Results from a baseline socio-economic study helped us to develop and implement projects that focus on protecting the environment, community health, education, and local livelihoods. Our education and training initiatives includes the construction of colleges as well as scholarships. We have programmes that focus on each of the priority areas, including, for example, a community health programme and a herders' livelihood support programme.
Water is precious in the arid South Gobi region, which receives on average 97 mm of rainfall each year. The way we manage water resources is of great importance to the local Khanbogd herders, whose livelihoods depend on it. Local herders rely on shallow sources of groundwater from springs and wells for their animals.
Oyu Tolgoi is one of the most water-efficient copper mines in the world. Through innovative recycling and conservation practices, our operation uses 0.42 cubic metres of water per tonne of ore processed – significantly below the global average of 1.2 cubic metres of water per tonne for comparable copper businesses. In addition, more than 85% of water used at Oyu Tolgoi is recycled. We also have a policy of zero direct discharge, meaning that no wastewater will be directly released into the environment - all of the water at Oyu Tolgoi is used and reused until it is lost through evaporation.
In addition to our recycling and water conservation practices, we also work with the community to protect the water in boreholes, existing wells and other community water supplies. One way we do this is through a community water-monitoring programme: we monitor the levels and quality of water in herders' hand-dug wells, and local herders make their own water records for comparison. The data has shown there has been no negative impact on the wells from the mine's operations.
Taxes & Royalties
2010-Q3 2019 figures
The Cooperation Agreement sets out how Oyu Tolgoi and its partner communities – Umnugovi aimag, and Khanbogd, Manlai, Bayan-Ovoo and Dalanzadgad soums – will work together towards sustainable development in areas such as water, environment, pastureland management, cultural heritage, tourism, local business development and procurement, and was established in Dalanzadgad in 2015.
The main goal of the agreement is to provide a strong governance structure for Oyu Tolgoi and local communities for effective cooperation and to address mutual obligations. Under the agreement, Oyu Tolgoi will make a contribution of US$5 million every year to a Development Support Fund (DSF) – administered jointly between Oyu Tolgoi and the Community – for community programmes and projects in the Umnugovi aimag.
The Cooperation Agreement is a requirement under the Oyu Tolgoi Investment Agreement (OTIA) and the Mongolian Minerals Law.
At Oyu Tolgoi, we are committed to protecting and preserving the cultural heritage of Mongolia, in particular in the region of the South Gobi. We have established a Cultural Heritage Management System, which outlines processes to ensure the management and protection of tangible and intangible cultural heritage.
Cultural heritage includes tangible heritage in the form of archaeological and paleontological finds, historic buildings, and natural landmarks and intangible heritage in the form of the traditions of the local people, nomadic herding, technology, and folk legends. For example, regarding tangible heritage, we protect and preserve dinosaur tracks in Shar Tsav, and preserve Khanbogd soum’s historical and cultural sites. Examples of intangible heritage include our support of the annual camel festival, traditional ovoo ceremonies and training local people on new methodologies for documenting local oral history.
Between 2010 and the third quarter of 2019, Oyu Tolgoi spent $9.9 billion in-country in the form of salaries, payments to Mongolian suppliers, taxes, donations and other payments to the Government of Mongolia.
Since 2011, Oyu Tolgoi has developed and implemented policies to create a supply chain in Mongolia with a particular focus on the South Gobi region. This includes a ‘Made in Mongolia’ procurement strategy to source products manufactured locally. For example, we awarded a contract to Mongolian shoe factory Khos-Az to supply safety boots to Oyu Tolgoi.
Today approximately 90% of our operational spend is with businesses that operate in Mongolia; our South Gobi spend has grown from $0.5 million in 2010 to over $523 million in 2019. The value of the spend with national suppliers that are majority owned by Mongolian citizens, now accounts for over 70% of overall operational spend, which brings the accumulative total spend with national suppliers is $3.0 billion since 2010.