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Oyu Tolgoi underground mine project, Mongolia

8th November 2019

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Oyu Tolgoi underground mine project.

Location
Mongolia.

Project Owner/s
Oyu Tolgoi is jointly owned by the Mongolia government (34%) and Turquoise Hill Resources (66%, of which Rio Tinto owns 51%). Rio Tinto has been managing the project since 2010.

Project Description
The Oyu Tolgoi openpit mine was completed on schedule in less than 24 months and production started in 2013. Since then, more than 440 000 t of copper have been sold.

About $6.4-billion has been invested to develop the openpit mine, concentrator and associated infrastructure, with an additional $500-million of capital costs for initial development of the underground mine.

The underground mine is expected to produce more than 500 000 t/y of copper, compared with current openpit production of 175 000 t/y to 200 000 t/y.

The mine also benefits from significant gold by-products, with an average gold grade of 0.35 g/t.

Underground production will come from the Hugo Dummett North deposit, including the North Extension, which contains probable ore reserves of 499-million tonnes, with an average grade of 1.66% copper and 0.35 g/t of gold.

The material from this brownfield expansion will use the existing concentrator and infrastructure.

The size and quality of this Tier-1 resource provides additional expansion options, which could sustain production for many decades.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an expected internal rate of return of more than 20%.

Capital Expenditure
The capital spend to bring the copper project into production is expected to range between $6.5-billion and $7.2-billion, an increase of between $1.2-billion and $1.9-billion, compared with the previous cost estimate of $5.3-billion.

Planned Start/End Date
Rio has also warned that first sustainable production from Oyu Tolgoi will be achieved only between May 2022 and June 2023, which is between 16 to 30 months later than the original feasibility study guidance in 2016.

Latest Developments
The construction of Shaft 2 at the Oyu Tolgoi mine has been declared complete.

Shaft 2 – a 10-m-diameter shaft sunk to about 1.3 km below the surface – will accelerate the underground development of the Oyu Tolgoi mine, Turquoise Hill has said.

The shaft uses the world's largest production hoist motor and can carry 300 people in the service hoist and lift 60 t skips in the production hoist. When operating at maximum capacity, the production hoist has the ability to lift 35 000 t of material to the surface daily.

Commissioning of the production hoist is continuing, with more than 2 700 t of rock successfully hoisted to surface. Turquoise Hill continues to work with the regulatory agencies to finalise the permitting.

Shaft 2 was constructed using almost 5 000 t of steel and more than 300 km of electrical cabling.

Key Contracts and Suppliers
Jacobs Engineering (EPCM) and Cimic Group’s Thiess (underground decline contractor).

On Budget and on Time?
Rio Tinto has warned of cost blow-outs and delays to its Oyu Tolgoi underground project.

Contact Details for Project Information
Rio Tinto media relations: Australia/Asia, Ben Mitchell, tel +61 3 9283 3620 or email media.enquiries@riotinto.com.
Turquoise Hill Resources investors and media, Tony Shaffer, tel +1 604 648 3934 or email tony.shaffer@turquoisehill.com.
 

 

Edited by Creamer Media Reporter

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