Rio Tinto seals $4.4 bln financing for Mongolia copper expansion

SYDNEY, Dec 15 (Reuters) - Rio Tinto RIO.AX RIO.L locked
in $4.4 billion in financing on Tuesday to fund a massive
expansion of a copper mine in Mongolia and a final decision
whether to proceed with construction will be made in the first
half of 2016.
The underground expansion of the Oyu Tolgoi mine is one of
three big growth projects for Rio Tinto, on even as the sector
cuts spending to weather a downturn in commodities prices.
"This agreement has been more than four years in the making
and it is one of the most significant agreements of its type in
the metals and mining industry," Rio Tinto copper chief
Jean-Sebastien Jacques told reporters on a call.
Rio Tinto and other big mining houses such as BHP Billiton
BHP.AX BLT.L and MMG Ltd 1208.HK are amassing vast copper
holdings in a push to capture a greater chunk of the $140
billion world market in an attempt to be ready for a turnaround
in the metal's fortunes that most believe is years away.
Separately and in joint ventures, the companies intend to
mine millions of additional tonnes of copper over the coming
decade.
Jacques said Australian, Canadian and U.S. export agencies
joined 15 international financial institutions in making up the
financing for the Oyu Tolgoi expansion.
Open pit mining of Oyu Tolgoi, in the south Gobi desert,
began more than two years ago, but work on the underground mine
was stalled amid disputes over taxes and construction costs,
which were resolved earlier this year.
The expansion will dig more than 200 km (125 miles) of
tunnels to access 25 billion pounds of copper and 12 million
ounces of gold reserves, making Oyu Tolgoi the world's third
largest copper and gold mine.
Rio Tinto is operator of the mine, which is 66 percent owned
by Rio's Turquoise Hill TRQ.TO arm and 34 percent owned by the
Mongolian government.
Initial production from the underground part of the mine is
still five to seven years away, long enough, Jacques said, for
the copper market to turn from surplus to deficit.
Copper is trading near its lowest in six years, weighed down
by a global supply glut.
"As and when the Oyu Tolgoi underground is running, we
expect the market to be in a structural deficit," Jacques said.
"From our perspective Oyu Tolgoi will be part of the
solution to provide the copper that is required in China or any
part of the world at that point in time," he said.