China customs impasse locks up $11bn Mongolian play
RIO Tinto remains unable to sell production from its $US11 billion ($11.5bn) Oyu Tolgoi project in Mongolia as China refuses to grant necessary approvals for $US425 million of warehoused copper, gold and silver to enter the country.
In its third-quarter report released yesterday, Rio revealed that metal stockpiles remain at the mine and at warehouses near the Chinese border because Chinese customs officials have still not approved the product to enter into their country.
Rio notified the market of the problem between China and Mongolia, neighbours with a long tradition of hostility, last month.
"Oyu Tolgoi's customers are making good progress with Chinese customs officials to obtain necessary approvals to enable them to collect purchased concentrate from the bonded Chinese warehouse," Rio said.
Despite the problems, the company maintained its position that it expected production at the mine, the first stage of which has now ramped up to full capacity after starting production earlier in the year, to be aligned with sales by the end of the year. Sales cannot be booked by Rio until customers receive the product.
Rio reported an otherwise strong third quarter, bolstering lost copper sales in Mongolia through a better-than expected recovery from a huge landslide at the Bingham Canyon mine in Utah's Rocky Mountains.
The recovery at Bingham Canyon led Rio to boost 2013 production guidance, which includes the Oyu Tolgoi production it cannot book as revenue, to 590,000 tonnes, up from previous guidance of 565,000 tonnes.
If Rio can sell the copper, this represents an extra $US180m in revenue for the miner.
"This was a strong quarter for Rio, driven by strength in copper as (Bingham operator) Kennecott Utah copper recovers more quickly than expected," analysts at RBC Capital said in a note.
Rio's third-quarter mined copper production of 162,300 tonnes trounced Deutsche Bank's expectation of 133,000 tonnes.
The surprise boost in copper output and guidance sent Rio's shares higher yesterday afternoon. The stock finished $1.55, or 2.5 per cent, higher at $63.20 yesterday after trading at $62.70 immediately before the report was released.
Rio's huge West Australian iron ore unit, which is Australia's biggest corporate taxpayer and whose $US4.27bn of underlying first-half earnings was greater than Rio's total first-half profit, continued to perform solidly, recording record production and shipments.
Global iron production of 68.3 million tonnes in the third quarter was in line with expectations and the company's production guidance of 265 million tonnes of iron ore production was unchanged.
In its third-quarter report released yesterday, Rio revealed that metal stockpiles remain at the mine and at warehouses near the Chinese border because Chinese customs officials have still not approved the product to enter into their country.
Rio notified the market of the problem between China and Mongolia, neighbours with a long tradition of hostility, last month.
"Oyu Tolgoi's customers are making good progress with Chinese customs officials to obtain necessary approvals to enable them to collect purchased concentrate from the bonded Chinese warehouse," Rio said.
Despite the problems, the company maintained its position that it expected production at the mine, the first stage of which has now ramped up to full capacity after starting production earlier in the year, to be aligned with sales by the end of the year. Sales cannot be booked by Rio until customers receive the product.
Rio reported an otherwise strong third quarter, bolstering lost copper sales in Mongolia through a better-than expected recovery from a huge landslide at the Bingham Canyon mine in Utah's Rocky Mountains.
The recovery at Bingham Canyon led Rio to boost 2013 production guidance, which includes the Oyu Tolgoi production it cannot book as revenue, to 590,000 tonnes, up from previous guidance of 565,000 tonnes.
If Rio can sell the copper, this represents an extra $US180m in revenue for the miner.
"This was a strong quarter for Rio, driven by strength in copper as (Bingham operator) Kennecott Utah copper recovers more quickly than expected," analysts at RBC Capital said in a note.
Rio's third-quarter mined copper production of 162,300 tonnes trounced Deutsche Bank's expectation of 133,000 tonnes.
The surprise boost in copper output and guidance sent Rio's shares higher yesterday afternoon. The stock finished $1.55, or 2.5 per cent, higher at $63.20 yesterday after trading at $62.70 immediately before the report was released.
Rio's huge West Australian iron ore unit, which is Australia's biggest corporate taxpayer and whose $US4.27bn of underlying first-half earnings was greater than Rio's total first-half profit, continued to perform solidly, recording record production and shipments.
Global iron production of 68.3 million tonnes in the third quarter was in line with expectations and the company's production guidance of 265 million tonnes of iron ore production was unchanged.
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