A worker walks past giant sacks of copper concentrate
Sydney - Arab Today
Anglo-Australian miner Rio Tinto said on Friday it would start work on a $5.3 billion expansion of its Oyu Tolgoi copper and gold mine in Mongolia after years of gridlock over the controversial project.
The development is expected to start within months, Rio said in a statement, with the mega-project expected to contribute up to one third of Mongolia's gross domestic product once fully operational.
"The development of the underground mine will start in mid-2016 following the approval of a $5.3 billion investment by the partners and the recent granting of all necessary permits," Rio said.
French coal and copper chief Jean-Sebastien Jacques, who has been involved in the project and is set to become Rio's next chief executive in July, said it would "transform Oyu Tolgoi into one of the most significant copper mines globally, unlocking 80 percent of its value".
"Long-term copper fundamentals remain strong and production from the Oyu Tolgoi underground will commence at a time when copper markets are expected to face a structural deficit," he added.
Mongolia, with only three million people but sitting on an estimated $1 trillion of natural resources, has enjoyed an economic boom in recent years on the back of foreign investment and mineral exports.
But rising resource nationalism and political infighting over the role of foreign firms in extraction has hurt projects such as Oyu Tolgoi, with disputes stalling progress on the underground phase for three years.
Mongolian Prime Minister Chimediin Saikhanbileg described the Rio statement on underground development as "a proud day for Mongolia ... a clear demonstration that the country is back to business".
The announcement came after Rio secured a $4.4 billion deal with international financial organisations and 15 commercial banks in December to finance the expansion.
Oyu Tolgoi LLC is 66 percent owned by Turquoise Hill Resources, a Rio Tinto subsidiary, and 34 percent by the Mongolian government.