Rio Tinto’s Oyu Tolgoi has approved a shift in its underground development strategy, pausing work in the Entrée Resources joint venture (JV) area and bringing forward development in Panel 2 South, citing delays in licence transfers.

The Oyu Tolgoi board has now approved an alternative mine plan that shifts away from Panel 1, which includes the Entrée JV area that would have supported production from 2027 under the existing mine plan.

While limited development will continue in areas of Panel 1 that lie outside the JV boundary, resources will be reallocated to accelerate work in Panel 2 South, which is not affected by the licences.

“Oyu Tolgoi continues to ramp-up as planned, with the cave performing above expectations,” said Rio Tinto Copper chief executive Katie Jackson.

“Our understanding of the orebody is growing as production and development progresses, further increasing our confidence and flexibility. With lateral development work only just beginning in Panel 1, this is the right time to pivot and bring forward development in Panel 2 South to maintain our options."

The mine’s long-term production target of 500 000 t/y of copper from 2028 to 2036 remains unchanged. Panel 0 and Panel 2 are expected to contribute to output in 2025 and 2026, aligning with Rio Tinto’s copper guidance of 780 000 t to 850 000 t for next year.

“Transferring the licences for the Entrée JV area will maximise the value Oyu Tolgoi delivers for all parties, and we are continuing to work with the government of Mongolia and Entrée Resources towards this outcome,” Jackson said.

Entrée president and CEO Stephen Scott said the Toronto-listed company was disappointed that it had been unable to achieve a timely transfer of title to the JV mining licences, stating that the transfer process started in February this year.

"The parties have always intended for OTLLC, the 80% owner and manager of the Entrée/Oyu Tolgoi JV, to hold title to the Shivee Tolgoi and Javkhlant mining licences on behalf of the JV participants. It is a requirement of the 2008 JV agreement and contemplated in the 2009 Oyu Tolgoi investment agreement. Entrée and OTLLC commenced the transfer process in February 2025 and will continue to work with representatives of the government of Mongolia to complete the transfers as soon as possible in accordance with applicable laws of Mongolia. 

"Our top priority is to try to reduce the adverse economic impact on all Oyu Tolgoi project stakeholders, including the people of Mongolia, that will result from a Panel 1 underground development delay," said Scott.

Entree cautioned that, should Lift 1 Panel 1 lateral development work be significantly delayed, it could have an "adverse effect on development costs and schedule, the business, assets, future cash flow, and financial condition of the company, and the company’s share price". 

Oyu Tolgoi, one of the world’s largest copper/gold mines, is operated by Oyu Tolgoi, which is 66%-owned by Rio Tinto and 34%-owned by the government of Mongolia.