Oyu Tolgoi released its latest performance scorecard, highlighting key performance metrics for the third quarter of 2021, providing an update on the underground development and its ongoing COVID-19 control measures.

We continue to prioritise the health and safety of our employees and the local community, transparently cooperating with the Government of Mongolia, Emergency Commissions of Umnugovi province, Khanbogd soum and other relevant stakeholders implementing the necessary preventive measurements. We recently donated MNT570 million to the Ministry of Health to purchase 1,000 oxygen concentrators essential for emergency care during the COVID-19 pandemic.

Chief executive officer of Oyu Tolgoi, Armando Torres, said, “I am proud of our miners building a world-class mining operation in Mongolia’s South Gobi and what we have achieved during this unprecedented time. Recently, we have reached the important milestones of celebrating the 10-year anniversary of the open pit mine, completing the breakthrough of the conveyor to decline - the largest tunnel on site that allows direct access from surface to the underground. Our teams have delivered these outstanding milestones safely and successfully, a true testament to the commitment and skills of our talented Mongolian workforce. The next major task that we all have in front of us is the commencement of the undercut. We will commence caving operations as soon as the required criteria are achieved so that we will be able to deliver the full benefits of Oyu Tolgoi to our stakeholders, including the people of Mongolia.”

In the third quarter, stringent Chinese border restrictions continued due to increased cases of COVID-19 in Mongolia. Force majeure declared on shipments on 30 March remains in place, as we continue to work closely with the Mongolian and Chinese authorities and our customers to manage the risk of supply chain disruptions. Cross-border concentrate shipments into China have resumed with some measures in place to transport greater volumes in a safe and efficient manner, however uncertainty continues to exist with the level of the COVID-19 cases in Mongolia.

Operational Update

Maintained strong focus on safety and achieved an All Injury Frequency Rate (AIFR) of 0.13 per 200,000 people/hours worked.

Maintained excellent water-conservation practices, achieving the highest water use efficiency rates per tonne of ore production, using 0.4 cubic meters of raw water per tonne of ore processed - three times less than average similar operations worldwide. Achieved an average water-recycling rate of 87.15 per cent, compared to a target of 80 per cent.

96 per cent of Oyu Tolgoi’s workforce are Mongolian citizens.

Paid US$590 million in the form of taxes, fees and other payments to the Government of Mongolia the first nine months of 2021. Since 2010, Oyu Tolgoi has paid US$3.5 billion in taxes, fees and other payments, including VAT to Mongolian suppliers.

Partnered with 739 suppliers at the end of the third quarter of 2021, including 469 national businesses, accounting for 75 per cent of the total operations procurement spend.

Q3 2021 Performance Scorecard can be viewed here.

Production Update

Mined copper production from the open pit was 16 per cent higher than the same quarter of 2020 as the operations begin to catch up on the significant impacts of the first half, with improved performance and increased mill feed following geotechnical issues in the first half, partly offset by lower manning levels due to COVID-19.

Underground Development Update

Technical progress

Project progress continues to be significantly affected by COVID-19 constraints. Site accommodation and manning levels improved in the quarter but were between 25 per cent and 50 per cent of planned requirements in order to comply with COVID-19 restrictions. The impact on project costs of the additional restrictions related to COVID-19 at the end of September 2021 is estimated to be $140 million. Despite these restrictions, construction on the Material Handling System 1 has been progressing well and is largely complete with commissioning anticipated in January 2022.

A significant milestone was achieved in August with the ‘breakthrough’ of the conveyor decline. The service decline breakthrough is anticipated in October 2021. The underground development work including truck chute construction is progressing.

Shaft 4 sinking readiness activities have been completed. Shaft 3 readiness works have commenced with the required works underway to ensure construction can resume as soon as personnel can be remobilised and additional investment is approved by the Oyu Tolgoi Board. The delays in shaft sinking due to COVID-19 restrictions and inability to mobilise subject matter experts to site are likely to result in delays of approximately nine months to commissioning of shafts 3 and 4 based on the known impacts to date.

Contractual commitments to future works such as Material Handling System 2 and concentrator upgrades continue to be delayed pending approval by the Oyu Tolgoi Board of the increased investment required to complete the project.

Other Updates

All key stakeholders have stated that they remain committed to moving the project forward and reaching a long-term solution to the issues under discussion. In September, registration of the updated Resources and Reserves was recommended by the Mongolian Minerals Council and formal registration is expected in the coming weeks. The updated Feasibility Study (OTFS20) is still required to be accepted by the relevant governmental agencies of Mongolia before the undercut can commence.

As a result of COVID-19 impacts and outstanding non-technical undercut criteria, first sustainable production will be no earlier than January 2023 (previously October 2022), subject to the timing of commencement of the undercut. The full impact on the cost of the integrated project is subject to further analysis once we have clarity on the timeline around the completion of the undercut criteria and ongoing COVID-19 restrictions.

Other milestones that need to be met in order to ensure that the project can commence caving operations (undercut) include: approval of the additional investment required to complete the project and the funds required to finance this investment must be approved by the Oyu Tolgoi Board and extension of the current power supply arrangements until an agreed long-term stable and reliable power solution can be fully implemented.

Source: www.ot.mn