Bloomberg reports that,
July 16 (Bloomberg) — Rio Tinto Group, fighting off a hostile $154 billion offer from BHP Billiton Ltd., expects to gain approval from Mongolia this year to mine what it says is the world’s largest undeveloped copper and gold resource.
“We believe this to be one of the first major new green- field projects that are out there, but we do need to get an investment agreement that is globally competitive,” Tom Albanese, chief executive officer of London-based Rio, said today in a Bloomberg Television interview. Production would probably begin by 2011, he added.
Mongolia’s proximity to China, the biggest copper consumer, is luring companies such as BHP and Peabody Energy Corp. to the country. Current estimates of copper and gold at the Oyu Tolgoi site, about 50 miles north of the Chinese border, are a “tiny fraction” of actual deposits, Rio’s partner Ivanhoe Mines Ltd. said. Demand from China, which imports two-thirds of its copper ore needs, pushed the metal’s price to a record July 2.
Rio and Ivanhoe have spent more than four years seeking the go-ahead for their $3 billion plan to develop Oyu Tolgoi. Final approval has been delayed as lawmakers debate changes to the nation’s mining laws. Ivanhoe Chief Executive Officer John Macken said last month it was seeking a production-sharing or profit-sharing accord with the government.
Ivanhoe, which owns the mine, raised the estimated resource in March to 78.9 billion pounds of measured, indicated and inferred copper and 45.2 million ounces of gold.
Those figures are “a tiny fraction of what is actually there,” Chairman Robert Friedland said in London on June 3.
China is buying up overseas mines and boosting purchases of scrap metal as it struggles to source enough copper to meet the needs of its manufacturers and sustain economic growth.
Aluminum Corp. of China, the nation’s biggest producer of the metal, in May boosted its planned investment in a copper mine in Peru to $2.16 billion from $1.5 billion to increase access to the metal.
China’s Scrap copper imports rose 14 percent to 2.4 million tons in the first five months, customs data show.
BHP and Peabody Energy were among companies seeking to control a $2 billion coal project in the country last year, the Mongolian National Mining Association said in December.
Rio dropped 195 pence, or 3.7 percent, to close at 5,025 pence in London trading.