09 May Rio Tinto approves development at Oyu Tolgoi mine
Rio Tinto (LSX:RIO) and its partners, the Government of Mongolia and Turquoise Hill Resources, have approved the next stage in the development in the Oyu Tolgoi copper and gold mine in Mongolia.
The development of the underground mine will commence in mid-2016 following the approval of a US$5.3 billion investment and the recent granting of all necessary permits.
First production from the underground is expected for 2020 and when fully ramped up in 2027 it is expected to produce more than 500,000 tonnes of copper annually.
The underground mine has an average copper grade of 1.66 per cent, more than three times higher than the open pit.
“Today’s investment takes it [Oyu Tolgoi] 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 deputy chief executive Jean-Sébastien Jacques.
“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.”
Oyu Tolgoi is jointly owned by the Government of Mongolia with 34 per cent and Turquoise Hill with 66 per cent – of which Rio owns 51 per cent.
Prime Minister of Mongolia MP Chimediin Saikhanbileg said: “This significant investment demonstrates the confidence of all the partners in both the Oyu Tolgoi mine and in Mongolia. It also demonstrates the attractiveness of Mongolia as a place to do business and invest, which will be a catalyst for further investments that will strengthen Mongolia’s economy.
“The development of the underground will create further jobs, support Mongolian suppliers and unlock substantial value for all stakeholders, delivering benefits for all Mongolians for generations to come. This is a proud day for Mongolia and is a clear demonstration that the country is back to business.”
The Mongolian mine employs around 3000 people, of which 95 per cent are Mongolian, and has so far already seen $6.4 billion invested to develop the open-pit mine.