The Oyu Tolgoi mine, also ( mn, Оюутолгой, ; "Turquoise Hill"), is a combined

open pit Open-pit mining, also known as open-cast or open-cut mining and in larger contexts mega-mining, is a surface mining technique of extracting rock or minerals from the earth from an open-air pit, sometimes known as a borrow. This form of minin ...

and

underground Underground most commonly refers to: * Subterranea (geography), the regions beneath the surface of the Earth Underground may also refer to: Places * The Underground (Boston), a music club in the Allston neighborhood of Boston * The Underground ...

mining project in Khanbogd sum within the south Gobi Desert, approximately east of the

Ömnögovi Province Ömnögovi ( mn, Өмнөговь ''Ömnögovǐ'', ''South Gobi'') is an aimag (province) of Mongolia, located in the south of the country, in the Gobi Desert. Ömnögovi is Mongolia's largest aimag. The capital is Dalanzadgad. The province is ...

capital

Dalanzadgad Dalanzadgad ( mn, Даланзадгад; ) is the capital of Ömnögovi Aimag in Mongolia. It is located south of the national capital Ulaanbaatar. The altitude of the city center is 1,470 meters (4,823 feet). As of 2011, its population is 19,3 ...

. The site was discovered in 2001 and is being developed as a

joint venture A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and economic risk, risks, and shared governance. Companies typically pursue joint ventures for one of four rea ...

between

Turquoise Hill Resources Turquoise Hill Resources was a Canadian mineral exploration and development company headquartered in Montreal, Quebec, and a majority-owned subsidiary of Rio Tinto Group. The company was called Ivanhoe Mines until August 2, 2012 when a financing ...

(a majority owned subsidiary of

Rio Tinto Rio Tinto, meaning "red river", may refer to: Businesses * Rio Tinto (corporation), an Anglo-Australian multinational mining and resources corporation ** Rio Tinto Alcan, based in Canada ** Rio Tinto Borax in America *** Rio Tinto Borax Mine, ...

) with 66% ownership and the

Government of Mongolia Politics of Mongolia takes place in a framework of a semi-presidential multi-party representative democracy. Executive power is exercised by the Prime Minister, who is the head of government, and the Cabinet. The President is the head of state, ...

with 34%. The mine began construction as of 2010 and shipped its first batch of copper on 9 July 2013. The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia's history and is expected upon completion to produce of copper annually. Financing for the project has come in part from the Rio Tinto Group and an investment agreement between Ivanhoe Mines and the government of Mongolia.

reached an agreement with the government in January 2022 to move the joint Oyu Tolgoi copper and gold project forward and resolve outstanding issues, which is key for

Mongolia Mongolia; Mongolian script: , , ; lit. "Mongol Nation" or "State of Mongolia" () is a landlocked country in East Asia, bordered by Russia to the north and China to the south. It covers an area of , with a population of just 3.3 million, ...

to significantly increase its copper exports to China in 2023.

History

In 2001, Canadian-based Ivanhoe Mines estimated the resource

gold Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile me ...

copper Copper is a chemical element with the symbol Cu (from la, cuprum) and atomic number 29. It is a soft, malleable, and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a pinkis ...

ore Ore is natural rock or sediment that contains one or more valuable minerals, typically containing metals, that can be mined, treated and sold at a profit.Encyclopædia Britannica. "Ore". Encyclopædia Britannica Online. Retrieved 7 Apr ...

deposit in the Gobi Desert of Mongolia, which Soviets had discovered officially before 1990. It is in an area known as ''Oyu Tolgoi'' (Mongolian for ''Turquoise Hill''), where in the time of Genghis Khan outcropping rocks were smelted for copper. The place was suspected to have mineralization by Mongolian geologists since 1950s. By 2003 there were 18

exploration Exploration refers to the historical practice of discovering remote lands. It is studied by geographers and historians. Two major eras of exploration occurred in human history: one of convergence, and one of divergence. The first, covering most ...

drill rigs on the property employing approximately 200 people, and Oyu Tolgoi was the "biggest mining exploration project in the world." In January 2013 Oyu Tolgoi started producing concentrate from the mine.

Description

The Oyu Tolgoi mine is in the South Gobi Desert of Mongolia, north of Mongolia's border with the

People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...

, where the mined copper is expected to be shipped. Oyu Tolgoi deposits contain an estimated 2.7 million tonnes of copper and of gold. It also contains 1,900 tonnes of silver and 205,000 tonnes of molybdenum. Production began in 2013 and is scheduled to reach full capacity in 2021. Over the anticipated lifespan of the mine (>50 years), Oyu Tolgoi is scheduled to produce of copper per year, an amount equal to 3% of global production. Oyu Tolgoi is also expected to produce of gold annually, with "by-product silver and molybdenum". Rio Tinto intends to employ 3,000–4,000 people from Mongolia. In January 2022, Rio Tinto reached an agreement with the government to move the joint Oyu Tolgoi copper and gold project forward and resolve outstanding issues. The agreement is key for Mongolia to significantly increase its copper exports to China in 2023 and attract more investment.

