Rio Tinto ’s Mongolian copper and gold mine, Oyu Tolgoi has appointed a new president and chief executive.
The mine’s board, which includes three new Mongolian members, granted the installation of Craig Kinnell, who was the leading copper marketing executive at Rio Tinto, the West Australian reported.
The appointment comes at a time when Rio Tinto has run into strife over negotiating with the Mongolian government about conditions over $4.2 billion worth of funding for the development of Oyu Tolgoi.
“Craig’s years of experience running mines and selling minerals at international market prices make him the perfect choice to successfully lead the project in the coming years,” Oyu Tolgoi chairman Batsukh Galsan said in a statement.
It was thought Rio Tinto could appoint a Mongolian as chief of Oyu Tolgoi to bridge relations with the Mongolian government.
The conflict between Rio and the Mongolian government resulted in the company axing 1700 jobs at the Mongolian mine recently.
The delays have hit Mongolia’s economy, with foreign direct investment slumping by 43 per cent.
The board will gather in Ulan Bator in Mongolia this week to discuss the problems. But analysts are predicting discussions will not abate the Mongolian government’s fears about Rio Tinto’s management cost, capital costs for the open pit mine that is producing at present, and the proposed underground mine.
“The best we can determine is that all stakeholders want the outstanding issues to be resolved and are confident they will be, but a number of items still need to be agreed before the OT board can go back to the project finance syndicate members,” Resource Investment Capital analysts said.
Rio Tinto had progressed in its financing talks for Oyu Tolgoi’s expansion earlier this year. But the underground development faced more delays as the company waited for financing grants from the Mongolian government.
The government said the country parliament will need to approve the financing.
But Prime Minister Norov Altankhuyag said recently Rio will not need to do this for the development’s package.
The Oyu Tolgoi mine will be partly funded by taxpayers after Australia’s export credit agency said it would continue lending to multinational companies.
The expansion will be partly funded by the Export Finance and Insurance Corporation.