Rio Tinto waits on Oyu Tolgoi financing
Rio Tinto is expected to know within days whether Australia's export credit agency will help fund its Oyu Tolgoi mine in Mongolia or follow the lead of the US and deliver a symbolic blow to the company's most important growth project.
The social and environmental impacts of the massive copper and gold mine were thrust into the spotlight this week when the US revealed why it had abstained from supporting a recent International Finance Corporation decision to fund the project.
Washington's concerns over a lack of information in the project's environmental assessment did not prevent the IFC's $US1.4 billion funding package being approved. But they did give ammunition to opponents of the project at a time when relations between Rio and the Mongolian government are strained.
Australia's Export Finance and Insurance Corporation has been talking to Rio and its subsidiaries over a funding package for Oyu Tolgoi for almost 18 months, and EFIC's final funding decision is believed to be imminent.
Most observers expect EFIC to follow the IFC's lead and commit taxpayer funds to the Oyu Tolgoi, but EFIC's deliberations have dragged on longer than some expected.
EFIC has applied a category A ranking to the project, a description applied to projects the corporation judges to have "potential for significant adverse environmental and/or social impacts".
An EFIC spokeswoman, Gabriella Hold, said the main project risks relate to "water resources, resettlement, biodiversity, stakeholder engagement and the project's management systems".
The comments echo the concerns of international aid groups who have focused on the plight of nomadic herders who roam the lands around Oyu Tolgoi.
Rio has argued that Oyu Tolgoi will bring unprecedented opportunities to such communities, given the mine is tipped to account for half the impoverished nation's exports by 2019.
EFIC has engaged with aid agencies such as Oxfam and Jubilee Australia during its recent deliberations. Jubilee's Carmelan Polce said EFIC should ensure impact studies were thorough before committing to the project.
Rio pointed to the IFC funding as a sign that financing of the project was progressing as expected. The IFC funding is for the second stage of Oyu Tolgoi, which is expected to cost more than $US4 billion.