October 29, 2009 Sydney Morning Herald

Rio flirts again with Chinalco

RIO TINTO and Chinalco have begun talks about jointly investing in Mongolia, only months after falling out over one of the largest and most acrimonious non-deals in corporate history.

The preliminary talks concern Oyu Tolgoi, in Mongolia's Gobi Desert, which is touted as the world's largest undeveloped copper and gold resource.

Earlier this month Rio Tinto, Canada's Ivanhoe Mines and the Mongolian Government signed an investment agreement that should lead to construction commencing in the northern spring. But the project is only 200 kilometres from the Chinese border and will require Chinese infrastructure, logistics and marketing co-operation.

"Chinese investment is inevitable," said an investment banker who advises Chinese companies on Mongolian and other investments.

"Rio Tinto needs China to make or transport the mining machinery, connect the electricity and water, build the rail link and of course to buy all the product," the investment banker said.

Chinalco, which is still Rio Tinto's largest shareholder despite the recent collapse of a $US19.5 billion ($21.4 billion) investment deal, is considered the most likely possible Chinese investor in the Oyu Tolgoi project.

It is understood to have got in first to register its interest with the National Development and Reform Commission, the agency responsible for trying to co-ordinate China's outward investment forays.

Sources close to both Chinalco and Rio Tinto confirmed that the companies are proceeding cautiously with early discussions about investment and co-operation at Oyu Tolgoi.

Any involvement by Chinalco in Oyu Tolgoi will be acutely politically sensitive, given Rio Tinto's present low standing in China and China's political and public relations problems in Mongolia.

In July a Chinalco spokesman, Lu Youqing, reportedly told a Chinese newspaper that Rio had "no business credibility" and that it was "not surprising" that executives such as Stern Hu were suspected of breaching the law. He later denied making the comment.

And Mongolia has bitter collective memories of Chinese imperial rule which are now overlaid with anxieties about economic annihilation. A well-placed Mongolian official told the Herald that his government rejected a request by China's Premier, Wen Jiabao, to visit earlier this month.

"We have something in our blood about China," the official said. "It will be very difficult for Chinalco to come into Mongolia."

The Oyu Tolgoi investment agreement says additional investors cannot be brought in without the consent of all parties, notably the Mongolian Government.

Alternatively, Chinalco could gain exposure to Oyu Tolgoi by seeking to invest directly in Ivanhoe Mines.

Rio Tinto holds its interest in Oyu Tolgoi through a 19.7 per cent stake in Ivanhoe and has options to raise its stake to 43 per cent.

Ivanhoe this week demonstrated its good relations with potential Chinese investors when its subsidiary SouthGobi Energy Resources issued a $US500 million convertible note to China Investment Corporation, China's main sovereign wealth fund, to develop an adjacent coal resource.

And the Mongolian official said China Shenhua Energy, China's largest coalmining company, is one of two front-runners to develop Talvan Tolgoi, the world's largest undeveloped coking coal resource.

Shenhua is leading a consortium to build a rail link up to the Mongolian border that could haul coal and copper concentrate from Oyu Tolgoi and Talvan Tolgoi into China.

China's presence in global mining investment is proving a headache as well as an opportunity for many countries in the region. But in many African nations China is the preferred investment source.

Rio Tinto may end up requiring Chinese co-operation to revive its other world-class mining prospect, the Simandou iron ore field in Guinea. Last year the Guinean Government tried but failed to hawk half of Rio Tinto's iron ore tenement to Chinalco, instead handing it to Israeli diamond miner Benny Steinmetz.

"Benny has been in Beijing trying to find a Chinese company to dig the mine and build the infrastructure," a Chinese resource company executive told the Herald.

Exacerbating the uncertainty, Guinea's minister for mining said last week he was negotiating up to $7 billion of mineral and oil deals with an opaque Hong Kong-listed company called China International Fund.

It is unclear whether those rights purport to pertain to assets controlled or recently appropriated from major mining companies in the area, such as Rio's.

October 06 2009

Rio Tinto signs Oyu Tolgoi Investment Agreement

Rio Tinto today signed an Investment Agreement with the Government of Mongolia for the development of the Oyu Tolgoi copper-gold complex in Mongolia's South Gobi region. Rio Tinto and Ivanhoe Mines Ltd, the development partners for the project, will now move forward with the government to address the conditions precedent and commence the development phase.  Production is expected to commence in 2013, with a five year ramp up to full expected production of 450,000 tonnes of copper per year and 330,000 ounces of gold.

Bret Clayton, chief executive of Rio Tinto's Copper and Diamonds group, said that Oyu Tolgoi is consistent with Rio Tinto's strategy of investing in large, long life, low cost ore bodies.

