Inside Rio Tinto's mine expansion financing

Author: Brian Yap | Published: 21 Jul 2016

Rio Tinto has revived Mongolia’s mining sector with its expansion financing of the country’s largest open-pit mine. The deal overcame significant red tape which caused multiple project delays.

The UK-based Australian mining giant gave its stamp of approval in May on a $4.4 billion limited recourse financing package for the $5.3 billion expansion of Oyu Tolgoi copper and gold mine in Mongolia.

But counsel involved in the deal point to issues around asset registration processes, and regulatory challenges concerning the creation of collateral security over assets. The local officials’ lack of knowledge of the workings of security packages further added to the complexity of the deal.

"There are local registration offices throughout the country, and none of them had to date seen the scale and complexity of the security package being proposed," said Stewart Robertson, partner at Sullivan & Cromwell in London. He added that the...