M'bishi Materials, Mitsui buy copper concentrates from Oyu Tolgoi on trial

TOKYO, Dec 22 (Reuters) - Japan's Mitsubishi Materials Corp and Mitsui & Co have bought 5,000 tonnes of copper concentrates from Mongolia's Oyu Tolgoi copper mine, operated by Rio Tinto (Xetra: 855018 - news) , on a trial basis, in an effort to diversify their procurement sources.

"We purchase over 60 percent of copper concentrates from Chile and Peru and we want to lower the degree of dependence on South America," Tatsuya Inoue, general manager of the raw materials department at Mitsubishi Materials, told Reuters on Monday.

Mitsubishi Materials procures about 1 million tonnes of copper concentrates a year, 60-70 percent of which comes from Chile and Peru.

The first shipment from Oyu Tolgoi, transported by rail in Mongolia and Russia to Vladivostok port, then by sea to a Japanese port, arrived at Naoshima Smelter and Refinery of Mitsubishi Materials early this month, Inoue said.

It takes about 25 days to carry the raw material from Oyu Tolgoi, which is located in Mongolia's vast and remote southern Gobi region, to Vladivostok by railroad, and five more days by ship to a Japanese port, compared with 30-40 days from a port in South America, Inoue said.

"We have not made any decisions on contract, but we intend to talk with the producer about a long-term contract as early as early next year," Inoue said, without elaborating further.

Vancouver-based Turquoise Hill Resources Ltd (Toronto: IVN.TO - news) owns 66 percent, and the Mongolian government 34 percent, of Oyu Tolgoi, which is one of the world's biggest copper and gold mines. The mine is operated by Rio Tinto, which owns a majority stake in Turquoise Hill.

The first open-pit phase of the project went into operation in July 2013, and the mine produced 76,700 tonnes of copper concentrate by the end of that year, but the second phase, which involves underground expansion of the mine, has faced delays. (Reporting by Yuka Obayashi; Editing by Prateek Chatterjee)