Steppe change

18 January 2021 By George Hay Follow @gfhay

Atop Jakob Stausholm’s to-do list is sorting out the miner’s troubled $10 bln Oyu Tolgoi copper project. Satisfying Ulaanbaatar, pushy hedge funds and minority shareholders at once will be impossible. Raising equity and reworking a sticky loan structure are the least-bad options.

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Rio Tinto-controlled Turquoise Hill Resources said on Jan. 11 that Mongolia’s government was considering terminating an underground expansion of the Oyu Tolgoi copper mine project due to rising development costs.

Turquoise Hill shares fell as much as 20% on Jan. 11 following the news.

Mongolia’s Deputy Chief at Cabinet Secretariat Solongoo Bayarsaikhan said on Jan. 13 that she believed the situation would not become so dire that the project had to be stopped and that the matter could be settled in a mutually beneficial manner.

Rio Tinto in 2019 announced a 30-month delay to a project to expand the Oyu Tolgoi mine underground and a cost overrun due to difficult geology. The company confirmed in December that the expansion would cost $6.75 billion, about $1.4 billion more than estimated in 2016.

Turquoise Hill said it was committed to engaging immediately with the government and Rio Tinto to address the development plan and revisit the sharing of economic benefits.

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Turquoise Hill shares fell as much as 20% on Jan. 11 following the news.

Turquoise Hill said it was committed to engaging immediately with the government and Rio Tinto to address the development plan and revisit the sharing of economic benefits.

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