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Chinalco eyes stake in mine in Mongolia

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ALUMINUM Corp of China is considering buying a stake in the Oyu Tolgoi copper and gold mine in Mongolia, touted as the world's largest undeveloped mine deposit, according to a regulatory filing.

China's biggest maker of the lightweight metal, also known as Chinalco, has indicated it would either acquire a direct ownership stake in the Oyu Tolgoi project or purchase a minority equity stake in its investor, Canada's Ivanhoe Mines Ltd, which holds 66 percent in the Mongolian project, Rio Tinto said in a United States Securities and Exchange filing yesterday. The Australian miner owns an indirect interest in the project via its 29.6 percent stake in Ivanhoe.

"Rio Tinto's ongoing discussions with Chinalco continue. If any arrangement is agreed, it may be a biparitite or tripartitie arrangement with Ivanhoe and/or Rio Tinto," the filing said.

Rio Tinto is also discussing with Ivanhoe about converting its equity stake in the company into direct ownership in the project.

Located in Mongolia's South Gobi region and 80 kilometers north of the China-Mongolia border, the project contains approximately 81 billion pounds of copper and 46 million ounces of gold in measured, indicated and inferred resources. 

Construction, which is likely to cost US$4.5 billion, began at the end of 2009 and is expected to be completed in 2012. Commercial production is set to begin in 2013.

It is reported to have at least 27 years of exploration with an annul output of 544,000 tons of copper and 650,000 tons of gold in the first decade.

Any arrangement may require the nod of Ivanhoe and Rio Tinto and will need Mongolian government support.

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