Contractor for Oyu Tolgoi underground decline project selected

JOHANNESBURG (miningweekly.com) – Australia-headquartered Cimic Group’s mining services contractor Thiess has secured the first underground decline project at the Rio Tinto-operated Oyu Tolgoi copper and gold project, in Mongolia, in a joint venture with local contractor Khishig Arvin.

The Thiess-led contract will include the construction of a box cut and the development of twin declines, incorporating a service and a conveyor tunnel. The project is starting this month and is scheduled for completion in 2020.

“This project is key to unlocking Oyu Tolgoi’s potential and is a great addition to Thiess’s diverse mining portfolio,” Cimic executive chairperson and CEO Marcelino Fernandez commented on Wednesday.

Thiess MD Michael Wright said the partnership with Khishing Arvin, which would hold 20% in the JV, would assist the contractor to build local capability, with about 90% of the workforce on the project expected to be Mongolian.

The underground development was delayed in 2013 owing to disputes with the Mongolia government, but was restarted this year, with Rio Tinto and its project partners approving the underground development in May.

In June, global engineering group Jacobs Engineering was awarded the engineering, procurement and construction management contract for the underground development, setting a project timeframe of five to seven years.

Considering that about 80% of the mine’s value resides underground, with copper grades about three-and-a-half times higher than the openpit, the underground mine is key to Oyu Tolgoi and Rio Tinto’s copper growth ambitions.

The openpit is already in production and produced 51 700 t of copper in concentrate in the second quarter, ended June, and 70 000 oz of gold in concentrate in the same period. Both copper and gold production were lower than in the comparative period of 2015.

Oyu Tolgoi is expected to produce between 175 000 t and 195 000 t of copper in concentrate and between 255 000 oz and 285 000 oz of gold in concentrate in 2016.