Rio Tinto today unveiled a pathway for the ongoing development of the underground project at Oyu Tolgoi in Mongolia, one of the largest known copper and gold deposits in the world. The definitive estimate details how Oyu Tolgoi underground will achieve sustainable production for Panel 0 by October 2022 for development capital of $6.75 billion.
Rio Tinto and its partners, the Government of Mongolia and Turquoise Hill Resources (TRQ), need to continue to work together to finalise three other milestones – the outstanding government approvals, funding and a power solution – in order to ensure that the project can commence caving operations in 2021. This will unlock the most valuable part of Oyu Tolgoi, delivering significant benefits for the shareholders of Oyu Tolgoi and the people of Mongolia.
At peak production, Oyu Tolgoi is expected to operate in the first quartile of the copper cash cost curve1 and by 2030 is expected to be the fourth largest copper mine in the world.
Oyu Tolgoi is expected to produce 480,000 tonnes2 of copper per year on average from 2028 to 2036 from the open pit and underground, compared with 146,300 tonnes3 in 2019 from the open pit. The underground Ore Reserve has an average copper grade of 1.52 per cent, which is more than three times higher than the open pit Ore Reserve, and contains 0.31 grammes per tonne of gold.4 The size and quality of this Tier 1 asset provides additional expansion options, which could see production sustained for many decades.
Arnaud Soirat, Chief Executive of Copper & Diamonds said, “We now have a pathway to bring the underground project into production, which will unlock the most valuable part of Oyu Tolgoi. We will continue to work together with the Government of Mongolia and TRQ to progress the project, including finalising all necessary approvals and agreeing a solution on power and funding.”
This is a summary. The full notice is available here: https://www.riotinto.com/-/media/Content/Documents/News/RT-development-OT-underground-2020.pdf
Note to editors
Oyu Tolgoi is jointly owned by the Government of Mongolia (34 per cent) and Turquoise Hill Resources (66 per cent, of which Rio Tinto owns a controlling interest of 50.8 per cent). Rio Tinto has been the manager of the Oyu Tolgoi project since 2010.
The open-pit mine was completed in less than 24 months and production started in 2013. Since then, more than 240 million tonnes of ore have been milled, with over one million tonnes of copper in concentrate sold.
This announcement is authorised for release to the market by Rio Tinto’s Group Company Secretary.
1 WoodMackenzie copper equivalent cash cost curve (Q3 2020).
2 This production target (stated as recovered metal) for the Oyu Tolgoi underground and open pit mines is underpinned 22 per cent by Proved Ore Reserves and 78 per cent by Probable Ore Reserves for the years 2028-2036, which have been scheduled from current mine designs by Competent Persons in accordance with the requirements of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves, 2012 Edition (the JORC code).
3 Rio Tinto Fourth Quarter Operations Review, published 17 January 2020
4 The Ore Reserves for Hugo Dummett North and Hugo Dummett North Extension are reflected in Table A below.