Virus may extend Rio’s Mongolian delays

Global pandemic is the latest challenge to Rio Tinto’s troubled Mongolian copper project, with the miner warning that progress had been slowed by efforts to restrict the spread of the coronavirus.

Rio said work on the multibillion-dollar underground expansion of the Oyu Tolgoi mine was continuing, but slowly, and the miner did not rule out further delays beyond the schedule blowout disclosed last year.

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Rio Tinto’s Mongolian copper project did not need more challenges for chief executive JS Jacques, but the coronavirus is providing them. Bloomberg

”Progress is being slowed,” said Rio in a statement. ”There is restricted access for teams from Rio Tinto, Oyu Tolgoi and our construction partners.

”The full impact of the slowdown on the underground project is unknown at this time.”

The comments come after Rio said on February 12 that copper deliveries from Oyu Tolgoi to its customers in China had been delayed because of measures introduced at the border to combat the spread of the virus.

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Rio said the existing mine at Oyu Tolgoi continued to operate and export to customers.

Previously slated to cost $US5.3 billion, Rio conceded in 2019 the project would cost between $US6.5 billion and $US7.2 billion.

Those cost estimates do not include the cost of building a power station, which is estimated to add $US924 million ($1.5 billion) to the cost of the project.

Sustainable production from the expansion was expected in the early months of 2021, but was said in 2019 to be running between 16 months and 30 months late.

Monday’s disclosure has left open the possibility of even longer delays.

In 2012, Rio expected to have the underground expansion complete by 2015, but a stand-off with the Mongolian government significantly delayed the project long before the recent issues emerged.

Mongolia had reported just a single case of the virus as of March 12. That case was a French citizen who flew into the nation on March 2.

It is understood the French citizen does not work for Rio.

The virus is another blow for the Mongolian economy, which is struggling under the International Monetary Fund’s decision to suspend bailout payments and the delays at Oyu Tolgoi, which is the nation’s biggest private employer and bellwether for foreign investment.

China is the destination for most Mongolian exports, but the virus ensured that total trade in January and February was 21.3 per cent lower than the same time last year.

source: https://www.afr.com/companies/mining/virus-may-extend-rio-s-mongolian-delays-20200316-p54aoo

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