rio tinto seeks support for $4bn oyu tolgoi

Mongolia and Copper price gathering steam (along with Mongolian Coal)

Author: Stephen Morris
Posted: Thursday , 10 Jan 2013
(BLOOMBERG) -

Rio Tinto Group is said to have invited bankers to Mongolia to help it raise as much as $4 billion of debt for the Oyu-Tolgoi copper-gold site, the country’s biggest-ever mine.

The world’s second-largest mining company has invited lenders as it seeks to finalize terms of the project financing, according to three people with knowledge with the transaction who asked not to be identified as the deal is private. A so- called request for proposal, setting out details of the debt sought, will be sent to lenders following the meeting, two of the people said.

The meeting will take place on Jan. 27 and include a visit to the mine, in the South Gobi desert 80 kilometers (50 miles) from Mongolia’s border with China, one of the people said.

Rio Tinto is seeking to raise as much as $2 billion from commercial banks, with the remainder provided by export credit agencies and international development funds, another person said.

London-based Rio Tinto spokesman David Outhwaite declined to comment on the debt financing.

Commercial production at the mine, which will account for about 30 percent of Mongolia’s gross domestic product once in full production, is expected to start by June after almost three years of construction, according to the website of Vancouver- based Turquoise Hill, owner of a 66 percent stake in the mine and majority-controlled by Rio Tinto.

Lenders were reviewing terms of a $3 billion to $4 billion project financing, Turquoise Hill said Oct. 9. The loan will fund in the first half of 2013, it said.

Banks Selected

BNP Paribas and Standard Chartered Bank were selected by Turquoise Hill predecessor Ivanhoe Mines alongside the European Bank for Reconstruction and Development, the World Bank’s International Finance Corp. and Export Development Canada, to arrange the financing, it said July 2010. They have been joined by Export-Import Bank of the United States, Australia’s Export Finance & Insurance Corp. and the World Bank’s Multilateral Investment Guarantee Agency, according to the IFC’s website.

The IFC is considering a loan contribution of about $800 million, including a syndicated portion, according to its website.

Rio Tinto provided $1.5 billion of bridge financing to support the development of the mine, and has provided $3.5 billion of funding in total, it said Apr. 18, 2012. The loan would be repaid when the project financing is in place, it said at the time.

http://www.mineweb.com/mineweb/content/en/mineweb-mining-finance-investment-old?oid=169341&sn=Detail