By Alex MacDonald
LONDON--A majority-owned unit of Rio Tinto PLC (>> Rio Tinto plc) said Monday that customers of its massive Mongolian Oyu Tolgoi copper and gold project have secured Chinese customs approval to receive copper concentrate in China, thus paving the way for the mine's owners to start earning revenue from the $6.2 billion project.
Turquoise Hill Resources Ltd. (>> Turquoise Hill Resources Ltd), a majority owned unit of Rio Tinto and 66% owner of Oyu Tolgoi, said in a statement that "Oyu Tolgoi's customers have been engaged with Chinese customs officials and have received the necessary approvals allowing them to collect purchased concentrate." The withdrawal of copper from the warehouse, which began on Saturday, means the company and the Mongolian government, which owns the remaining 34% stake in the mine, will now be able to record revenue from copper concentrate exports that began in July.
The Oyu Tolgoi mine began exporting copper concentrate to China for the first time in July following hiccups in securing export permits from the Mongolian government. Oyu Tolgoi's customers in China then faced further delays when they weren't able to secure Chinese customs approval for copper imported from Oyu Tolgoi. This prevented Oyu Tolgoi's shareholders from recording any sales from copper exports on their books.
Turquoise Hill said it now expects to record revenue from those copper exports in line with their withdrawal from the warehouse, which is located in China near the Mongolian-Chinese border.
It added that Oyu Tolgoi's production wasn't negatively affected as a result of the Chinese customs approval delay. "Shipments of concentrate are expected to be aligned with production rates by the end of 2013," the company said.
Oyu Tolgoi, which is operated by Rio Tinto, produced 160,000 metric tons of copper concentrate and shipped approximately 38,000 tons of concentrate to the bonded warehouse in China between the time it began its first shipments in July and Sept. 18.
At full output, Oyu Tolgoi is set to produce an average of 450,000 tons of copper and 330,000 ounces of gold a year, as well as silver and molybdenum. The International Monetary Fund has estimated that the mine will generate up to one-third of Mongolia's gross domestic product when it reaches full production, which had been expected in 2021.
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