Rio's Oyu Tolgoi hit with US objections

Questions raised by the United States Treasury over environmental and social issues related to the $US12 billion ($A11.7 billion) Oyu Tolgoi copper and gold mine in Mongolia threaten to obstruct Rio Tinto Ltd's attempts to secure financing, according to The Australian.

The US Treasury has abstained from voting on whether the World Bank and the European Bank for Reconstruction and Development (EBRD) should help fund the mine, arguing that Oyu Tolgoi's environmental and social impact assessment (ESIA) was not sufficient and that concerns lingered surrounding an associated coal-fired power station, the newspaper reported.

The main issue resulting from the US Treasury decision is not the funding – the $US900 million worth of World Bank loans as part of a $US4 billion funding package were approved last month – but rather Rio's ability to counter Mongolian government calls for a greater stake in the project and local opposition surrounding the project's potential negative effects.

“The United States believes the ESIA has gaps in critically important information, particularly related to the operations phase of the project and mine closure,” the US Treasury said, according to The Australian.

“The ESIA does not provide a sufficiently detailed analysis of associated facilities and cumulative impacts, notably concerning a coal-fired power plant that will likely be needed to provide reliable power for the project. Also, the planned expansion in the project's mining capacity is covered only lightly in the cumulative impact assessment.”

Neither Rio, nor the Rio subsidiary building the mine, Turquoise Hill, would comment, The Australian added.