Oyu Tolgoi crosses US$9 billion in-country spend www.ot.mn
Ulaanbaatar, Mongolia - Oyu Tolgoi released the latest edition of its scorecard on April 23rd, providing its performance for Q1’2019.
We wanted to highlight our expanding cooperation with – and commitment to – our community with development of local infrastructure. Khanbogd-Oyu Tolgoi 35.1km paved road was commissioned and launched in February this year. Oyu Tolgoi LLC fully funded the MNT46 billion project. Prior to disturbing the land for construction, 10 thousand rare plants were relocated to Oyu Tolgoi’s tree nursery in Khanbogd to protect environmental features of the affected area.
In March, as a best industry practice not only in the country but also internationally, Office of the Compliance Advisor Ombudsman (CAO) of the World Bank Group formally closed its dispute resolution process related to the complaints by the herders residing and raising livestock near the Oyu Tolgoi mine site. Parties successfully reached agreement, news celebrated and shared across local and mining community. Experience of the process was shared with Khanbogd soum Tripartite Council and CAO on March 25th.
Safety, Environment, training and human resources
Oyu Tolgoi workforce has demonstrated a strong safety performance and Oyu Tolgoi is continuing to be one of the leading safety performers across Rio Tinto as a result. The company has achieved an All Injury Frequency Rate (AIFR) of 0.09 per 200,000 hours worked.
Oyu Tolgoi also maintained its world-class environmental performance, with only 0.46 cubic metres of water per tonne of ore processed – three times less than similar operations worldwide - and achieving an average water recycling rate of 86 per cent over the period.
As of the first quarter of 2019, 93 per cent of Oyu Tolgoi workforce were Mongolian, 20.8 per cent of which were from the Umnugovi province. 57.3 per cent of the total workforce were underground workforce.
Oyu Tolgoi provided 171,192 people hours of training to nearly 8,915 of its employees and contractors in the Q1’19.
Tax, procurement and local partnership
Oyu Tolgoi paid US$2.4 billion in taxes, fees and other payments to the Government of Mongolia between 2010 and 2019, including, US$57.7 million in taxes and US$28 million in VAT* in the first quarter of 2019.
Celebrating our collaboration with local community, OT organised an Open Day event in Dalanzadgad along with Umnugobi Governor’s Office and Labour and Social Welfare Services Department and “Career Exposure Day” in Dalanzadgad. Moreover, OT continued to invest in sustainable and long term projects issuing US$5 million to support local development.
Oyu Tolgoi collaborated with 531 suppliers in Q1’19, 372 of which are national businesses that account for 78 per cent of total operations procurement spent. Between 2010 and 2019, Oyu Tolgoi spent US$2.8 billion on national procurement, US$443 million of which was spent on procurement from Umnugobi suppliers.
The Oyu Tolgoi Performance Scorecard for Q1’2019 is available here.
As expected, mill throughput in Q1’19 decreased 3.2 per cent over Q1’18 due to the concentrator processing harder Phase 4 ore and planned plant maintenance. This was offset by higher copper and gold mill head grades as mining advanced into the high-grade zone of Phase 4A, compared to Q1’18 when lower grade Phase 6 was processed. Recovery rates also benefited from the processing of higher-grade ore, with copper and gold recovery rates up 5.4 per cent and 27.4 per cent on Q1’18 respectively. Copper production increased 18.2 per cent over Q1’18 due to increased head grade and recovery rate. Gold production increased 187.6 per cent over Q1’18 primarily due to a 135.2 per cent increase in head grade resulting from the increased contribution of Phase 4A. Average gold mill head grades are expected to decline significantly over the remainder of 2019, particularly in the second half as softer, lower grade Phase 6 ore, and some material from mine stockpiles are processed. Average copper mill head grades are also expected to be lower over the remainder of the year.
Turquoise Hill expects Oyu Tolgoi to produce 125,000 to 155,000 tonnes of copper and 180,000 to 220,000 ounces of gold in concentrates for 2019.
Underground development progress
Work continues on critical Shaft 2 equipping activities, central heating plant, mine infrastructure, underground materials handling systems and on priority underground development. Pre-sinking works for Shaft 3 and Shaft 4 have also commenced.
Rio Tinto, as project manager, has advised that the fit-out and commissioning work on Shaft 2 (the main production and services shaft) is now expected to be completed by the end of October 2019. As previously announced, more detailed geotechnical information and different ground conditions have required a review of the mine design and the development schedule. The impact of these changes, including the further delay to Shaft 2, will be included in the definitive estimate review, which is expected to be completed towards the end of the year.