LONDON (Reuters) – When temperatures rise and winds drop in the coming weeks, a band of explorers will hunt for copper riches in Mongolia’s Gobi Desert. For years Rio Tinto has been the sole international copper mine operator in Mongolia, bound closely to a country where it has bet billions of dollars on the giant Oyu Tolgoi project.
Others have steered clear due to the risks of operating in a nation with an unpredictable and young democracy and judiciary, a frail economy and extreme weather.
Now rising global demand for a metal used in electric cars and renewable energy, at a time of increased costs and depleted deposits in the world’s biggest copper producer Chile, is driving miners to riskier locations.
Some are looking to Mongolia. Geologists say deposits like Oyu Tolgoi – meaning Turquoise Hill because of the staining of the rocks by oxidized copper – rarely occur in isolation. That means, for some miners, the chances of finding another make the east Asian nation worth a calculated gamble, especially given its proximity to the world’s biggest copper consumer, China.
The new charge is led by a group of about half a dozen smaller players, including Australia’s Xanadu Mines (XAM.AX), Canada’s Kincora Copper (KCC.V) and U.S. company Wood Capital Partners, which have higher risk appetites and are seeking to steal a march on competitors.