive a US$250 million advance payment against royalties and taxes under the agreement signed with both Rio and Ivanhoe.
Production at the mine is expected to commence in 2013, with a five year ramp up to the full expected production of 450,000 tonnes of copper per year and 330,000 ounces of gold.