Oyu Tolgoi mine

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Oyu Tolgoi
Oyu Tolgoi 23.JPG
Number 1 Shaft at Oyu Tolgoi
Location
Oyu Tolgoi is located in Mongolia
Oyu Tolgoi
Oyu Tolgoi
Location in Mongolia
Location Khanbogd
Aimag Ömnögovi
Country Mongolia
Coordinates 43°00′30″N 106°50′35″E / 43.00833°N 106.84306°E / 43.00833; 106.84306Coordinates: 43°00′30″N 106°50′35″E / 43.00833°N 106.84306°E / 43.00833; 106.84306
Owner
Company Ivanhoe Mines Mongolia Inc
Website www.ot.mn

The Oyu Tolgoi mine (Mongolian: Оюу Толгой, also Oyuu Tolgoi, Turquoise Hill) is a combined open pit and underground mining project in Khanbogd sum within the south Gobi Desert, approximately 235 kilometres (146 mi) east of the Ömnögovi Province capital Dalanzadgad. The site was discovered in 2001 and is being developed as a joint venture between Turquoise Hill Resources (a majority owned subsidiary of Rio Tinto) with 66% ownership and the Government of Mongolia with 34%. The mine began construction as of 2010 and shipped its first batch of copper, all 5,800 tons of it, on July 9, 2013.[1]

The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia's history and is expected upon completion to account for more than 30% of the country's gross domestic product. Copper production is expected to reach 450,000 tonnes (500,000 short tons) annually. Financing for the project has come in part from the Rio Tinto Group and an investment agreement between Ivanhoe Mines and the government of Mongolia.

History[edit]

Canadian-based Ivanhoe Mines discovered the gold-copper ore deposit in 2001 in the Gobi Desert of Mongolia. It is in an area known as Oyu Tolgoi (Mongolian for Turquoise Hill),[2] where in the time of Genghis Khan outcropping rocks were smelted for copper.[3] By 2003 there were 18 exploration drill rigs on the property employing approximately 200 people, and Oyu Tolgoi was the "biggest mining exploration project in the world."[2] In January 2013 Oyu Tolgoi started producing concentrate from the mine. [4]

Description[edit]

The Oyu Tolgoi mine is in the South Gobi Desert of Mongolia, 80 kilometres (50 mi) north of Mongolia's border with the People's Republic of China, where the mined copper is expected to be shipped.[3] Oyu Tolgoi deposits contains an estimated 2,700,000 tonnes of copper and 1.7 million ounces (48,195,000 grams) of gold.[5] Production began in 2013 and is scheduled to reach full capacity in 2021. Over the anticipated lifespan of the mine (>50 years), Oyu Tolgoi is scheduled to produce 430,000 tonnes (470,000 short tons) of copper per year, an amount equal to 3% of global production. Oyu Tolgoi is also expected to produce 425,000 ounces of gold annually, with "by-product silver and molybdenum".[5][6][7] Rio Tinto intends to employ 3,000-4,000 people from Mongolia. [8]

Mining and milling[edit]

Oyu Tolgoi will use both underground and open pit mining techniques. Initially the mine will process 70,000 tonnes of rock per day, ramping up to 85,000 tonnes from both the open pit and the underground mine (underground mining is to be done by block caving). The yield from the first phase of mining will be ground through one semi-autogenous grinding mill (SAG mill). Expansion to new underground areas will result in an additional increase of up to 140,000 tonnes per day with a possible increase to 170,000 tonnes per day.[9]

Financing[edit]

The original discovery site of the Oyu Tolgoi deposit

As of 2010, the estimated cost of bringing the Oyu Tolgoi mine into production was US$4.6 billion,[10] making it (financially) the largest project in Mongolian history;[11] however, by 2013 costs had ballooned to $10 billion.[12] The mine will account for more than 30% of Mongolia's GDP.[9] In early 2010 global mining company Rio Tinto owned 22.4% of Oyu Tolgoi owner Ivanhoe Mines (now Turquoise Hill Resources), and gave both technical assistance and financial support to the project. At the time Rio Tinto had the option of increasing their stake to 46.6%. On 31 March 2010 the Government of Mongolia approved an investment agreement where they would purchase 34% of the project.[13] In October 2010, Ivanhoe announced a new US$1 billion share offering in order to raise funds to develop this mine.[14] Rio Tinto increased its ownership of Ivanhoe in December 2010, also assuming direct management of the design and construction of the project, however without fulfilling another aim, to achieve direct ownership of the mine.[15][16]