"While the size and grade of the existing Oyu Tolgoi ore reserves and mineral resources are already world class, we are also excited by significant exploration upside that still remains," he said.  "We plan to be a partner here in Mongolia for decades to come."

Mr Clayton said that the Oyu Tolgoi project holds great potential, both for the parties investing in its development, and for the people of Mongolia. " We believe Oyu Tolgoi will bring far reaching benefits for employees and communities directly linked to the mine, as well as for the people and industries indirectly connected to our operations."

Under the terms of the Investment Agreement and associated Shareholders' Agreement, the Government of Mongolia will own 34 per cent of Ivanhoe Mines Mongolia Inc LLC, the license holder of the Oyu Tolgoi Project. Key terms include a stable operational and tax environment, provisions dealing with the Government's equity participation and financing arrangements.

Rio Tinto initially made a US$303 million investment in a 9.95 per cent shareholding in Ivanhoe Mines Ltd in October 2006 under the terms of a Placement Agreement, and has the obligation to invest US$388 million for a further 9.95 per cent holding at the conclusion of an unconditional investment agreement with the Mongolian government (Tranche 2). Rio Tinto and Ivanhoe have recently agreed to a short term, month by month extension of the October 27 deadline for completing Tranche 2.

Under its current agreements with Ivanhoe Mines Ltd, Rio Tinto has the right to acquire up to 43.1 per cent of Ivanhoe's shares under fixed price options, with a right to further increase that interest to 46.65 per cent through on-market purchases.

---

Ivanhoe Mines Limited is a Canada-based international mining company with operations focused in Central Asia and the Asia Pacific region. The assets of the Company include Oyu Tolgoi Copper and Gold Project in southern Mongolia, its Cloncurry Iron-Oxide-Copper-Gold Project in Queensland, Australia and its Bakyrchik Gold Project in Kazakhstan.

Ivanhoe Mines also owns 80.5% of SouthGobi Energy Resources (SouthGobi). SouthGobi is developing the Ovoot Tolgoi Coal Project in southern Mongolia.

トロントに本社を置くSouthGobi Energy Resourcesは10月28日、モンゴル南部のOvoot Tolgoi 炭鉱の拡大(150万トン→800万トン/年）の資金としてCICが5億ドルを融資することで合意したと発表した。CICは見返りに取締役1名を派遣する。

In May 2008, the Company announced that it has completed the previously announced sale of its 42% control block in China gold producer Jinshan Gold Mines to a wholly owned subsidiary of China's national gold-mining conglomerate, China National Gold Group, of Beijing.

Ivanhoe Minesは、4月10日、自社が保有するJinshan Gold Mines社(同)の権益(全体の42%)を中国黄金集団有限公司(CNGC)に譲渡することで合意したと発表した。総額217.7百万C$に相当する。カナダ、中国政府による承認手続は 2008年5月を目途としている。
　Jinshan Gold Mines社は、内モンゴル自治区において2007年6月からCSH金鉱山の操業を開始しており、今まで33.3千oz(1.0t)の金を生産、現在120千oz(3.7t)/年に向け増産体制を整えているところである。
　中国黄金集団有限公司(China National Gold Group Corp.:CNGC)は1979年に設立された政府系企業であり、65の鉱山から中国の金生産量の20%に当たる78t/年を採掘している。
　その他、Ivanhoe Mines社は、CNGCとの間で長期的な戦略パートナーシップを目指している。今回の譲渡はその第一歩と位置付けており、今後、共同で中国での金、銅の探鉱、鉱山開発に集中していくことになる。

---

　2008年、Chinalco(中国アルミ業公司)は、他の中国国営企業とともに、ギニアのLansana Conte前大統領から、Rio Tintoが所有していたSimandou鉄鉱石鉱区の所有を要請されていたが、仮に要請を受けてしまえば豪州との関係、特にRio Tintoとの間で問題になるとして断ったと地元経済紙に語った。
　同鉄鉱石プロジェクトは、70百万t/年、最終的には170百万t/年の鉄鉱石生産計画で、Rio Tintoがこれまで400百万US$を投じて開発を行い、更に100億US$まで投資する計画であったが、ギニア政府は、鉄道、道路、港湾及び水力発電所建設といった開発に巨額資金を同国に投資してくれる中国のような同盟国に対して、協力への見返りとして資源開発の権益を与えるために、Rio Tinto保有権益を取消している。

