Rio Tinto launches underground copper mine in Mongolia
Rio Tinto Plc [RIO-NYSE] is celebrating the start of underground production at the Oyu Tolgoi copper-gold mine in Mongolia’s Gobi Desert. This development is viewed as a key milestone for what is set to become one of the world’s leading copper suppliers.
On Monday, Mongolia Prime Minister Luvsannamsrain Oyun-Erden join joined Rio Tinto CEO Jakob Stausholm 1.3 kilometres underground at the mine site to mark the occasion. This was followed by a ceremony with Oyu Tolgoi employees and leaders, Government of Mongolia representatives, Oyu Tolgoi board members and local suppliers.
Oyu Tolgoi is held 34% by Mongolia, with the other 66% owned by Rio Tinto Rio, the mine operator. The open pit and concentrator have been successfully operating for over a decade. The total workforce is currently around 20,000 people, of which 97% are Mongolian.
Oyu Tolgoi works with more than 500 national suppliers and has spent around US$15 billion in Mongolia since 2010, including US$4 billion of taxes, fees and other payments to the state budget.
The stage was set for underground production to begin following an agreement in January, 2022 between Rio Tinto and the Government of Mongolia. Since then, 30 drawbells have been blasted and copper is now being produced from the underground mine.
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. Ore is currently being processed from Panel Zero in Hugo North Lift 1 and production will ramp up over the coming years.
Development of the underground mine is an investment of over US$7 billion, a project which aims to unlock the most valuable part of the copper resource.
At peak production, Oyu Tolgoi is expected to produce around 500,000 tonnes of copper annually on average from 2028 to 2036 from the open pit and underground. The estimated average production of over 290,000 tonnes per annum of copper for the estimated reserve life of 30 years is underpinned by current proven and probable ore reserve estimates.
That compares with 163,000 tonnes in 2021, according to a Rio Tinto fourth quarter operations review, published on January 17, 2022.
The underground ore reserve has an average copper grade of 1.52%, which is more than three times higher than the open-pit ore reserve and contains 0.31 g/t gold.
“We are starting underground production 1.3 kilometres beneath the remote Gobi Desert from an ore body that will be critical for global copper production and Mongolia’s ongoing economic development,’’ said Stausholm. “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,’’ he said.