Rio Tinto, Chinalco tie-up for Oyu Tolgoi will need government approval
23 Feb 2011
Any stake sale by mining giant Rio Tinto to China's state-owned aluminum giant Chinalco for developing the Oyu Tolgoi copper and gold project in Mongolia would require the Mongolian government's approval, said Mongolian Prime Minister Sukhbaatar Batbold.
Although the country welcomes Chinese investment, any change to the investment agreement signed between the Mongolian government, Rio Tinto and Canada's Ivanhoe Mines would require clearance from the government, he said.
After signing a joint venture agreement with Chinalco in July last year to develop its 12-billion Simandou iron ore-project in Guinea, Rio Tinto had said that it would hold talks with Chinalco on taking it as a partner in the Oyu Tolgoi project.
Chinalco, which already holds about 9-per cent stake in Rio Tinto, had indicated that it would be interested in taking a minority stake in the Oyu Tolgoi project or acquiring a stake in Ivanhoe.
The Oyu Tolgoi copper and gold mine in Mongolia's Gobi desert, thought to be one of the world's largest untapped copper and gold deposits is 66 per cent owned by Vancouver-based Ivanhoe Mines and 34 per cent by the government of Mongolia.
It contains approximately 37 million tonnes of copper and 1,300 tonnes of gold in measured, indicated and inferred resources.
Ivanhoe has estimated that the average annual output from the Oyu Tolgoi mine to be around 540,000 tonnes of copper and 670,000 ounces of gold over a 27-year life, with first production slated to start in 2013.
Rio Tinto, which had initially acquired a 19.9-per cent stake in Ivanhoe in October 2006 in order to jointly develop the Oyu Tolgoi project, has since gradually raised its stake to 46.6 per cent, with a long term plan of controlling the entire project.
Speaking to reporters after holding talks with Australian Prime Minister Julia Gillard, Batbold said that any change in the investment agreement on the Oyu Tolgoi project would have to be negotiated with the government of Mongolia.