Rio Tinto cuts copper hopes in fresh Mongolia mine setback
Australian miner Rio Tinto has been forced to slash forecasts for the amount of copper it hopes to extract in its expansion of the giant Oyu Tolgoi mine in Mongolia after redrawing the design plans due to rock instability risks.
Rio Tinto's updated feasibility study, to be lodged with Mongolia's government, details a 17 per cent reduction in recoverable copper reserves from the mine's main deposit due to the new plans leaving more ore in place to serve as pillars for geotechnical stability.
The plan to enlarge the Oyu Tolgoi mine has been beset by a series of delays and cost blowouts since construction began in 2019.Credit:Bloomberg
The feasibility study also confirmed earlier forecasts that the expansion would cost between $US1.3 billion and $US1.8 billion ($1.9 billion and $2.6 billion) more than its initial estimate of $US5.3 billion and would now take 21-29 months longer for first production to begin, meaning mining activity is not likely to commence until October 2022 at the earlier.
The long-held plan by Australia's second-largest miner to enlarge the Oyu Tolgoi mine, its flagship growth project, has been beset by a series of delays and cost blowouts since construction began in 2019. But Arnaud Soirat, Rio's chief executive of copper and diamonds, said the mine redesign was a positive step.
"This amended mine design is another positive step in the development of the underground mine which will unlock the most valuable part of Oyu Tolgoi," he said.
"We remain focused on delivering the underground project safely and within the guidance ranges we have announced on both cost and schedule."
Rio said it anticipated that part of ore in the "pillars" would be able to be recovered in the future.
"It is expected that part of the material contained in these pillars will be recoverable at a later stage following additional studies which are currently underway," it said in a statement.
Oyu Tolgoi is 34 per cent owned by the Mongolian government and 66 per cent owned by Turquoise Hill Resources, of which Rio Tinto has a 51 per cent stake. Since 2010, Rio has been the manager of the Oyu Tolgoi project.
The mine in Mongolia's Gobi Desert is one of the world's largest known copper and gold deposits and is the country's biggest source of foreign investment, providing thousands of local jobs.