Rio Tinto has announced the next stage in the development of the world-class Oyu Tolgoi copper and gold mine in Mongolia following the approval of a $5.3 billion investment by its partners and the recent granting of all necessary permits.
The Oyu Tolgoi mine is owned by the Government of Mongolia (34%) and Turquoise Hill Resources (66%, of which Rio Tinto owns 51%).
Rio Tinto told the ASX last week the development of the underground mine will commence in mid-2016, with first production from the underground – which has an average copper grade of 1.66 per cent, more than three times higher than the open pit – expected in 2020.
“Rio Tinto’s partnership with Mongolia began over a decade ago and we are proud of what we have already achieved in building a world-class and safety-focused operation which has already been selling copper for nearly three years. Today’s investment takes it to another level and will transform Oyu Tolgoi into one of the most significant copper mines globally, unlocking 80 per cent of its value,” said Rio Tinto deputy chief executive Jean-Sébastien Jacques.
“Long-term copper fundamentals remain strong and production from the Oyu Tolgoi underground will commence at a time when copper markets are expected to face a structural deficit. In line with Rio Tinto’s other tier one assets, Oyu Tolgoi offers opportunities for further expansions, leveraging existing infrastructure and supply chains and will provide attractive returns for all shareholders and Mongolia more broadly for decades to come. This is a long-term partnership, built to create mutual benefit.”
Production at the open-pit mine at Oyu Tolgoi started in 2013. Since then, more than 440,000 tonnes of copper have been sold. Oyu Tolgoi employs approximately 3000, of which 95% is Mongolian.
When the underground is fully ramped up in 2027, Oyu Tolgoi is expected to produce more than 500,000 tonnes of copper a year, compared with current annual production of 175,000-200,000 tonnes. The mine also benefits from significant gold by-products, with an average gold grade of 0.35 grams per tonne.