ULAN BATOR, Mongolia, July 9 (UPI) -- Mining giant Rio Tinto's $6.2 billion copper and gold Oyu Tolgoi project in Mongolia has started to ship copper concentrate to customers, the company said.
The first copper concentrate was produced at the mine in January and Rio Tinto had projected commercial output to begin by the end of last month, but the company and the government had disagreements over costs and financing, The Wall Street Journal reports.
Rio Tinto operates and controls Oyu Tolgoi through its majority stake in Turquoise Hill Resources, which owns 66 percent of Oyu Tolgoi and the Mongolian government the remaining 34 per cent. The project, located in the southern Gobi desert near the border with China, is one of the world's five largest copper-gold mines.
"It has taken the vision and hard work of thousands of people to get to this point, where we are starting to convert the rich resources beneath the desert into real wealth and opportunity for all stakeholders, including the Mongolian people," said Rio Tinto Copper chief executive Jean-Sebastien Jacques, in a statement Tuesday.
The project accounts for more than 20 percent of the country's economic activity and is expected to generate $2 million a day in royalties, tax and fees for the Mongolian government, the Financial Times reports.
By the end of June, Rio Tinto had made $1.1 billion in taxes and payments to the Mongolian government, the company said. As of the end of April, the project employed nearly 11,000 Mongolians.
Rio Tinto said that all permits for exporting copper concentrate are in place, along with the required approvals from the Oyu Tolgoi board and authorities for continued concentrate sales.
"Oyu Tolgoi starts production at a time when undeveloped quality copper assets are scarce and the outlook for copper continues to be strong," Jacques said. "With continued development, Oyu Tolgoi will generate wealth for many decades to come."
While Mongolia has vast reserves of copper, gold and coal, development of its mining sector has been hampered by a lack of infrastructure and political uncertainty caused by changing rules for foreign investment. The progress of Oyu Tolgoi is considered a litmus test for how Mongolia's resources will be developed.
Turquoise Hill said in a release Tuesday that the initial sale of about 5,800 tons of concentrate will be sent to customers in China. A convoy carrying approximately 600 tons of concentrate departed from the mine Tuesday, and the remainder would be shipped over the next two weeks.
The average annual production from the site will be 430,000 tons of copper and 425,000 ounces of gold, for 20 years, Rio Tinto says.
