Oyu Tolgoi Copper-Gold Mine Underground Expansion Approved

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Researched by Industrial Info Resources (Sugar Land, Texas)--All systems are go for construction of the underground portion of the Oyu Tolgoi mine in Mongolia, after partners including Rio Tinto plc (NYSE:RIO) (London, England) and the government of Mongolia approved the financing for the $5.3 billion underground phase of the project.

Pre-construction activity started months ago in anticipation of board approval in 2016. Full construction activities are scheduled to start in the next month or so.

Industrial Info first reported the Oyu Tolgoi project in 2002 when a feasibility study was initiated. It's been a roller coaster ride for the project, which has survived starts and stops due to market and government negotiations. Construction on the first phase, a $6.2 billion open pit mine and concentrator, began in 2011 at the peak of the mining boom, and the open pit mine opened in 2013. Construction began at that time on the underground phase, but worked ceased as market conditions deteriorated. A total of five vertical shafts totaling 6 kilometers (km) in depth will be developed as well as 200 km of lateral development. A significant portion of Shaft 1 and 2 were completed by the time construction was halted in 2013.

Initial operation of the underground portion of the mine is expected in 2020. Rio Tinto is banking on long-term fundamentals of copper improving by that time. By the time the underground portion is fully operational in 2027, the Oyu Tolgoi operation is projected to produce 500,000 tonnes of copper per year from both the underground and open pit operations.

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