The Rio Tinto Limited (ASX: RIO) share price could be one to watch in the near term. This comes as the mining giant's CEO, Jakob Stausholm, attended a meeting with Mongolia's Prime Minister Oyun-Erdene Luvsannamsrain.
At the closing bell on Friday, Rio Tinto shares finished down 2.25% to $94.46 apiece.
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What happened?
In an effort to smooth tensions over Rio Tinto's Oyu Tolgoi copper and gold mine, the 2 heads met together this week. The project has suffered major setbacks and cost overruns which have resulted in production delays.
Construction on the mine commenced back in 2010, touted as one of the world's safest and most sustainable mines. The company leveraged new technologies and mechanical equipment to carry out more efficient mining operations.
First production was originally forecast to begin in late 2020, but geotechnical difficulties and COVID-19 pushed this date back. Rescheduled for October 2022, Rio Tinto has again moved the timeline to January 2023 because of cost blowouts.
The Mongolian government threatened to tear up the 2009 investment agreement, in which it has a considerable stake. An independent review rejected Rio Tinto's explanation for the project's delays and climbing costs.
Canadian-listed Turquoise Hill Resources, the other major shareholder in the project, advised it needed US$3.6 billion in further funding. Rio Tinto holds a 50.8% interest in the mineral exploration and development company.
However, the Mongolian government's stance is that Rio Tinto should cover any additional costs.
Some believe that concessions could be made to the Mongolian government to reset relations and complete the project.
Once online, the mine will produce around 560,000 tonne of copper resources per year at full operational capacity. This is forecasted to occur sometime no earlier than 2025.
Should everything run according to plan, the Oyu Tolgoi project could be the world's fourth-largest copper mine by 2030.
Rio Tinto share price summary
Over the past 12 months, Rio Tinto shares have fallen 8% despite hitting a 52-week low of $87.28 in mid-November. When looking at 2021 alone, its shares have plummeted by almost 20%.
Rio Tinto commands a market capitalisation of roughly $35.87 billion with approximately 371.22 million shares outstanding.
