Oyu Tolgoi: All that's left is for China to flip the switch
Rio Tinto's majority owned Turquoise Hill Resources (NYSE:TRQ TSE:TRQ) announced Tuesday that the power transmission lines for its massive Mongolian copper gold mine – one of the biggest mining projects in the world – have now been completed.
The Oyu Tolgoi (turquoise hill in the vernacular) project has been complicated by a stand-off in long-running talks over power supply between Mongolia and China, but the company said Tuesday that it was confident of receiving electricity from China. Oyu Tolgoi is located 80 km from Mongolia's Chinese border.
First ore is expected to be processed within six weeks of signing the final power agreement, and Turquoise Hill reiterated today that commercial start-up of Oyu Tolgoi is expected to in the first half of 2013.
The Vancouver-based 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.
Turquoise Hill Resources holds 66% of Oyu Tolgoi and Mongolia's government the rest.
In September a group of influential Mongolian parliamentary backbenchers in a petition had called for the enforcement of a parliamentary resolution that gives the Mongolian government majority ownership of Oyu Tolgoi from the current 34%.
Turquoise Hill said Tuesday it believes that the October 2011 "reaffirmation" by the Mongolian government that the deal was in full compliance with the country's laws still stands.