Oyu Tolgoi copper and gold mine

Overview:

• Oyu Tolgoi copper and gold mine.
• The second phase of the copper and gold project in Mongolia marked one of the largest mining lending deals in 2015.
• Project finance worth $4.4 billion was secured for the project.
• The decision for the deal to proceed to the second phase was made more than a year ago. At the time where commodity prices were declining, the sponsors—13 lenders, export credit agencies and multi-laterals—Rio Tinto and Turquoise Hill Resources continued to have confidence in this project.
• Prior to kicking off to the second phase, the project encountered various disputes with the Mongolian government, and as a result the agreement of the loan was delayed until August 2015.
• The project financing will be provided by the Export Development Canada, the European Bank for Reconstruction & Development (EBRD), IFC, US Ex-Im, and Export Finance & Insurance Corporation of Australia, along with commercial lenders BNP Paribas, ANZ, ING, Société Générale Corporate & Investment Banking, Sumitomo Mitsui, Standard Chartered Bank, Canadian Imperial Bank of Commerce, Crédit Agricole, Intesa Sanpaolo, National Australia Bank, Natixis, HSBC, MUFG, and multilateral banks KfW IPEX-Bank and Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO).
• The Multilateral Investment Guarantee Agency (MIGA) provided political risk insurance for the commercial banks.
• The containing reserves and resources would make Oyu Tolgoi Phase II one of the world’s largest copper-gold deposits.
• Oyu Tolgoi would have a transformative effect and impact on the nation and the people of Mongolia, and when it reaches its full production in 2021, the International Monetary Fund estimated that Oyu Tolgoi would generate up to a third of Mongolia’s GDP.
• Shearman & Sterling (Matthew Bersani, Andrew Ruff, Etienne Gelencsér) advised Erdenes Oyu Tolgoi.
• Sullivan & Cromwell acted for Rio Tinto.
• Milbank Tweed Hadley & McCloy acted for the lenders.

Adam Majeed - Asia Editor