MELBOURNE, July 29 (Reuters) - Rio Tinto has put on hold all work on an underground expansion of the Oyu Tolgoi copper mine in Mongolia after the government said parliament will need to approve financing for the project, which is expected to cost more than $5 billion.
The indefinite delay marks the latest bump in the road for the global miner at one of its biggest projects, which started exporting copper earlier in July following two last-minute hiccups in securing government approval.
“The Mongolian Parliament is currently in summer recess and the parliamentary approval process may take some time to work through,” Rio Tinto said in a statement.
The company said it remained committed to working with the government to secure the project financing.
“However, in view of the current uncertainty, including continued discussions with the government on a range of other issues, all funding and work on the underground development will be delayed until these matters are concluded and a new timetable has been agreed,” Rio Tinto said.
Oyu Tolgoi is 66 percent owned by Rio Tinto’s Turquoise Hill unit, and 34 percent owned by the Mongolian government. The government has raised concerns about the costs of the expansion project and the potential that rising costs will delay when it starts receiving its share of profit from the mine.
The expansion is designed to take production at the mine to 425,000 tonnes of copper and 460,000 ounces of gold a year.
Production at the open pit mine and export of copper concentrate is continuing.