UPDATE 1-Mongolia wants to resolve mine dispute with Rio Tinto by early 2014

Thu Nov 21, 2013 2:10am EST
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* Oyu Tolgoi is key to Mongolia development plans

* Govt eager to push on with expansion

* But dispute with Rio Tinto has put second phase on hold

* Bleak copper markets could cloud project outlook

By David Stanway

BEIJING, Nov 21 (Reuters) - Mongolia hopes the $5 billion expansion of the giant Oyu Tolgoi copper and gold mine can start next year as it works to resolve a dispute with global miner Rio Tinto, its partner on the project, a government source said.

But Rio Tinto may be reluctant to push on too quickly due to bleak market conditions, the source said, with copper prices down more than 10 percent in 2013 and expected to drop further on a flood of new supplies from South America and Africa.

A Rio Tinto spokesman declined to comment.

Copper shipments from the first phase of project started in June, but Rio Tinto in late July put on hold plans to build an underground mine amid complaints by Mongolia that costs had spiraled out of control and that its interests had not been fully served.   Continued...