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Oyu Tolgoi lifts force majeure

Turquoise Hill Resources (CN:TRQ) has lifted its force majeure notice to customers, effective today, after traffic flow has returned to normal at the main Mongolia-China border crossing following a protest last month.
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Sales will be made up in coming quarters: Turquoise Hill

Staff reporter

The company said "safe and normal" mine operations and production had been maintained and it expected any sales impact to be made up over the next few quarters.

Oyu Tolgoi declared force majeure over customer contracts on January 17 after vehicles had obstructed the main access road at the Ganquimaodu Border Zone for a week. 

It was the second setback the company suffered in January, having been handed a US$155 million tax bill days earlier from the country's authorities. 

The company said the blockade was lifted on the 18th and the border re-opened but congestion meant a waiting period was required for traffic to return to pre-blockade levels.

Turquoise Hill, 51% owned by Rio Tinto (LN:RIO), owns 66% of Oyu Tolgoi in a joint venture with the Mongolian government.

Issues are continuing to surface, with the Mongolian government cancelling a 2014 power agreement with Turquoise Hill two weeks ago.

The cost of power had not been included in the $5.3 billion capital costs for Oyu Tolgoi's underground expansion, which is under development.

Rio has since said it will work with its partners to develop the best solution for a domestic power supply for Oyu Tolgoi and had earmarked $250 million a year to develop a power station in Mongolia in its 2019 and 2020 capex forecasts.

When the underground mine is fully ramped up, Oyu Tolgoi is expected to produce more than 500,000 tonnes of copper a year, compared with an expected 125,000-155,000t of copper and 240,000-280,000 ounces of gold this year.