Rio Tinto and Turquoise Hill have finalized an agreement over the Oyu Tolgoi copper mine’s funding and expansion plans in Mongolia.
The agreement is expected to help complete the Oyu Tolgoi copper mine’s development and comes after a prolonged standoff that involved the resignation of a top-level executive and a subsequent class-action lawsuit.
Under the funding plan, Rio Tinto indicated in a media statement on Friday, the two partners will address the remaining $2.3 bn funding for the underground Oyu Tolgoi copper mine project, restructure and repay the existing debt of $1.4bn, and raise additional supplemental debt worth $500mn from international investors.
Rio Tinto has also committed to a co-lending facility of $750mn, to address any shortfalls from re-profiling. Conversely, Turquoise Hill has committed to a rights issue or placement of common shares up to $500mn to make up for funding shortfalls within six months of the co-lending facility initiation.
Bold Baatar, Rio Tinto’s chief executive, and Steve Thibeault, interim chief executive at Turquoise Hill, agree that the terms are equitable and that this deal is a milestone in Oyu Tolgoi’s development to produce 160,000-180,000mt of copper concentrate annually.