Ulan Bator, Jan 26 (IANS): The Mongolian government and Anglo-Australian mining giant Rio Tinto have settled a long-running dispute over underground expansion for the Oyu Tolgoi copper-gold mining project, allowing the mine's underground mining construction to commence, the Mongolian government's press office has said.

"I believe that the commencement of the Oyu Tolgoi underground mining construction demonstrates to the world that Mongolia can understand and negotiate with investors, work together in a sustainable manner and be a trusted partner," Mongolian Prime Minister Luvsannamsrai Oyun-Erdene said on Tuesday during the commencement ceremony of the underground mining operations.

Within the framework of the government's new revival policy for economic development, Mongolia is ready to work actively and mutually beneficially with global investors and partners, Oyun-Erdene added.

The Oyu Tolgoi copper-gold mine deal between the Mongolian government and Rio Tinto was signed in 2009, with its financing arrangement revised in 2015, Xinhua news agency reported.

However, the underground expansion of the Oyu Tolgoi project had been hit by frequent disputes and delays over geotechnical difficulties, costs, the Covid-19 pandemic and others.

The mine is Mongolia's biggest ever investment project, and is located in the country's South Gobi Desert.

When the underground mine becomes fully operational in 2023, Mongolia will have the world's fifth-largest high-tech underground mine and become one of major players in the international copper market, the Mongolian government said, adding that mine's benefits to the country's economy and state budget are expected to be at least tripled.

It is expected to produce 430,000 tons of copper and 425,000 ounces (about 12,050 kg) of gold annually for 20 years.

The Mongolian government has a 34-per cent stake in Oyu Tolgoi while the Rio Tinto-controlled Turquoise Hill Resources owns the remaining 66 per cent.