The Government of Mongolia is considering terminating and replacing the development and financial plan for the Oyu Tolgoi copper mine in the country, Rio Tinto-controlled Turquoise Hill Resources said on Monday.
Rio Tinto had in 2019 announced a 30-month delay and a cost overrun due to difficult geology, and in December confirmed the underground expansion at the mine would cost $6.75 billion, about $1.4 billion higher than its estimate in 2016.
The government has told Rio Tinto it is dissatisfied with the miner's plans and is concerned that the significant increase in the development costs of the Oyu Tolgoi project has eroded the economic benefits that the country had hoped to get, Turquoise Hill said.
"The Government of Mongolia has indicated that if the Oyu Tolgoi project is not economically beneficial to the country, it would be necessary to review and evaluate whether it can proceed," Turquoise Hill said in a statement.
Turquoise Hill said it was committed to engaging immediately with the Government of Mongolia and Rio Tinto to address the development plan and revisit the sharing of economic benefits arising from the Oyu Tolgoi project.
Oyu Tolgoi is one of the world's largest-known copper and gold deposits, located in the South Gobi region of Mongolia. The Mongolian government holds a 34% stake in the project and Rio-controlled Turquoise Hill owns the rest.
(Reporting by Arathy S Nair in Bengaluru; Editing by Arun Koyyur)
