BASE METALS

Oyu Tolgoi starts underground production

RIO Tinto has reached a milestone in the long-running saga to develop the Oyu Tolgoi copper-gold deposit with the start of underground production.

 Workers underground at Oyu Tolgoi

Workers underground at Oyu Tolgoi

Mongolian prime minister Luvsannamsrain Oyun-Erdene joined Rio chief executive Jakob Stausholm 1.3km underground yesterday to celebrate the milestone.

Rio recently paid US$3.1 billion to acquire the remaining shares it didn't already own in majority Oyu Tolgoi owner Turquoise Hill Resources, taking its interest from an indirect 33.6% to a direct 66%.

The Mongolian government owns the remaining 34%.

The $7 billion underground development was paused until early last year when Rio reached an agreement with the Mongolian government that included the waiving of $2.4 billion of debt owed to Turquoise Hill.

Rio said since the agreement was reached, 30 drawbells have been blasted.

Ore is currently being processed from Panel Zero in Hugo North Lift 1 and production will ramp up over the coming years. 

Oyu Tolgoi is expected to become the fourth-largest copper mine in the world by 2030, operating in the first quartile of the copper equivalent cost curve.

Once ramped up, Oyu Tolgoi is expected to produce around 500,000 tonnes of copper per year on average from 2028 to 2036 from the open pit and underground, enough to produce around 6 million electric vehicles annually, and an average of around 290,000t over the reserve life of around 30 years.

"We would like to thank the government of Mongolia for their commitment as our partner in achieving this remarkable milestone," Stausholm said.

"We are starting underground production 1.3km beneath the remote Gobi desert from an orebody that will be critical for global copper production and Mongolia's ongoing economic development.

"The copper produced in this truly world-class, high technology mine will help deliver the electrification needed for a net zero future and grow Rio Tinto's copper business."

Oyun-Erdene said he looked forward to Mongolia becoming one of the world's largest copper producers.

"The start of underground production at Oyu Tolgoi demonstrates our ability to work together with investors in a sustainable manner and become a trusted partner," he said.

"The next phase of the partnership will enable the continued successful delivery of Mongolia's ‘New Recovery Policy' and Vision 2050 economic diversification strategy. Mongolia stands ready to work actively and mutually beneficially with global investors and partners."

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