Despite a U.S. refusal to back World Bank support for Rio Tinto’s Oyu Tolgoi in Mongolia – one of the world’s biggest copper and gold mines – talks with the bank’s private sector division, the International Finance Corp. (IFC), are moving forward.
Rio is seeking funding from investors for its $12 billion project in the South Gobi Desert, expected to constitute 30% of Mongolia’s economy once full production is underway. Rio announced production would return to capacity this month permitting second-phase financing amid talks between the government and Turquoise Hill Resources Ltd., a company subsidiary which owns 66% of the project.
U.S. officials said Oyu Tolgoi’s environmental and social impact assessments prompted concerns regarding its operational and mine closure phases along with facilities impact studies. However, Washington’s stance will not stop the overall funding proposal, approved this month by IFC officials, who will now collaborate with Rio to determine a financial package.
Along with the European Bank for Reconstruction and Development – which has approved a $1.4 billion loan to date – the U.S. Import-Export Bank and Standard Chartered, the IFC is has been joined by a number of other investors for the project near the Chinese border. Previous accusations of capital cost overruns, among other issues, spurred Mongolian officials on Oyu Tolgoi’s board to refuse the budget in January; negotiations will likely continue through this month.