MELBOURNE, Australia—The first convoy of trucks has left Rio Tinto PLC's $6.2 billion Oyu Tolgoi mine in Mongolia's southern Gobi Desert carrying copper to China, an important milestone for the operation and a sign tensions between the government and the mining company have eased since the incumbent president won a second term in office.
"With continued development, Oyu Tolgoi will generate wealth for many decades to come," Jean-Sebastien Jacques, chief executive of the Anglo-Australian mining company's copper division, said in a statement Tuesday.Oyu Tolgoi is central to Rio Tinto's efforts to source new mineral supplies in developing resource hotspots and to reduce its dependence on iron ore, which accounts for about 80% of its earnings. It is also vital to Mongolia. Rio Tinto says the mine will likely account for more than 30% of the country's gross domestic product when it reaches full production in 2020.
The first copper concentrate was produced at Oyu Tolgoi in January. Rio Tinto had forecast commercial output would begin by the end of June, provided it could resolve several issues with Mongolia's government. A ceremony to mark the inaugural shipment set for June 21 was canceled the evening before at the request of Mongolia's government, leaving bagged concentrate waiting to be loaded onto trucks that would take it from the mine, which is less than 100 kilometers north of the Mongolia-China border.
The company and the government have for months been trying to settle a dispute over costs and financing. A person familiar with the matter said the government more recently had raised concerns over banking arrangements for Oyu Tolgoi.
Mr. Jacques said all permits are in place, and the mining operation has approval from Oyu Tolgoi's board, which includes representatives from the government, to continue selling copper concentrate. Rio Tinto's Turquoise Hill Resources Ltd. unit owns 66% of Oyu Tolgoi, while the government controls the remainder.
Source: The WSJ
