Ulaanbaatar, Mongolia,7 May 2020
Oyu Tolgoi released its 2019 ‘Year in Review’ report today. The report covers key areas of the business which are safety, people, partnership, cash and growth.
Once again, the company delivered historic milestones across the business against a backdrop of challenges faced throughout 2019. Oyu Tolgoi achieved sustainable and efficient surface operations and maintained outstanding safety performance along with the shipment of its five millionth tonne of copper concentrate. Total in-country spend, since 2010, reached US$10 billion.It was also the 10th anniversary of the Oyu Tolgoi Investment Agreement which was signed in October 2009.
The company registered a significant number of national procurement contracts under the “Made in Mongolia” strategy, spending US$431 million on 564 national businesses in 2019, further building on its sustainable supply chain and supporting Mongolian economic diversity at both the national and community level.
Oyu Tolgoi LLC Chairman of the Board of Directors, Ambassador Batsukh Galsan, said, “2019 was another important year in progressing the implementation of the company’s 10-year development strategy. We continued our contribution to the prosperity of the country by supporting its responsible mining industry, while developing the skills and capabilities of our employees, advancing underground development, and significantly contributing to the development of the local communities”.
Oyu Tolgoi LLC CEO, Armando Torres, said, “Our Operations in 2019 reached a new safety record, not only for the company but also across Rio Tinto Group. Sharing our world-class safety culture and practices with Mongolia’s institutions, and our communities, has been one of our corporate social responsibility priorities.
“Despite entering low grade ore at the open pit mine, and challenging global market circumstances, both copper and gold production exceeded the production guidance in 2019 thanks to the hard work of our professional, highly skilled, national workforce. The open pit mine and concentrator improved efficiency and the company maintained its position as an industry leader.
“In 2019, the construction of crucial infrastructure of the underground mine - “Chandmani” Underground Operation & Service Centre and Production Shaft 2 - was completed. These are important steps to the development of the underground mine in making Oyu Tolgoi one of the world’s largest copper mines”.
Highlights of the 2019
Safety
In 2019, the All Injury Frequency Rate (AIFR) across Oyu Tolgoi was maintained at 0.16 per 200,000 people hours worked, which is the same record-breaking performance as in 2018. In particular, Surface Operations finished 2019 with AIFR 0.09 per 200,000 hours worked. This was the best performance of the company, and across Rio Tinto Group, which has 60 operations in 36 countries.
Production & Financial Performance
Oyu Tolgoi delivered a strong performance with sales revenue of US$1,166 million, which was slightly lower than 2018 figure of US$1,180 million.
The in-country procurement spend increased year-on-year and reached 87 per cent of the total operational procurement in 2019. Between 2010 and 2019, the company spent US$3.1 billion on national procurement.
Underground mine development
Oyu Tolgoi Underground development continued to further advance its performance by breaking a number of records and completing the construction of critical infrastructure. Shaft 2, the main production shaft and primary access point for people and materials, was completed. The 1,300-metre construction, which is equivalent to 15 Shangri-La Ulaanbaatar towers in total height – 14 below ground and one above, includes the largest friction rope hoist system in the world. Another key infrastructure delivered is the ‘Chandmani’ Operations and Service Centre, the gateway and control center for the Underground mine.
Lateral development productivity consistently exceeded targets with 40 per cent month-on-month improvement especially during the second half of the year, reaching 14,606 equivalent metres at the end of the year (32,925 equivalent metres to date).
Detailed work on the Underground mine design continued and is expected to be completed in the first half of 2020, with the Definitive Estimate provided in the second half of 2020, as previously disclosed to the market.
Community partnership and investment in human development
The socio-economic and environmental baseline study of Umnugovi showed major changes in the province over the last 10 years, including three-fold GDP growth, local manufacturing increasing 36 times, and the lowest level of poverty at the national level proving long-term, constructive and robust partnerships with Umnugovi aimag.
Through the Gobi Oyu Development Support Fund, in partnership with the local communities, the company funded the first meat factory in Umnugovi, with a certified laboratory, a new 10-bed capacity hospital in Mandal-Ovoo soum, a new 100 children kindergarten in Manlai soum, and a boiler house in Bayan-Ovoo soum.
The national road safety campaigns “No Need to Rush” and “Play by the Rules”, organized in partnership with the National Police Agency (NPA), resulted in year-on-year reduction in the number of traffic accidents by 63.9 per cent across the country and 16.3 per cent in Ulaanbaatar as per the data provided by the NPA.
Oyu Tolgoi’s vision commits Oyu Tolgoi to invest in human development. In 2019, Oyu Tolgoi signed a Memorandum of Understanding with the Mongolian National University of Science and Technology to collaborate in upgrading geotechnical and underground mining engineer training. A collaboration agreement between Oyu Tolgoi, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), GCR Mongolia and SMS was also signed to train 350 Technical and Vocational Education and Training (TVET) college graduates in technical skills equivalent to Skillset I of Australian Quality Training Framework standards. Oyu Tolgoi has invested US$67.7 million in TVET support to-date, and over 2,600 students have participated in Oyu Tolgoi educational programmes.
Oyu Tolgoi maintained its strong environmental performance in 2019. The company’s water usage is less than 0.4 cubic meter per tonne ore, and its average water recycling rate is 87 per cent. These are both world class performance indicators.
The company’s “Made in Mongolia” strategy was expanded to a range of product lines including local food product supply, steel products, and variety of electric products manufactured in Mongolia. In 2019, US$9 million per annum “Made in Mongolia” contracts were signed creating over 200 local jobs, further strengthening Mongolia’s in-country supply chain.
The full Oyu Tolgoi 2019 Year in Review is available here.
https://www.ot.mn/media/ot/content/reports/2019_Year_in_review/YiR_2019_EN.pdf
About Oyu Tolgoi LLC (www.ot.mn)
Oyu Tolgoi LLC, Mongolia's largest copper and gold mining company, is a strategic partnership between the Government of Mongolia, Turquoise Hill Resources and Rio Tinto. Located in the South Gobi, Oyu Tolgoi commenced shipment of product to customers in July 2013. Oyu Tolgoi is managed by Rio Tinto, which is investing global expertise and cutting-edge technology to help develop Mongolia’s mining industry and ensure Oyu Tolgoi is one of the world’s most advanced mines. For Oyu Tolgoi, nothing matters more than safety. The business operates under the principle that if a job cannot be done safely, it will not be done at all.
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