Chinalco to co-develop Mongolian copper-gold mine
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Aluminum Corporation of China, or Chinalco, a large Chinese resources company, is now negotiating with Mongolia about its participation in the project of Oyu Tolgoi, a copper-gold mine of Mongolia. If a labor contract is signed successfully, about 2,600 Chinese workers are expected to work for the project, said a member of the Chinese delegation on Thursday.
The insider released that the earliest time for the final decision of Chinalco's participation would be in July, and the labor contract would be a booster for that.
In March this year, Chinalco's president Xiong Weiping expressed the company's willingness to co-develop the Oyu Tolgoi mine. It is the largest undeveloped copper-gold mine in the world, located 200 kilometers away from the border of the two countries.
Chinalco has strong advantages in participating in this mine's exploration. Located in the interior land, the mine depends largely on the infrastructure of China for the export of its products, and China is the only large country with mineral import around Mongolia.
The insider also said that China Investment Corporation (CIC) plays an important role in the possible cooperation. Oyu Tolgoi is owned by Ivanhoe Mines Ltd. of Canada, whose equity stake is held by Rio Tinto. CIC owns the right to appoint board members and the pre-emption rights of SouthGobi Energy Resources Ltd., a subsidy of Ivanhoe. This means that if Ivanhoe transfers the share of SouthGobi in the future, CIC will have priority right to buy it.
"If necessary, CIC could talk directly to Ivanhoe,” the insider said.
CIC has also been "negotiating with potential partners” including Rio Tinto, Xiong said.
John Connors, managing partner of Baker & McKenzie, told the 21st Century Business Herald that Oyu Tolgoi is a milestone project in the history of foreign investment in Mongolia. "This is an opportunity for foreign funds to hold the stake of Mongolia's domestic mine.” However, Connors added, it was still uncertain whether Chinese enterprises could join this project.
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