Disagreement between the Mongolian government and Rio Tinto came to a head in 2013, with the government urging Rio Tinto to increase revenue and the company backtracking on a $5 billion investment.[17] In July 2013, the shares of Turquoise Hill Resources (Rio Tinto's unit that controls 66% of the mine) dropped 20% after a dispute between Tserenbat Sedvanchig, the executive director of Erdenes Oyu Tolgoi (the state-owned company that controls the other 34%), and Rio Tinto. Sedvanchig was fired in August and replaced by Davaadorj Ganbold, a former deputy minister and member of parliament.[18] In the meantime, Rio Tinto announced it would cut 1700 employees from the mining operation.[17]

Environment[edit]

There has been some speculation of the effects of Oyu Tolgoi on the livelihood of traditional Mongolian herders in the South Gobi region. It is feared that mining will cause a shortage of water and an increase of dust which will lead to "desertification and the decreasing quality of vegetation" in the region.[19]

Other sources point to a wider concern that pollution will affect the long term health of millions in the capital city Ulaanbaatar[20] as the country grows at an increasing rate.

References[edit]

  1. ^ Oyu, Tolgoi. "Oyu Tolgoi begins concentrate shipments". Oyu Tolgoi. Retrieved October 15, 2013. 
  2. ^ a b Grainger, David (22 December 2003). "The Great Mongolian Gold Rush The land of Genghis Khan has the biggest mining find in a very long time. A visit to the core of a frenzy in the middle of nowhere.". CNN Money (Fortune Magazine). Retrieved 19 January 2010. 
  3. ^ a b Brooke, James (15 October 2004). "Mining brings the Gobi Desert to life". The New York Times. Retrieved 19 January 2010. 
  4. ^ Lazenby, Henry (1 February 2013). "Oyu Tolgoi produces first concentrate". Mining Weekly. Retrieved 1 February 2013. 
  5. ^ a b Tinto, Rio. "Oyu Tolgoi". Rio Tinto. Retrieved October 15, 2013. 
  6. ^ MacDonald, Alex (1 April 2010). "Rio Tinto moves to development phase for $US4bn Oyu Tolgoi mine". The Wall Street Journal. Retrieved 2 April 2010. 
  7. ^ "Oyu Tolgoi 2010 Spending Budgeted at $758 Million". Engineering Mining Journal. Retrieved 2 April 2010. 
  8. ^ "Oyu Tolgoi". 2013. Retrieved 22 April 2013. 
  9. ^ a b "Oyu Tolgoi Gold and Copper Project, Mongolia". Mining-Technology. Retrieved 21 April 2010. 
  10. ^ Morrison, Rod (17 June 2010). "PFI - Oyu Tolgoi mine picks two". Reuters. Retrieved 22 June 2010. 
  11. ^ March, Stephanie (15 January 2010). "Concern over giant Mongolian min". Australian Broadcasting Corporation - Radio Australia. Retrieved 18 January 2010. 
  12. ^ Michael Kohn; William Mellor (April 9, 2013). "Mongolia Scolds Rio Tinto on Costs as Mine Riches Replace Yurts". Bloomberg Markets Magazine. Retrieved May 5, 2013. 
  13. ^ Rocha, Euan (31 March 2010). "UPDATE 2-Ivanhoe finalizes Oyu Tolgoi investment agreement". Reuters. Retrieved 1 April 2010. 
  14. ^ "Ivanhoe plans $1-billion share offer". Retrieved 18 October 2010. 
  15. ^ Tio's peace pact tames Canadian copper monster The Australian, published: 10 December 2010. Retrieved 10 December 2010
  16. ^ "Ivanhoe Mines 2010 Annual Information Form page 16/95". March 2011. 
  17. ^ a b Stewart, Robb M. (15 August 2013). "Rio Tinto to Cut 1,700 Jobs at Oyu Tolgoi Mine". The Wall Street Journal. Retrieved 19 August 2013. 
  18. ^ Kohn, Michael (19 August 2013). "Oyu Tolgoi LLC Executive Director Fired Following Rio Dispute". Bloomberg Businessweek. Retrieved 19 August 2013. 
  19. ^ "Mongolian mining hurting Mother Nature". Perth Now. 30 January 2012. Retrieved 1 February 2012. 
  20. ^ "Australian Mining Giants to Deprive Mongolians of Way of Life?". Love Perth. 31 January 2012. Retrieved 1 February 2012. 

External links[edit]