A giant Chinese aluminum company is in discussions to buy a minority stake in either Ivanhoe Mines Ltd. or its Oyu Tolgoi copper-gold project in Mongolia.
Rio Tinto and Ivanhoe Mines have signed a new agreement under which Rio Tinto will assume direct management of the world-class Oyu Tolgoi copper-gold project in Mongolia and provide a comprehensive financial package to Ivanhoe Mines that is expected to help secure the development of the project approximately six months ahead of schedule in late 2012.
Global miner Rio Tinto will increase its stake in Canada's Ivanhoe Mines by 2.7 percent to 22.4 percent for $233 million, in a move tied to plans to jointly develop the giant Oyu Tolgoi copper mine in Mongolia.
Mongolia's political parties are locked in post-election squabbling, but once the dust settles a new government could finally pass deals to tap the coal, copper and uranium that sit beneath its vast deserts and grasslands.
But analysts say the deal that goes ahead would be less than ideal for either Mongolia or foreign investors, with the country better served by taxing its mineral wealth, rather than seeking direct government ownership in massive mines.
The current law gives the state either a 34% stake or a controlling 51 percent stake in mining projects. An investment agreement with Ivanhoe Mines and Rio Tinto for the Oyu Tolgoi project, still under negotiation, would be the first such deal.
People close to the Mongolian mining industry have said they believed Rio and Chinalco were working out a deal on Oyu Tolgoi, a copper-gold deposit that is a joint venture between Rio and Ivanhoe Mines of Canada.
The discovery, known as Ulaan Khud North, extends the known strike length of the Oyu Tolgoi mineralised system by an additional 3 km to the north, to more than 23 km.