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Posts tagged ‘Turquoise Hill Resources Ltd (TRQ)’

Mongolia sees return to 17% growth next year

November 19th, 2013

by Frik Els | November 19, 2013 | Reprinted by permission of

Mongolia’s economy is set to return to strong growth next year, the Asian nation’s central bank governor said November 19.

Central bank head Naidansuren Zoljargal said gross domestic product could expand as much as 17% next year from around 11% this year, according to WSJ Online.

Foreign direct investment in the country dropped 49% to September 2013 compared with last year, which had already marked a 17% year-on-year decline. The value of the currency, the tugrik, is down more than 20% this year, inflation has returned to double digits and the Mongolian central bank’s off-balance sheet spending is burning through foreign reserves as foreign debts balloon to 55% of GDP.

Changes to Mongolia’s 2012 Strategic Entities Foreign Investment Law (SEFIL) came into force at the start of the month and are designed to turn around a slowdown in its economy, which was the world’s fastest-growing at the start of the decade, and a steep fall-off in foreign investment.

While the new investment law has been universally hailed as a positive step, the number one issue that has to be resolved before investor confidence will return is the future of the massive Oyu Tolgoi copper-gold mine.

Oyu Tolgoi, which could have a final bill of as much as $14 billion, is 34% owned by the Mongolian government with Rio Tinto NYE:RIO-controlled Turquoise Hill TSX:TRQ owning the rest.

Talks over Oyu Tolgoi’s expansion and the reworking of the initial 2009 deal that first unleashed the Mongolian investment boom have dragged on for the better part of a year. Both sides provided fresh faces for the Oyu Tolgoi board in September to break the impasse.

Vancouver-based Turquoise Hill last week suspended work on the $5.1-billion underground expansion of Oyu Tolgoi, saying it will move forward with a $2.4-billion rights offering, as talks on financing arrangements with the Mongolian government including a World Bank-led $4.5-billion debt package—the largest in the history of mining—have gone nowhere.

The rights offering will help the company repay a bridge loan and a $1.8-billion interim funding facility.

In a November 18 press release from the company that holds Mongolia’s share of the mine, representatives stated that the government “is flexibly available to prioritize and continue the discussions on terms and conditions of the project financing separate from any other issues.”

The disputes are centred on costs with Rio’s management fees and the Mongolian government’s share of funding of surrounding infrastructure proving particular sticking points.

Production at Oyu Tolgoi’s open pit began this year and the mine is now operating at nameplate capacity of 100,000 tonnes of ore processed per day.

The giant copper mine is set to contribute as much as a third of the nation’s economy if the underground expansion goes through.

Reprinted by permission of

Turquoise Hill brings Oyu Tolgoi up to nameplate capacity

October 15th, 2013

by Frik Els | October 14, 2013 | Reprinted by permission of

Turquoise Hill Resources TSX:TRQ on October 14 announced third quarter 2013 production at its massive copper-gold-silver Oyu Tolgoi mine in Mongolia was broadly in line with expectations.

Turquoise Hill brings Oyu Tolgoi up to nameplate capacity

Kay Priestly, CEO of the Vancouver-based company, said: “During the third quarter, the Oyu Tolgoi concentrator continued to ramp up and is now operating at nameplate capacity of approximately 100,000 tonnes of ore processed per day. Concentrate shipments began early in the quarter and Oyu Tolgoi’s customers are making good progress with Chinese customs officials to resolve matters with purchased concentrate at the border.”

“Head grades improved in the quarter with a lower proportion of stockpiled ore processed as open pit mining activities ramped up after being reduced in the second quarter to preserve cash. Given the mine and concentrator are still early in development and operation, ore grades and recovery rates are expected to continue to improve throughout the fourth quarter.”

Turquoise Hill owns 66% of the mine located in the South Gobi desert. The government of Mongolia holds the rest.

Turquoise Hill said it expects the $6.6-billion mine, which shipped its first copper in July, to produce between 75,000 and 85,000 tonnes of copper in concentrates for 2013 and that shipments of concentrate are expected to be aligned with production rates by the end of 2013.

Turquoise Hill and controlling shareholder Rio Tinto NYE:RIO are currently locked in talks with the Mongolian government about phase two of the Oyu Tolgoi mine, which could push the mine’s final bill to as much as $13 billion.

Reprinted by permission of

Mongolia to scrap foreign ownership law

August 27th, 2013

by Frik Els | August 27, 2013 | Reprinted by permission of

Mongolia is really worried about falling foreign investment in the country.

So much so that it is considering recalling its parliament, currently enjoying summer recess, for an emergency session to counter an impending crisis brought about by sliding coal prices and uncertainty over its massive Tavan Tolgoi met coal mine and the Oyu Tolgoi copper-gold project.

Mongolia is also considering changes to its 2012 Strategic Entities Foreign Investment Law (SEFIL), which observers believe is at least partly to blame for the more than 40% slump in foreign direct investment in the Asian nation during the first half of the year.

We won’t separate the market between strategic and non-strategic.

Under SEFIL, state-owned companies need state approval for a stake of any size in a company deemed to belong to a “strategic” sector such as mining. If these firms want approval for a majority stake, parliament has to give the go-ahead.

All foreign firms wanting to buy 33% or more must secure government approval but, according to Mongolia’s Director of Foreign Investment Sereeter Javkhlanbaatar, this provision could be scrapped, IVC Post reports.

Javkhlanbaatar said the new policy would assuage investor fears on ownership limits, adding: “We won’t separate the market between strategic and non-strategic.”

Foreign state-owned firms—which mostly mean Chinese companies—would still need official approval, however.

Last year China’s state-owned Aluminum Corp’s bid for coal producer SouthGobi Resources TSX:SGQ was blocked by Mongolian authorities, sending shares of the company owned by Turquoise Hill Resources TSX:TRQ into a tailspin it has not yet recovered from.

Reprinted by permission of