Shares in companies operating in Mongolia received a boost as Rio Tinto (LON:RIO) and its partners finally agreed terms for the expansion of the massive Oyu Tolgoi copper mine.
Oyu Tolgoi, the largest industrial project ever undertaken in Mongolia, is owned 66/34 by Turquoise Hill (NYSE:TRQ), in which Rio has a 51% stake, and the government.
Rio and its partners will spend US$5.3bn building an underground section of the mine that lies close to the border with China.
Oyu Tolgoi was dogged by delays, accusations and wrangling between the government and miner prior to opening but an open pit operation finally got underway in 2013 churning out around 200,000 tonnes of copper a year.
The underground expansion will take this total up to 500,000 tonnes with a gold credit.
Jean-Sébastien Jacques, Rio Tinto’s deputy chief executive, said the agreement takes its partnership with Mongolia to another level and will transform Oyu Tolgoi into one of the most significant copper mines globally.
"Long-term copper fundamentals remain strong and production from the Oyu Tolgoi underground will commence at a time when copper markets are expected to face a structural deficit.”
Shares in Rio eased 2% in London.