$6bn Oyu Tolgoi mine expansion ‘no brainer’ – Rio Tinto

Rio Tinto this week insisted that its plans for a $6bn expansion of  the massive Oyu Tolgoi copper and gold mine in Mongolia’s Gobi desert is a no-brainer and will go ahead despite the sharp slump in metal prices that has created investor unease about new big-ticket developments around the world.
Craig Kinnell, Rio’s copper and coal division chief development officer, said early-stage works on the Oyu Tolgoi underground project had already begun and substantial activity should kick in by June.  He did, however, qualify this statement of intent by saying that the project still depended on the JV between Rio Tinto subsidiary Turquoise Hill (66%) and the Mongolian government (34%) finalising about $US4.2 bn in project finance by the end of this year and completing a revision of the capital budget for the underground development, which was last costed out several years ago.
Speaking on site at Oyu Tolgoi yesterday Kinnell would not reveal the likely final budget but hinted that  the tough environment for the mining industry, triggered by the slowdown in Chinese growth, should give rise to cost savings as contractors and suppliers were more desperate to pick up work. 
The Oyu Tolgoi mine is a combined open pit and underground mining project in the southern  Gobi Desert that  was discovered in 2001.The project is the largest financial undertaking in Mongolia’s history and is eventually expected to account for more than 30% of the country’s  GDP.