Mining giant Rio Tinto (ASX: RIO) placed on hold its planned $5 billion expansion of the Oyu Tolgoi copper mine in Mongolia because of the Mongolian Parliament's stand that it must approve the financing for the project.

Rio just started to export copper from an open pit mine at the Oyu Tolgoi site in July. It had previously secured the national government's approval for the financing for the copper mine's second phase.

The additional requirement of securing the parliament's nod could be due to Mongolia's concern about the cost of the venture's expansion and the threat of delay over rising costs that could affect its share of profits from the project.

Mongolia's Parliament is in summer recess and will resume session in October.

Rio has over $4 billion financing for the expansion project of which roughly half are from commercial banks. It is one of the biggest resources financing deals in but Asia for 2013 and the agreement is slated to lapse in the coming weeks, but has high chances of being extended.

Turquoise Hill of Rio owns 66 per cent of Oyu Tolgoi and the balance is owned by the Mongolian government.

Because of these delays as well as other issues pending such as work on the underground development, analysts agree that there must be a conclusion on these matters and agreement to a new timetable.

"The decision to stall underground development appears to be a clear signal from Rio that it is not going to invest more risked capital until the country's issued are sorted," Reuters quoted Investec analysts' note.

The planned expansion aims to boost production to 425,000 tonnes of copper and 460,000 ounces of gold annually.

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