www.unuudur.com » Rio Tinto suspends shipments to China from Oyu Tolgoi mine

Rio Tinto suspends shipments to China from Oyu Tolgoi mine

[Нийтэлсэн: 12:23 05.12.2016 ]


Rio Tinto has suspended shipments to China from its giant copper-gold Oyu Tolgoi mine in Mongolia due to problems at the border of the two countries that have been linked to Chinese anger at a recent visit to Mongolia by the Dalai Lama.

Canadian-listed company Turquoise Hill Resources, which is 51 per cent owned by Rio and owns two thirds of the Oyu Tolgoi project, said that it had suspended shipments to the Chinese border “following a new requirement at the Chinese-Mongolian border to utilise one joint coal and concentrate crossing route.

“The new requirement has led to safety and security concerns as well as unreasonably long waiting times to cross the border.”

The company, whose shares fell 2.5 per cent to $C4.34 ($A4.37) in early trade on Friday before closing down 0.7 per cent at $C4.42, said in a statement it was unclear how long the suspension would continue and it was trying to clarify the matter with Mongolian and Chinese authorities.

The suspension comes one day after new fees were levied on commodity shipments between Mongolia and China, following a diplomatic row sparked by last week’s visit of Tibetan spiritual leader, the Dalai Lama, to Ulaanbaatar.

The Dalai Lama is cherished as a spiritual leader in predominantly Buddhist Mongolia, but China regards him as a dangerous separatist and warned the visit could damage bilateral relations.

RBC Capital Markets analyst Fraser Phillips said in a note to clients that the suspension was a negative, but the fees are understood to be very small in the scheme of Rio’s giant business in Mongolia, and similar border tensions in the past have been resolved quickly.

“Oyu Tolgoi is in active discussion the with relevant authorities to resolve the issue and resume shipments as fast as possible,” a Rio spokesman said on Sunday.

In 2016 the mine in the south Gobi Desert is forecast to produce 175,000 to 195,000 tonnes of copper in concentrates and 255,000 to 285,000 ounces of gold in concentrates, according to Turquoise Hill.

But the project is set to become much bigger over the next decade. In June, Rio’s board gave approval for a $US3.5 billion underground expansion at the Oyu Tolgoi project, with first production expected in 2020. When fully ramped in 2027, copper output is forecast at more than 500,000 tonnes annually.

Rumours that Rio Tinto would increase its stake in Turquoise Hill have seen the Canadian’s share price soar from a low of $C2.30 on January 20 to a high of $C5.04 on November 24. Rio has denied such a move is imminent.

The latest incident comes amid a tough period for Rio’s operations in so-called “frontier” nations.

Last month Rio dismissed two executives over the payment of $US10.5 million to a French investment banker Francois de Combret who assisted Rio in its negotiations with the Guinean government regarding the Simandou iron ore project. Rio has referred the matter to regulators in Australia, the United States and Britain.

And last week Rio confirmed that it is facing a second probe by the Securities & Exchange Commission in regards to a failed coal project in Mozambique. It is understood the SEC probe relates to impairments taken on the project.

by James Thomson




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