After months of difficulties, Vancouver-based Rio Tinto's (LON:RIO) flagship Oyu Tolgoi copper-gold mine in Mongolia is set to start producing early next year, as the company finally solved the problem over power supply from neighbouring country China.
The $6 billion project was delayed by a stand-off in talks over power supply between Mongolia and China, reports MINING.com.
Rio''s majority owned Turquoise Hill Resources (NYSE, TSX:TRQ) announced on Monday it signed an important power purchase agreement with Inner Mongolia Power Corp.
After the news, the Vancouver-based company's stock was up 76 cents, or about 9.5%, at $8.83 in early trading Monday.
First ore from Oyu Tolgoi is expected to be processed within six weeks and Turquoise Hill reiterated that commercial start-up of Oyu Tolgoi is expected to in the first months of 2013.
The Canadian company is also expected to release a feasibility study for underground mining next year, which it says could commence in 2016.
Turquoise Hill will spend $6.2 billion on phase one of the project and is working to secure $3 billion to $4 billion to bring Oyu Tolgoi to full production in 2018.
The mine is set to produce more than 1.2 billion pounds of copper, 650,000 ounces of gold and 3 million ounces of silver each year.
Rio Tinto (LON, NYSE & ASX:LON), Turquoise Hill Resources – formerly known as Ivanhoe Mines – and the government of Mongolia co-own Oyu Tolgoi mine. Turquoise Hill Resources holds 66% of Oyu Tolgoi, while Rio runs the project.
Now that the power problem has been solved, Turquoise Hill and the Mongolia government's attentions are likely to turn to the investment dispute that governs Oyu Tolgoi's development. Authorities asked Turquoise Hill in October to hold new discussions over the contract, a request the miner rejected.
