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Rio Tinto

Rio Tinto is a world leader in finding, mining and processing the earth's mineral resources. It is one of the leading international mining group,s combining Rio Tinto plc, a London listed public company headquartered in the UK, and Rio Tinto Limited, which is listed on the Australian Stock Exchange, with executive offices in Melbourne.

The two companies are joined in a "dual listed companies" (DLC) structure as a single economic entity, called the Rio Tinto Group.

The Group finds, mines and processes the earth's mineral resources - metals and minerals. These are neccessary in many of the day-to-day products we use.

The Group's major products include aluminium, copper, diamonds, energy products, gold, industrial minerals (borates, titanium dioxide, salt and talc), and iron ore. Its activities span the world but are strongly represented in Australia and North America. There are also significant businesses in South America, Asia, Europe and southern Africa. The most recent, and soon to be most extensive project is now currently in Mongolia. This can be seen on the map to the side, marked as '20'. This operation in Mongolia is twinned with Ivanhoe Mines, who is also a leading competitor in mining in the country.

Here, we have provided some interesting articles regarding Rio Tinto's mining projects in Mongolia, they have all been credited to the original source.

Oyu Tolgoi copper-gold deposit in Mongolia belongs to the people.

In negotiating an investment agreement for development of the giant Oyu Tolgoi copper-gold deposit in Mongolia, Rio Tinto recognises this is a wonderful natural endowment that belongs to the people of Mongolia, Bret Clayton said on a visit to Ulaanbaatar.

Addressing ministers and parliamentarians together with the ambassadors of the UK and the US at an event in December 2006 during the eight hundredth anniversary celebrations of the founding of the Mongolian state, Bret assured lawmakers that Rio Tinto's focus on socio-economic development requires the Group to recognise the interests of stakeholders - particularly, in this case, "all of the people of Mongolia, in the development of their natural resources."
State recognition

He went on: "While private investors like Rio Tinto usually provide the capital and expertise to develop these world class orebodies such as Oyu Tolgoi, we do not presume to own them.

"What Rio Tinto expects to receive is, firstly, state recognition that Rio Tinto is the developer of choice and, secondly, a license from the state to develop a resource in a way that maximises the benefit for the owners of that resource.

"Of course, this can only happen if the investor, with the financial and technical capability to develop the resource, has sufficient assurance that it can generate an adequate return on its investment and that there is stability in the investment terms over the life of the project."

The journey about to be embarked upon at Oyu Tolgoi will affect how Mongolia is viewed globally. "We believe that a successful start on the journey will confirm to the watching world that Mongolia is an open, democratic society in which foreign investment is welcomed and the state's resources are being developed responsibly, to world's best practice, and in a way that benefits all Mongolians."

Source: www.riotinto.com

Behind the Rio Tinto, Ivanhoe deal

Ivanhoe's Friedland expects big things out of Mongolia

NEW YORK - This week Canadians cashed in their Inco Ltd. stock but a new deal closed that heralds the start of a new Canadian mining powerhouse.

An agreement was inked in New York between Anglo-Australian mining giant Rio Tinto and Canada's Ivanhoe Mines, giving Rio 9.9% of Ivanhoe and an option to buy up to 40%. The two will jointly develop Ivanhoe's huge copper-gold discovery made in 2001 in Mongolia.

When a Rio executive was asked why only 40% was bought, he replied, "because that's all that was available."

Since the deal was announced on Oct. 18, Ivanhoe shares have jumped 40% and its market cap to $3.8-billion from $2.2-billion.

Ivanhoe's founder and executive chairman, Robert Friedland, spoke to me at length about the deal. He's touring financial capitals to talk with investors and analysts about the deal.

He rose to prominence after discovering the gigantic Voisey's Bay nickel deposit in Newfoundland in 1994 and selling it for billions of dollars in 1996 to Inco.

But with this deal, he does not want to sell out of Mongolia but to participate.

