Commodity trader Trafigura has agreed to provide financing for the Oyu Tolgoi mine, in Mongolia in exchange for a long-term deal to buy an undisclosed portion of the output.  1

Trafigura, which markets a wide range of metals including copper concentrate, referred to the offtake deal in its first fully public annual report since being set up 20 years ago. “We also provide finance in exchange for long-term supplies. For instance, we recently signed an offtake agreement with Oyu Tolgoi in Mongolia,” it said in the report.

Oyu Tolgoi is 66%-owned by Turquoise Hill Resources, in which Rio Tinto has a majority stake, and 34% by the Government of Mongolia.

Rio Tinto had no immediate comment on the Trafigura deal. Rio put the mine’s $5-billion expansion on hold in July, saying the Mongolian Government wanted parliament to approve the project’s financing.

Fifteen banks that have agreed to finance the expansion have told Rio they will extend their commitments, which were due to expire at the end of the year, until next March.

Trafigura also said the global copper market is expected to be broadly in balance next year as low inventories and a recovery in global growth offset stronger mine output. “We don’t expect prices to rise markedly, but on the other hand, with concentrates trading at close to cost levels for some producing areas, a collapse in prices is also unlikely,” the Trafigura report said.

The global copper market is expected to widen its surplus next year to 328,000 tonnes from 182,000 tonnes this year, analysts said in October.

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