Mining Roundup: Mongolia Ousts Oyu Tolgoi Chief to Appease Rio Tinto

on Aug 19, 2013
Listen Monday, August 19th: Rio Tinto’s (LON:RIO) dispute with the Mongolian government over the expansion of the jointly-owned Oyu Tolgoi copper and gold mine today took a new twist.

According to a news report carried by Mongolia’s official Montsame News Agency, the government had sacked the head of the company that owns the government’s 34-percent stake in Oyu Tolgoi in a move designed to appease Rio Tinto, whose Turquoise Hill Resources (TSE:TRQ) unit owns the remaining 66 percent of the project.
Tserenbat Sedvanchig, the executive director of Mongolia’s Erdenes Oyu Tolgoi, was reportedly fired at a board meeting today after nine months at the helm of the state-owned company, a period marked by disputes with Rio Tinto over mine costs and funding. Sedvanchig was replaced by former deputy prime minister and member of Parliament Davaadorj Ganbold, who today said in an interview that “something should be done to find consensus” between the miner and the Asian country’s government.

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The Rio Tinto share price in London today was 1.44 percent lower at £3,059.50p as of 13:03 BST, dragged down by a slump in the price of copper, one of the company’s main commodities.
**Glencore to Take Up to $7 Billion Hit on Xstrata Assets**
Switzerland-based Glencore Xstrata (LON:GLEN), which was created by the $29-billion takeover of Xstrata by Clencore in May, is expected to write down the value of assets inherited from the smaller peer by as much as $7 billion when it posts its first-half profit results tomorrow, Reuters has reported, citing analysts.

It is thought that nickel assets, including a $5-billion Xstrata operation in New Caledonia, will make up the bulk of the writedown, as nickel prices stand at less than a third of their 2007 highs, with supply continuing to exceed demand. Yet, the value of other assets including copper projects, which accounted for a large slice of Xstrata’s pipeline of future mines and expansions, could also be cut back, industry specialists have noted.

A consensus estimate of 13 analyst forecasts provided by Glencore puts half-year core profit, or earnings before interest, tax, depreciation and amortisation (EBITDA), at $5.88 billion, and attributable profit, or net earnings, at $1.7 billion. Glencore, which has published first-half output figures in line with forecasts, has not provided pro forma year-ago data.

In a separate development, Bloomberg today reported that MMG (HKG:1208), a unit of China Minmetals Corp, is weighing a bid for Glencore’s Las Bambas copper mine in Peru. According to unnamed sources quoted by the newswire, MMG is seeking advice on a potential offer from banks including Bank of America and Citigroup. This makes MMG the second Chinese company to have reportedly shown interest in the project after Chinalco Mining Corp.
!m[Glencore to Write down Billions in Xstrata Assets, Analysts Predict](/uploads/story/4922/thumbs/pic1_inline.jpg)
The Glencore share price in London today was 2.21 percent down at £301.90p as of 13:29 BST. Unlike the Swiss commodities giant, MMG traded on the up, closing today’s session in Hong Kong 2.06 percent higher at HK$1.98.
**RUSAL Swings to Loss in Second Quarter**
Among other miners, Russia’s United Company RUSAL (HKG:0486), the world’s largest aluminium producer, also saw its stock value rise today, although the company reported a fall in quarterly earnings.
The Russian miner swung to a loss of $208 million in the three months ended June, weighed down by a struggling global aluminium market. Yet, the RUSAL share price in Hong Kong climbed 0.41 percent, closing today’s trading session at HK$2.45.


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