Rio Tinto Group’s $5.3 billion underground expansion of Oyu Tolgoi mine in Mongolia will increase its output in about four years time when the copper market is in deficit, according to the company’s deputy chief executive officer.
The investment to expand the copper and gold mine required courage due to the “challenging economic climate,” Jean-Sebastien Jacques said at an event Saturday in Mongolia, according to an e-mail transcript provided by the company. A global surplus of refined copper could maintain pressure on the market with a number of mine expansions expected during 2016, Bloomberg Intelligence said in a April 7 report.
“The long-term need for copper remains strong and production from Oyu Tolgoi underground will commence when copper markets will be in deficit,” said Jacques, who will become CEO in July, replacing Sam Walsh.
Copper demand may catch up with supply next year and a deficitwill then widen on a lack of new mines, Freeport-McMoRan Inc., the largest publicly traded producer, said in March. Oyu Tolgoi, about 80 kilometers (50 miles) north of the Chinese border, will rank as third largest in the world at full production, according to Wood Mackenzie Ltd.
Turquoise Hill Resources Ltd., which Rio Tinto controls through a 51 percent stake, owns 66 percent of the deposit, according to data compiled by Bloomberg. Mongolia’s state-owned Erdenes Oyu Tolgoi LLC holds the share of the mine not owned by Turquoise Hill.