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Rio Tinto seeks copper find in Central Asia

Wednesday 22 June 2011

ALMATY (REUTERS) – Global miner Rio Tinto Ltd is ready to commit funds for an exploration drive in Central Asia that it hopes could unearth the world’s next giant copper deposit, a company official told Reuters.

The company hopes to start drilling in Uzbekistan this year and is ready to proceed with a joint venture in Kazakhstan to explore multiple copper targets, Rio Tinto’s general manager for exploration in Central Asia Chris Welton said. “We are looking for an Oyu Tolgoi," Mr Welton said in an interview, referring to the Mongolian deposit set to become one of the world’s biggest copper mines outside Chile.

Kazakhstan holds 3% of the world’s recoverable oil reserves as well as large deposits of copper and other industrial metals. But the geologists who mapped the region in Soviet times were not counting on copper prices that set record highs above $10,000 a tonne this year. Mr Welton said Central Asia could hold much greater, deeper reserves than those already mapped. “Ideas have moved on. Technology has moved on. We are looking to apply that here in Kazakhstan,” he said.

With regions such as South America, the United States and the Pacific rim well explored, Welton said relatively unmapped regions such as Central Asia were the next big frontier. “The big new discoveries that are going to make a big difference for a company like Rio, and also for copper supply, are beginning to come out of frontier terrains,” he said. “We look at Kazakhstan and say: ‘The geology’s right. It’s got great potential and there’s been very little modern exploration done”.

Rio Tinto is awaiting the approval of state-owned miner Tau-Ken Samruk to begin work on a 50-50 joint venture to explore a region of Kazakhstan, within which it plans to identify target areas for drilling. The two companies signed a memorandum of understanding last year, but delays to the final agreement have meant Rio Tinto has reallocated its $US3.5 million (A3.29 billion) Kazakh exploration budget for 2010. “Quite rightly, Kazakhstan is taking its time on this agreement. This will be a precedent agreement, the first one that Tau-Ken signs, so they want to get it right,” Mr Welton said. “We also want to get it right, but we also want to start spending,” he said. “If we get a deal signed this year, we will put the licence applications in immediately.”

Rio will fund exploration until resources and reserves are registered with the state, at which point the joint venture partners would fund development of any mine on a pro rata basis. “If we get a decent-sized, high-quality set of targets, I would’ve thought we would be looking at a minimum spend of somewhere around $10 million next year,” Mr Welton said.

The next big find

Rio Tinto, the world’s fifth-largest copper miner, will do its own exploration from scratch in Central Asia and, in searching for a potentially giant deposit, does not plan to acquire existing deposits or mines, Mr Welton said.

When referring to the potential for an Oyu Tolgoi-type deposit in Kazakhstan, Mr Welton said such reserves were not on the state balance. “They’re not known,” he said. “These are purely conceptual targets that we are looking to progress.” He added Rio’s approach was to target specific areas that it believes could hold prospects.

Copper is its focus in Central Asia, as the region’s relative isolation from sea ports would make bulk commodities such as iron ore or coal less competitive. To improve government relations, Rio Tinto plans to open an office in the Kazakh capital Astana this year. It has also registered a representative office in Tashkent, capital of neighbouring Uzbekistan, as part of its push into the country.

Mr Welton said Rio was looking to partner with Uzbek state exploration company Goskomgeologiya and had already applied for a copper licence in a region close to the Kyrgyz border. “We are hoping to have that licence issued by the third quarter this year. We would start drilling almost immediately,” he said, adding that some of the Kazakh exploration budget for this year had been reallocated to Uzbekistan. “We firmly believe that there are multiple copper prospects that are of high calibre and untested, so we’ll be looking to build a portfolio of two or three projects (in Uzbekistan).”

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