Minister D.Zorigt: It is true that the agreement negotiation has difficulties on finance related issues.

Jun 20 • Government, Mining • 752 Views • 3 Comments on Minister D.Zorigt: It is true that the agreement negotiation has difficulties on finance related issues.

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Working group was established by the State Great Khural, the Standing Committee on Economy, and Demparty and MPRP groups at the SGK, to amend IA on OT project, because the first draft cannot be adopted as it was. Some newspapers reported that investors wouldn’t accept the comments and findings of the working groups. Minister D.Zorigt shares his opinion on this issue.

Q: There is hearsay and some articles appeared on newspapers that investors wouldn’t accept the comments and findings of the working groups. What will be your opinion?

Minister D.Zorigt: Not exactly. The negotiation is underway. We made progress on 7-8 points and provisions. It is true that the negotiation has some difficulties on finance and funding related issues. It will be presented to the Government and the SGK.

Q: What issues are included in the finance related issues?

Minister D.Zorigt: Will the Mongolian State invest in 34% of its ownership at OT or will it own 34% without investment? This is the main issue to solve between us.

Q: What do you think about shortening the agreement term down to 15 years?

Minister D.Zorigt: We are negotiating. This comment also brought hindrance in the negotiation progress.

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3 Responses to Minister D.Zorigt: It is true that the agreement negotiation has difficulties on finance related issues.

  1. north of 48 says:

    Daily News Thursday, June 18, 2009
    BHP delays Chilean expansion projects

    The Northern Miner TV, 06/12/2009
    Watch Now

    Companies in this story
    BHP Billiton
    Rio Tinto plc
    Related Articles
    South America
    The global recession has prompted BHP Billiton (BHP-N, BLT-L) to continue to delay a slate of expansion projects in Chile, the biggest among them an expansion of the world’s largest copper mine, Escondida.

    The base metals giant now says it will reconsider its growth plans early next year if the current recovery in copper prices holds.

    BHP owns three large copper mines in Chile’s north: a 57.5% interest in Escondida, which is co-owned by Rio Tinto (RTP-N, RIO-L) (30%), a Japanese consortium (10%) and the World Bank’s International Finance Corp. (2.5%); a 100% interest in Spence, which produces copper cathode; and a 100% interest in Cerro Colorado, which produces copper cathode.

    Minera Escondida produces copper concentrate by means of the sulphide ore flotation process, and copper cathodes using the oxide ore leaching and low-grade sulphide bio-leaching processes.

    Infrastructure at Escondida consists of: two open-pit mines located 5 km apart, Escondida and the newer Escondida Norte; two concentrators plants, Laguna Seca and Los Colorados; an electrowinning plant to produce cathodes from oxide and sulphide ore; and two pipelines that bring copper concentrate from the mine some 170 km to a filter plant located at the Port of Coloso, just south of Antofagasta.

    In June, Chile’s Region II environmental authority, Corema, approved the construction of a US$3.5-billion seawater desalination plan in the Puerto Coloso area to supply water to the filter plant.

    But the Escondida partners are holding off for now on going forward with the megaproject, which would entail measures such as building an artificial beach in the El Huascar area.

    In good years, this behemoth of a mine yields about 8% of the world’s copper production, 20% of Chile’s total copper output, and about 2.5% of Chile’s gross domestic product.

    In the first three months of 2009, BHP reported that production at Escondida continued to be affected by lower ore grades and reduced production from milling.

    This, it says, was partly offset by the continued ramp-up of Spence and higher mine production at Escondida.

    Beginning July 1, Escondida will shut the Laguna Seca semi-autogenous grinding (SAG) mill for 45 days for maintenance work mostly relating to its electrical motor.

    BHP has already stated that it expects Escondida production to fall 30% for the fiscal year that ends June 30.

    Escondida produced 1.26 million tonnes of copper for the fiscal year ended June 30, 2008.

    For the nine months ended March 31, 2009, Escondida produced 532,300 tonnes copper in concentrate and 213,400 tonnes copper cathode, or about a 28% drop from the comparable nine-month period in the previous fiscal year.

    Of note, Escondida production during August and September 2008 was hit by three shutdowns of the SAG mill at the Laguna Seca concentrator, resulting in 10 lost days of production.

    Reserves at Escondida at the end of June last year stood at 144 million tonnes grading 0.93% copper in the oxide category, 1.7 billion tonnes at 1.1% copper in the sulphide category, and 2.3 billion tonnes at 0.55% copper in the sulphide-leach category.

    Several billion of tonnes of resources have also been outlined.

    Escondida and Escondida Norte rank as two of the world’s largest porphyry copper deposits.

    Debt-laden Rio Tinto, which has been selling off non-core assets around the world, has indicated that it is not looking to sell its stake in Escondida.

    Meanwhile, for the nine months ended March 31, 2009, Spence cranked out 127,900 tonnes copper cathode (compared with 99,700 tonnes in the previous nine-month period), while Cerro Colorado produced 74,600 tonnes copper cathode (compared with 79,100 tonnes).

    Reserves at Spence were last pegged at 66 million tonnes at 1.08% copper (oxide ore) and 205 million tonnes at 1.06% copper (sulphide).

    In mid-2008, Cerro Colorado’s reserves stood at 105 million tonnes of 0.65% copper (oxide) and 48 million tonnes of 0.71% copper (sulphide).

  2. north of 48 says:

    Mongolia … Chile nows thats a smart operation …. hey there rich ! not poor

  3. Barry says:

    Thanks for the update Amaransaa.

    Progress on 7-8 points does not equate to agreement on 7-8 points.
    Nor does it answer the question as to how many points are in contention and what those contentious points are.
    With only a few days remaining in the Spring Session of the SGK,
    What does the Minister think the chances are for an agreement before the SGK goes into recess? Will the powers that be call for a special session to consider the OT agreement?
    Can anyone get a comment from IVN / RTP? “B”

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