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OT will be kept beyond politics, says PM as underground development begins
2016-06-09
Oyu Tolgoi is a national project and will be kept beyond politics, Prime Minister Ch.Saikhanbileg told journalists on May 7 at a ceremony to mark the formal inauguration of development work on its underground mine. Among others who attended the event were Minister of Mining R.Jigjid, Head of Government Office S.Bayartsogt, the US, Canadian, Australian and United Kingdom Ambassadors to Mongolia, Rio Tinto Chief Executive-designate Jean-Sйbastien Jacques and Board members of Oyu Tolgoi LLC.
The day before, the Board had made a formal announcement of starting the development, which will cost $5.3 billion. Of this total, between $400 million and $500 million will be spent this year, according to D.Ganbold, Executive Director of Erdenes Oyu Tolgoi. This is in addition to the $600 million already spent since the project financing agreement was signed in December 2015. Over 980 companies have entered into supply agreements with Oyu Tolgoi and the number is expected to double.
The development will enable underground production from the Hugo Dummett North deposit (including the North Extension) where a 200-km-long tunnel will be built at a depth of 1.3 km. Five vertical and two slope shafts are to be built.
The first vertical shaft will be at 1.385 km, the second at 1.166 km, and the fifth at 208 m. Both slope shafts will be 7.5 km long. The first will have a conveyor system to transport ore, and the other will be used to transport equipment. The whole work of development will take 5-7 years. First production from the underground is expected in 2020. When the underground is fully ramped up in 2027, Oyu Tolgoi is expected to produce more than 500,000 tonnes of copper a year, compared with current annual production of 175,000-200,000 tonnes.
Prime Minister Saikhanbileg, who had earlier said the development of the underground would “deliver benefits for all Mongolians for generations to come... and is a clear demonstration that the country is back to business”, told journalists that the project would lead the country’s economic growth, and would be kept beyond politics. “We saw how the open pit development boosted our economy. Now the second chapter is starting. Oyu Tolgoi does not belong to any of the political parties. It is a project of all Mongolia,” he said, and added, “Mongolia’s foreign, business, economic, and investment policies shall not depend on the outcome of elections, or on political parties’ positions. These affect the national interest and will not be swayed by partisan political considerations. Thus the Oyu Tolgoi project will be led by its engineers, workers and board, but not politicians.”
On his part, Rio Tinto deputy chief executive Jean-Sйbastien Jacques said the underground development begins at a time when the copper price in the international market is “looking positive”. Putting into full capacity a world-class deposit of this size is “an enormous undertaking,” he said. “I’m sure Oyu Tolgoi will provide attractive returns for all shareholders and Mongolia more broadly for decades to come. This is a long-term partnership, built to create mutual benefit.”
He said “Rio Tinto’s partnership with Mongolia began over a decade ago and we are proud of what we have already achieved in building a world-class and safety-focused operation which has already been selling copper for nearly three years.“
The open-pit mine at Oyu Tolgoi was completed on schedule in less than 24 months and production started in 2013. Since then, more than 440,000 tonnes of copper have been sold. Oyu Tolgoi has a workforce of approximately 3000, of which 95 per cent is Mongolian, and to date has paid more than $1.4 billion in taxes, fees and other payments to the Government of Mongolia.
S.Bold-Erdene