Oyu Tolgoi is one of the most exciting developments in copper and gold mining for several decades. As well as containing reserves and resources that make it one of the world's largest copper-gold deposits, Oyu Tolgoi will have a transformative effect on the nation and the people of Mongolia and is an important long term partnership with the Government of Mongolia. By the time it reaches full production in 2021, the International Monetary Fund estimates that Oyu Tolgoi will generate up to a third of Mongolia's GDP.
Oyu Tolgoi is situated in the southern Gobi desert of Mongolia, approximately 80 kilometres north of the Mongolia-China border and 550 kilometres south of the capital, Ulaanbaatar. It is jointly owned by the Government of Mongolia (34 per cent) and Turquoise Hill Resources (66 per cent, of which Rio Tinto owns 51 per cent). Since 2010, Rio Tinto has also been the manager of the Oyu Tolgoi project.
The first major discoveries were made at Oyu Tolgoi in 2001. Estimates indicate that Oyu Tolgoi contains 2.7 million tonnes of recoverable copper and 1.7 million ounces of recoverable gold in reserves. The scale of deposits at Oyu Tolgoi is expected to allow the project to operate for over 50 years.
Oyu Tolgoi is expected to produce an average of 430,000 tonnes of copper and 425,000 ounces of gold per year, as well as by-product silver and molybdenum, over its mine life. Ore from Oyu Tolgoi will be processed into concentrate on-site and, in its initial years, shipped by road to international markets.
On 9 July 2013, Oyu Tolgoi reached a major milestone when shipping commenced with trucks carrying copper concentrate leaving the mine gates bound for customers in China. The 100,000 tonne-per-day concentrator began processing ore at the beginning of 2013, from Oyu Tolgoi's open pit. The underground section of the mine, which is expected to be developed in the next phase of the project, contains up to 80 per cent of the value of the project. The feasibility study to develop the next phase is under way and is expected to be completed in the first half of 2014.
The benefits of Oyu Tolgoi for the Mongolian economy are significant. Since 2006, Rio Tinto and Turquoise Hill Resources have invested approximately US$6.2 billion in the first stage development of the project.
During operations, Oyu Tolgoi is committed to employing a minimum 90 per cent Mongolian workforce, a huge jobs boost for a country with a population of only three million.
By the end of June 2013, Oyu Tolgoi had paid over US$1.1 billion in taxes, fees and other payments to the Government of Mongolia. It created more jobs than any other company in Mongolia, and was the second highest taxpayer in the country in 2012. The benefits for Mongolia will be even greater now that shipments have commenced as royalty payments and increased income from taxation flow to the government.
Rio Tinto is proud to be working with its partners to introduce world-class standards of safety, transparency and technology at Oyu Tolgoi.
Training and education
Oyu Tolgoi is committed to Mongolia for the long term. US$126 million has been committed over five years to the biggest single investment in education and training in Mongolia. Oyu Tolgoi has invested in building and improving vocational training centres in seven Mongolian towns and cities. More than 6,600 people will be trained at these vocational training centres, and 1,200 vocational training centre teachers are being trained with the Mongolian Ministry of Education. Oyu Tolgoi has also provided scholarships for hundreds of young Mongolians both at the national and international universities.
The unique ecosystem of the South Gobi and the proximity to herder communities and wildlife means that Oyu Tolgoi is operating in a sensitive and precious environment. Under the guidance of Rio Tinto's world-class standards of environmental protection, Oyu Tolgoi is fully committed to minimising and mitigating its impact on the South Gobi.
Oyu Tolgoi is designed to be one of the most water-efficient mines of its kind in the world. As well as only using water from a previously-undiscovered, deep and saline aquifer that is unconnected to surface water, the operation will continuously recycle 80 per cent of the water used in operations and all of the water used for domestic purposes.
Working in partnership with international NGOs, the operation aims to have a net positive impact on the biodiversity of the area surrounding the site. Through Rio Tinto's expert guidance and compliance with over 70 specific Mongolian laws and standards governing the mine's operation, Oyu Tolgoi's environmental impact will be carefully managed.
Beyond protecting the environment of the South Gobi, Oyu Tolgoi seeks to improve the lives of local people in a number of ways. The nearby town of Khanbogd has been provided with power, initially through generators and shortly through a power line connection from the mine site. Khanbogd has also benefitted from a number of social investments from Oyu Tolgoi including funding for new educational and healthcare facilities, road improvements and programmes to help improve social conditions.
Oyu Tolgoi's Cultural Heritage Programme is a new benchmark for companies in Mongolia who are aiming to safeguard important cultural, historical and social resources. It will seek to protect both man-made and natural heritage in the South Gobi.
Oyu Tolgoi has restored portions of the historically-significant Demchig Monastery. Other initiatives included over 100 local elders transcribing and recording their traditional songs, handed down for generations but at risk of being lost.
While the initial production is being processed from ore taken from Oyu Tolgoi's open pit, the greatest value of Oyu Tolgoi lies deep underground. The deep parts of the deposits are expected to be mined using block caving techniques in the underground phase of the project.
Oyu Tolgoi is hugely important and significant for the country's future. As well as being a world-class copper business that is safe and sustainable, it will also become a national icon, contributing to a brighter future for the country.