"Mongolia is about the discovery and development of a mineral province [a huge region of ore bodies] as opposed to a single asset like Voisey's Bay, which we think is a one-off," he said. "We wanted to bring in a strategic minority partner, which has brought strong operating and financial credentials."

When asked what his stake will be if Rio takes up 40% of the stock within five years, he said "about 20%."

This week, Goldman Sachs, JP Morgan, Macquarie Research Equities and others lauded Rio Tinto for getting involved because Ivanhoe's discovery is believed to be the world's largest undeveloped copper-gold resource. Citigroup called it "Mongolian Magic".

"We've been talking to Rio Tinto for 2 1/2 years," said Mr. Friedland. "But we have been approached by every major mining company in the world. We've never approached anybody. Never initiated a call and only accepted calls at the level of the CEO."

Some 30 confidentiality agreements were signed with mining giants interested in buying into the find. Everybody with size tire-kicked and negotiated.

"We ran a Dutch auction in reverse," explained Mr. Friedland. "Major mining companies always want to have 51% so they can access the cash flow. We said we wanted to sell the smallest possible percentage to someone who had the best expertise."

Mongolia, however, has some political challenges. A revenue-sharing deal with Ivanhoe has taken longer than some had hoped. And this spring, Mongolia passed a windfall profits tax, which imposes huge royalties on production unless they are refined or smelted inside the country.

"The agreement with Mongolia is not taking a long time," he said. "We're foreigners. We're guests in Mongolia and they want to know who, and what, they're dealing with."

"The windfalls profits legislation is that if copper is above US$1.40 a pound, the incremental tax rate starts going up. Below it, the tax rate is unmolested. It is a mistake for them to do it, in our considered opinion, but it wasn't completely crazy. It is likely to be renegotiated or appealed.

"And our deal with the government, when it happens, will ultimately have the force of law."

Rio Tinto's participation is clearly a vote of confidence in Ivanhoe as well as in Mongolia and helps put pressure on Mongolia's politicians.

"Rio Tinto's participation will help us achieve a better agreement for Mongolia and our shareholders. It will be a better and bigger mine. Rio Tinto also has the world's strongest mining environmental credentials," he said.

Dealing with politicians is always complicated, he said, including in Canada.

"When we were in Newfoundland, then-Premier Brian Tobin said 'not one pound of nickel in my province will be removed unless we built a smelter'. He had no power legally to do that."

Mr. Tobin's tangle was out of line and a smelter was never built. Development was unduly held up for years, but Inco is finally producing there.

"Rio Tinto gives us backup from two governments because its head offices are in London and Melbourne. Diplomatic backup is extremely valuable," he said.

Rio Tinto also has financial and diplomatic clout, knowledge about markets and the world's best expertise on block-caving, which is an automated underground mining technique that will be used in some of Ivanhoe's Mongolian mines.

Today, the project -- called Oyu Tolgoi -- is impressive. Ivanhoe has invested tens of millions per month, employing hundreds of people to build infrastructure and conduct more drilling to further define the reserves. The development will eventually include open-pit and underground mines that could produce for decades.

Mr. Friedland is not only a financier and salesman, but also one of the world's foremost mine finders. He's a dual citizen of the United States and Canada who has operated mines all over the world and lives in his airplane, making deals in the mining and technology sectors.

So it wasn't surprising that, true to his American and stock market roots, he concluded our interview with a pitch to Canadian investors.

"For 30 years, people in Canada bought Rio Algom [sold by Rio Tinto to BHP] which had uranium in Ontario and assets elsewhere. So the comparison is obvious. Now we are creating Rio Ivanhoe. And with the sale of Inco this week, Falconbridge, Noranda, there is $40-billion of secular mining money looking for a home. We suggest the new Ivanhoe. We're Canadian."

Source: Diane Francis, Financial Post
Published: Saturday, October 28, 2006

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