Mining and milling

Oyu Tolgoi will use both

and

mining techniques. Initially the mine will process 70,000 tonnes of rock per day, ramping up to 85,000 tonnes from both the open pit and the underground mine (underground mining is to be done by

block caving Underground hard-rock mining refers to various underground mining techniques used to excavate "hard" minerals, usually those containing metals, such as ore containing gold, silver, iron, copper, zinc, nickel, tin, and lead. It also involves th ...

). The yield from the first phase of mining will be ground through one semi-autogenous grinding mill (SAG mill). Expansion to new underground areas will result in an additional increase of up to 140,000 tonnes per day with a possible increase to 170,000 tonnes per day.

Financing

As of 2010, the estimated cost of bringing the Oyu Tolgoi mine into production was US$4.6 billion, making it (financially) the largest project in Mongolian history; however, by 2013 costs had ballooned to $10 billion, which caused some concern for the Government of Mongolia, which borrows its 34 percent share of investment from the foreign investors with interest. The mine is said to account for more than 30% of Mongolia's

GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...

upon completion. In early 2010 global mining company

owned 22.4% of Oyu Tolgoi owner Ivanhoe Mines (now Turquoise Hill Resources), and gave both technical assistance and financial support to the project. At the time Rio Tinto had the option of increasing their stake to 46.6%. On 31 March 2010 the Government of Mongolia approved an investment agreement where they would purchase 34% of the project. In October 2010, Ivanhoe announced a new US$1 billion share offering in order to raise funds to develop this mine. Rio Tinto increased its ownership of Ivanhoe in December 2010, also assuming direct management of the design and construction of the project, however without fulfilling another aim, to achieve direct ownership of the mine. Disagreement between the Mongolian government and Rio Tinto came to a head in 2013, with the government urging Rio Tinto to settle the US$340 million tax issue and the cost overruns from the initially planned US$5.1 billion to US$7.1 billion during the initial stage of the project. In July 2013, the shares in Turquoise Hill Resources (Rio Tinto's unit that controls 66% of the mine) dropped 20% after a dispute between Tserenbat Sedvanchig, the executive director of Erdenes Oyu Tolgoi (the state-owned company that controls the other 34%), and Rio Tinto. Sedvanchig was fired in August and replaced by Davaadorj Ganbold, a former deputy minister and member of parliament. In the meantime, Rio Tinto cut 1700 Mongolian employees from the mining operation. On 21 November 2019, the parliament of Mongolia adopted a resolution on "Ensuring Interests and Rights of Mongolia in the Exploitation of Oyu Tolgoi Deposit, which instructs the government (Cabinet) to look into "a product sharing arrangement" or swap its 34% equity with "a special royalty".

Controversial issues

Environmental impact

Oyu Tolgoi mine is located in one of the driest areas in

.Schneider, Keit
Mongolia Copper Mine at Oyu Tolgoi Tests Water Supply and Young Democracy.
''Circle of blue'', 5 November 2013. Retrieved on 2014-18-08.

Rainfall Rain is water droplets that have condensed from atmospheric water vapor and then fall under gravity. Rain is a major component of the water cycle and is responsible for depositing most of the fresh water on the Earth. It provides water f ...

in the desert area ranges between zero and 50mm per year. It is estimated that the water demand will triple in the coming two decades mainly due to mineral exploitation in the area. Herders worry that Oyu Tolgoi is draining the region's water supply, since it uses more than a billion gallons of water a month. In addition, there is a substantial risk of acid rock drainage from the mine, from tailings storage facilities and from any

overburden In mining, overburden (also called waste or spoil) is the material that lies above an area that lends itself to economical exploitation, such as the rock, soil, and ecosystem that lies above a coal seam or ore body. Overburden is distinct from tai ...

or waste rock stored on the surface and not deposited back into the mine. South

Gobi The Gobi Desert ( Chinese: 戈壁 (沙漠), Mongolian: Говь (ᠭᠣᠪᠢ)) () is a large desert or brushland region in East Asia, and is the sixth largest desert in the world. Geography The Gobi measures from southwest to northeast ...

is also a

critical habitat Critical habitat is a habitat area essential to the conservation of a listed species, though the area need not actually be occupied by the species at the time it is designated. This is a specific term and designation within the U.S. Endangered Spe ...

for at least six

endangered An endangered species is a species that is very likely to become extinct in the near future, either worldwide or in a particular political jurisdiction. Endangered species may be at risk due to factors such as habitat loss, poaching and in ...

and threatened species found nowhere else in the world. Two protected areas are located in close proximity to Oyu Tolgoi and are included in the mine's area of impact.'A Useless Scam'.
''Oyu Tolgoi Watch and others''. December 2012, Retrieved 18 August 2014. In order to compensate for the loss of habitat, a biodiversity offset strategy has been released,Biodiversity offsets strategy for the Oyu Tolgoi project.
Issued in April 2012, Retrieved 18 August 2014. however the

NGO A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...

s are not convinced. They are stressing that company did not consider avoiding, minimizing or mitigating the damage and went directly to

offsetting A carbon offset is a reduction or removal of emissions of carbon dioxide or other greenhouse gases made in order to compensate for emissions made elsewhere. Offsets are measured in tonnes of carbon dioxide-equivalent (CO2e). One ton of carbon ...

