The cost of the of the Oyu Tolgoi copper and gold mine project in Mongolia has been increased to $7.2bn
Rio Tinto’s Oyu Tolgoi facility, due to be one of the largest copper mines in the world once complete, has been hit by a $1.9bn rise in costs and a delay that could last up to 30 months, the Anglo-Australian miner announced today.
Preliminary estimates for development capital spend for the project are now at $7.2bn, while the firm also predicts first sustainable production won’t be achieved until between May 2022 and June 2023.
It attributes the setback to stability risks identified with the approved mine design, which have consequently led to an ongoing deliberation process to judge which new design method should be used from here on out.
“We have made significant progress on a number of key elements in the construction of the underground project during 2019,” said group executive Stephen McIntosh.
“However, the ground conditions are more challenging than expected and we are having to review our mine plan and consider a number of options.
“Delays are not unusual for such a large and complex project but we are very focused as a team on finding the right pathway to deliver this high value project.”
Oyu Tolgoi set for unprecedented production
Upon completion of the expansion, the mine will produce more than 500,000t of copper a year, compared to be current production of 175,000t-200,000t.
Rio Tinto copper & diamonds CEO Arnaud Soirat said: “Oyu Tolgoi is a world-class ore body and a world-class business that is already producing copper, employing around 16,000 people and benefitting Mongolia through taxes, royalties and significant procurement.
“We are working with TRQ and the Government of Mongolia to complete the underground, which will unlock the most valuable part of the mine for the benefit of all stakeholders.”
In a statement detailing the price hike and project delay, Rio Tinto said: “The company will continue to focus on minimising the impact to project schedule and cost, as it works through the detailed analysis and testing of each mine design option.
“Although further work is necessary to reach definitive conclusions, Rio Tinto is reviewing the carrying value of its investment in the project and will announce if any changes are required, in the half year results on 1 August 2019.”