Around the Oyu Tolgoi underground mining project

Rio Tinto, Oyu Tolgoi’s management company, said on Wednesday (December 16, 2020) that Mongolia’s Oyu Tolgoi copper and underground gold mine is expected to begin production in October 2022, with a project cost of $ 6.75 billion.

Five years ago, $ 5.3 billion was spent on developing the Oyu Tolgoi underground mine, with the first production expected to begin in early 2021. However, after estimating the project’s risks last year, it was estimated that an additional $ 1.9 billion would be needed. The start of production was expected to be delayed from October 2022 to July 2023.

Restrictions on international flights to prevent the Covid-19 have affected the underground mine’s development, but work has continued unabated. The construction work on the front and rear vents of the Oyu Tolgoi underground mine is still stalled.

According to Oyu Tolgoi’s third-quarter report, preparations for the penetration, such as installing a ventilated rear mouth rope, are well underway, and future work will require international experts in underground mine access. Some of these contractors are scheduled to be withdrawn by the end of 2020, but the situation is likely to change due to recent developments.

The underground mine’s cross-section has now reached 45,858 meters, and the construction work required for the first blast is about 90 percent complete.

All surface infrastructure work required for sustainable production has been completed. The infrastructure that can be completed after the completion of critical material transportation infrastructure is not relevant to sustainable production, but it is essential to increase production.

According to the detailed estimates, the mine is expected to reach a stable level between October 2022 and June 2023. Construction costs are estimated at $ 6.6-7.1 billion, including Covid-19 expenses and scheduling.

The company’s shareholders announced on July 3 that they had prepared an amendment to the Feasibility Study (Feasibility Study 20) by Mongolian laws and regulations. The Reserve Amendment (HT19) report was submitted in February 2020, but the deadline for reviewing and registering reserves was 150 days after that date. According to the relevant regulations, the HT19 report must be discussed before the Feasibility Study 20 can be formally accepted and discussed.

According to the 2009 Investment Agreement and Mongolian laws and regulations, HT19 and Feasibility, Study 20 must be discussed and received within 150 days of submission. Feasibility study20, which includes an estimate of the underground mining project’s total cost, needs to be approved before a decision can be made to start excavation at the cutting level in 2021.

Oyu Tolgoi will continue to work with Mongolia’s Government on electricity under the Amendments to the Energy Source Regulation Agreement signed in June 2020.

It is necessary to extend energy imports from China’s Inner Mongolia before March 1, 2021, to ensure the required energy sources before deciding on cutting.

There is also a need to conclude an “Energy Purchase Agreement” to supply power to Oyu Tolgoi from the Tavan Tolgoi power plant financed by the Government of Mongolia before March 1, 2021.

On September 3, 2020, Oyu Tolgoi entered into an “Energy Purchase Agreement” with the Southern Electricity Distribution Network to supply power to the Oyu Tolgoi mine complex by an agreement to receive a certain amount of energy from the national power grid.

JACQUES SEBASTIAN JACK TO RESIGN THIS MONTH AND JACOB STAUSHOLM WILL INSTEAD

Rio Tinto paid a total of $ 7.6 billion in taxes and royalties last year, including $ 4.8 billion in income taxes. In 2019, a total of $ 305 million was paid in taxes in Mongolia.

To date, there is no new information on Turquoise Hill’s arbitration proceedings in November to review the company’s relationship with the Mongolian government and project financing.

Rio Tinto announced on Thursday (December 17, 2020) the appointment of Jacob Stauscholm as CEO. Former CEO Jean-Sebastien Jacques will step down on December 31, 2020, while the new CEO will take office on January 1, 2021.

Simon Thompson, chairman of the company, said: “Extensive policy and trade experience, strengths, leadership skills and attitudes are the hallmarks of Stausholm’s appointment as CEO.”

Jacob Stauscholm was appointed Chief Financial Officer of the company in 2018. In the past, the group has been a leader in business operations, managing assets, ensuring financial discipline and stability, and distributing dividends to investors.

Jean-Sebastien Jacques, Rio Tinto’s chief executive, has resigned over the destruction of the country’s 46,000-year-old stone caves during an explosion at an iron ore field in Pilbara, Australia.

A former CEO of the company’s copper and coal group, he has visited Mongolia several times connected with the Oyu Tolgoi project and was instrumental in securing $ 4.4 billion in financing for the second phase of the project.