Depiction of a billion USD.
The Government and Rio Tinto are yet to settle their differences over the project’s expansion. Most of the high grade ores lying in the underground mine, Mongolia worries about the debt it is currently incurring in building of the mine. Open pit is complete and company is currently started exporting copper concentrates. The concentrator is operating at 100,000 tons of ore a day basis and Rio Tinto is seeking loan from international development finance institutions, commercial banks and credit agencies to raise USD7 billion in two stages through project financing.
Mongolia has been declining to support the Project Financing demanding the full breakdown and explanation of cost escalations. OT LLC, the project company is yet to submit the required updated Feasibility Study to the authorities and justify its costs according to the officials. As end of the month OT LLC have spent USD8.4 billion on the project and USD2.3 billion is in equity and rest in loans. Out of USD2.3 billion 34% is share of the Mongolian government which incurring debt of 6.5%+LIBOR over the years. Mongolia is to receive dividends after it pays off the incurring “shareholder loan” which comes after paying off the debts and if approved project financing. The estimated escalations by BM Research Team is estimated to be around USD20 billion for the whole project.