OBG talks to Jean-Sébastien Jacques, Chief Executive, Copper, Rio Tinto

Interview: Jean-Sébastien Jacques

What additional steps can be taken in order to meet the need for improved infrastructure in Mongolia’s mining industry? What role can the government play in this process?

JEAN-SÉBASTIEN JACQUES: While Mongolia has made a great deal of progress in a short period of time, it is quite clear that there is more work to do, especially as the country looks to further develop the mining industry.

The government muÉst establish a clear, long-term strategy for investing in infrastructure development, starting with an efficient transportation network, like a railway, to provide reliable access to markets, as well as a competitive and reliable energy supply.

At the same time, we must create strong and sustainable government-industry partnerships, so we can work together to address the country’s infrastructure needs and address the associated technical and financial challenges.

How do you assess the evolution of copper prices in the medium to long term? How can Mongolia capitalise on opportunities arising from this?

JACQUES: While we expect continued price volatility in the near term, the long-term prospects for copper look very promising, driven by supply constraints and the ongoing growth and development of Mongolia’s neighbour, China, which is the world’s largest consumer of copper.

Mongolia is in a strong position to fully capitalise on the copper market’s attractive long-term fundamentals, but it must ramp up production. This is where the need for infrastructure becomes even more pressing, because customers will want the product on the back of a very reliable supply chain.

What more is being done to ensure that talks with the Mongolian government about the Oyu Tolgoi mine are successful?

JACQUES: We are in regular conversations with the government and have agreed on a roadmap to address the handful of remaining key issues so we can move forward. We are also encouraged by the progress we have made together and by the fact that our recent discussions have focused not on political issues, but on generating value for all our shareholders and stakeholders, which included the government and people of Mongolia.

The sooner we can resolve these important issues, the better for all involved, but we must also bear in mind that Oyu Tolgoi is a mine that will be operating for decades to come, therefore we need to create strong and sustainable relationships that are built on trust and common understanding for years ahead, and that will take time.

How would you describe the relationship between the success of Oyu Tolgoi and the broader economic growth in Mongolia? What impact will this have on future developments?

JACQUES: Oyu Tolgoi is very important for Mongolia today, but our aspiration is that it ultimately will be part of a bigger and broader Mongolian economy that is driven by numerous international and local players, not just Rio Tinto.

The importance of Oyu Tolgoi in the short and medium term is clear, but the sooner Mongolia develops more large-scale projects like Oyu Tolgoi, the better it will be in the long run.

To be successful in the wider economy, Mongolia must also diversify with other mining projects and go beyond the mining industry. Investors also see Oyu Tolgoi as a good option for foreign direct investment in Mongolia today.

A positive outcome from our discussions with the government would have a strong and positive effect on the level of confidence of foreign investors coming into the country. In 15 or 20 years, there could be several projects in Mongolia similar in size to Oyu Tolgoi and with a material local economic impact.

This is ultimately what we would like to see happen.