EPCM contractor selected for $5.3bn Oyu Tolgoi underground mine

JOHANNESBURG (miningweekly.com) – Global engineering group Jacobs Engineering has been awarded the engineering, procurement and construction management (EPCM) contract for the $5.3-billion Oyu Tolgoi underground mine development, in Mongolia, paving the way for construction to get under way.

Copper and gold mining company Oyu Tolgoi – a partnership between the government of Mongolia, Turquoise Hill and Rio Tinto – reported on Wednesday that Jacobs would be responsible for the materials handling systems of the underground mine, as well as associated surface and underground infrastructure.

The underground project would be delivered over a five- to seven-year period.

“Following the final notice to proceed for the underground development last month, this contract is a critical piece as we ramp up towards full construction,” Oyu Tolgoi chief development officer Marco Pires said.

The underground development, which was delayed in 2013 owing to disputes with the Mongolia government, was key to the Oyu Tolgoi mine and Rio Tinto’s copper growth ambitions. About 80% of the mine’s value resided underground, with copper grades about three-and-a-half times higher than the openpit, which was already in production.

Underground production from Oyu Tolgoi was expected to start in 2021, which the project developers believed fitted in well with an anticipated shortfall in supply. Rio Tinto subsidiary Turquoise Hill, which owned 66% of Oyu Tolgoi, previously stated that a copper supply deficit would emerge in about 2019, owing to declines in copper grades globally.

The underground mine would produce 95 000 t/d at full production, which was expected to be achieved between 2026 and 2028.

Jacobs president and CEO Steve Demetriou, who described Oyu Tolgoi as a landmark project for the global mining landscape, said his company was excited to be part of one of the world’s largest mining projects.

Jacobs has established a Mongolian business unit and would work with a local workforce and partners to deliver the contract.

Oyu Tolgoi started shipments from an openpit mine in July 2013.