Recently, it has been speculated in the news that Rio Tinto is awaiting or expecting a nod/approval from the government for its Oyu Tolgoi project copper concentrate export. However, it is not Rio Tinto that needs an approval, if there is ever an approval needed, but Oyu Tolgoi LLC which government has 34% interest.
The government has no right to block or halt the copper exports due to its different functionality. The project company, Oyu Tolgoi LLC, is responsible for obtaining permits and preparing documentations as clearly stated in the relevant laws and regulations.
Few mid-level ministry officials and agencies have complained that Oyu Tolgoi management tries to obtain these permits by jumping over the standard procedures by talking directly to the ministers. As it’s motto to honor and obey the local laws and regulations it has been acting opposite to its own policies in the times of previous cabinet.
The reform government is simply asking the project company to adhere the laws and rules set by the state, and stop its effort to circumvent it.
The message regarding the nod from the government is clear. Oyu Tolgoi LLC management which is contracted to Rio Tinto Alcan Inc. is willing to as much as blame possible if it fails to obtain the permits it had had been obtained long time ago.
Commercially, there is no sense for the government to block or in some way hold back the export. However, Rio Tinto is taking a proactive measure if the government tries to use this momentum as leverage to solve the cost overruns and other issues.