　ギニアのMahmoud Thiam鉱業相は、2009年10月13日、中国がギニアの鉱業インフラ設備、道路、住宅、電気及び道路網の建設、そして飲料水の浄化に70〜90億US$相当の投融資を検討していると述べた。報道によれば、中国側は既に電力設備2基(50MW、30MW)の建設を開始するためにギニア中央銀行に150百万 US$を送金しているほか、中国とギニアは同国沖での石油探鉱JVプロジェクトも既に形成している。同国鉱業セクターは同国における輸出収支全体の90％を占めているため、｢中国の投資プロジェクトは、同国の経済成長にとって重要になる｣とThiam鉱山相は述べた。
　現状、ギニアでは2008年 12月の政権交代により、鉱業投資家に大きな懸念を与えている。2008年12月23日にLansana Conte前大統領が他界して以来、Moussa Dadis Camara率いるJunta軍事政権が主導を握り、Junta政権は前政府が承認した鉱業権の見直しを開始した。報道によれば、2009年7月、Rio TintoのSimandou鉄鉱石プロジェクトの鉱区の北半分がイスラエル系Beny Steinmetz社に突然の通達で譲渡された。また、ギニア裁判所(一審)は2009年9月10日、2006年に締結されたギニア政府とUC　 Rusal(露)とのFriguiaアルミナ精錬所の売買契約を取消す判決を下した。その後、10月15日の報道では、ギニア政府はUC Rusalに対して、未納税などの理由から10億US$の追徴金を要請し、10月19日の週にパリで話し合いが行われる予定である。
　また、国内の治安も悪化しており、2009年9月28日、野党デモ隊の少なくとも130人が治安部隊に射殺されたと国連から報じられた。同事件から、フランス外務省は10月16日、同国渡航を警告したほか、米国、欧州、国連も経済制裁を暗示している。
　 USGSによれば、ギニアのボーキサイト埋蔵量は世界の約27％が推定されているが、現在は世界のボーキサイト生産8.8％のみで、今後も開発の余地があるとされている。また、同国は高品位とされる鉄鉱石、金、ダイアモンド、ウランのポテンシャルが在るとされている。現状は、Junta政権の鉱山企業等との法的総論がどのように決着するのか予想できず、また、国政悪化のなかの中国のギニアへの融資の行方も定かではない。

-----

Associated Press 2009/10/13

Rio Tinto raises stake in Ivanhoe after mine deal

Rio Tinto PLC said Tuesday it will increase its stake in Canada's Ivanhoe Mines Ltd. to 19.7 percent after the pair last week signed a deal with the Mongolian government to develop a $4 billion gold and copper mine.

Rio Tinto said it will complete the second tranche of its investment - consisting of 46.3 million shares at a subscription price of $8.38 each - raising its holding in Ivanhoe from the current 9.9 percent.

The Oyu Tolgoi mine in the Gobi desert is expected to start production in 2013, the company said in a statement.

"This investment will allow us to work with the Government of Mongolia to progress the development of Oyu Tolgoi as quickly as possible," said Bret Clayton, chief executive of Rio Tinto's Copper and Diamonds Group.

The deal was renegotiated repeatedly after opponents complained it shortchanged Mongolia. Parliament had to repeal a windfall profits tax in August before London-based Rio Tinto Ltd. and Ivanhoe Mines Ltd. would agree to go ahead.

Mongolia will own 34 percent of the mine and receive a $250 million advance payment against royalties and taxes under the agreement signed by its ministers for finance, mining and the environment and executives of Rio and Ivanhoe. It calls for total investment of $4 billion.

Under the deal, the government can buy shares to raise its stake to 50 percent after 30 years once the miners recoup their initial investment.

October 28 2009

Rio Tinto completes second tranche of its investment in Ivanhoe Mines

Rio Tinto confirmed today it has completed the second tranche of its private placement investment in Ivanhoe Mines Ltd, increasing its ownership by 9.8 per cent to 19.7 per cent of Ivanhoe's common shares. The second tranche consists of 46,304,473 common shares at a subscription price of US$8.38 per share for a total consideration of US$388,031,483.74.

If Rio Tinto were to exercise and convert all of its remaining warrants and securities of Ivanhoe, it would own approximately 257,931,578 common shares of Ivanhoe representing 43.1 per cent of Ivanhoe's common shares.

Rio Tinto has no present intention of acquiring other securities of Ivanhoe, except as regards its right to acquire additional securities so as to maintain its proportional equity interest in the future, or of disposing of any of the securities of Ivanhoe which it holds. Depending upon its evaluation of Ivanhoe's business, prospects and financial condition, the market for Ivanhoe's securities, general economic and tax conditions and other factors, Rio Tinto may acquire additional securities of Ivanhoe or sell some or all of the securities it holds.