. They urge the company to develop a strong, detailed, long-term species conservation and habitat protection plan, including a rigorous monitoring strategy. They are of the opinion that the current mitigation strategies described in the ESIA are too general and are not based on empirical data. Consequently, the offset strategy presented by the company can be called into question.

Social impact

Mongolia's Southern and Central Zones occupy terrain traditionally used by nomadic herdsmen. Diverting already scarce water resources to mining could jeopardize their

livelihood A person's livelihood (derived from ''life-lode'', "way of life"; cf. OG ''lib-leit'') refers to their "means of securing the basic necessities (food, water, shelter and clothing) of life". Livelihood is defined as a set of activities essential t ...

s.Balch, Oliver (28 February 2014)
Mongolia's_water_scarcity
_could_threaten_its_economic_boom..html" ;"title="water scarcity">Mongolia's water_scarcity">Mongolia's_water_scarcity
_could_threaten_its_economic_boom.''The_Guardian''._Retrieved_18_August_2014._In_harsh_conditions_of_Gobi_Desert.html" ;"title="water scarcity
could threaten its economic boom.">water scarcity">Mongolia's water scarcity
could threaten its economic boom.''The Guardian''. Retrieved 18 August 2014. In harsh conditions of Gobi Desert">Gobi desert herders have a very specific way of organizing summer pasture and its rotation, access to water, hay collection and hay storage. Any changes to these unique practises hamper the

s of

nomad A nomad is a member of a community without fixed habitation who regularly moves to and from the same areas. Such groups include hunter-gatherers, pastoral nomads (owning livestock), tinkers and trader nomads. In the twentieth century, the po ...

s.Goodland, Robert (31 July 2012)
Mongolia: The Oyu Tolgoi Copper & Gold Mine Project (Comments on Chapter D1 of the ESIA: "Environmental and Social Management Plan Framework").
Retrieved 18 August 2014.Gillet, Kit (13 September 2012)

''The New York Times''. Retrieved 18 August 2014. Steel fence that surrounds the gaping mine blocks traditional herding corridors and makes it difficult for the herd animals to find water. Roads constructed by the mine owners present additional barriers to animals. Some Mongolian herders forced to resettle because of the Oyu Tolgoi expansion have experienced herd loss. They were forced to move to inferior locations without adequate time to select spots that would protect their animals from harsh winter storms. The minimal assistance provided at the time of resettlement was not sufficient.Is Rio Tinto managing herders in "Oyu Tolgoi City" in the South Gobi region of Mongolia?.
''London mining network''. 14 October 2012, Retrieved 18 August 2014. Furthermore, they were forced to accept inadequate compensation based on their location in proximity to the mine, rather than the size of pasture taken away from them.Mongolian herders complain against Rio Tinto over Oyu Tolgoi mines.
''Mines and Communities''. 10 December 2012, Retrieved 18 August 2014.

Economic impact

Mining in Mongolia currently contributes about a third of

and accounts for 89.2 percent of the country's total

export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...

s.Pearly, Jacob (9 August 2013)
Mongolia: Ulaanbaatar Wrestles with Dutch Disease Dilemma.
''Eurasianet.org''. Retrieved 18 August 2014. The numbers are expected to rise since government issued about 3,000 new mining licences. Building an economy on

mineral In geology and mineralogy, a mineral or mineral species is, broadly speaking, a solid chemical compound with a fairly well-defined chemical composition and a specific crystal structure that occurs naturally in pure form.John P. Rafferty, ed. (2 ...

s puts country at risk of

Dutch disease In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agricultur ...

, or the relationship between the increase in the

economic development In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and ...

of natural resources and a decline in the

manufacturing sector In macroeconomics, the secondary sector of the economy is an economic sector in the three-sector theory that describes the role of manufacturing. It encompasses industries that produce a finished, usable product or are involved in constructio ...

agriculture Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people t ...

. Cashmere industry and agricultural sector are already feeling the side effects.Langfitt, Frank (21 May 2012)
Mineral-Rich Mongolia Rapidly Becoming 'Mine-golia'.
''NPR''. Retrieved 18 August 2014. Although

’s economic growth has helped to reduce poverty by more than 11 % in recent years, there is also a rising inequality in terms of income distribution. Poverty is higher in the

rural area In general, a rural area or a countryside is a geographic area that is located outside towns and cities. Typical rural areas have a low population density and small settlements. Agricultural areas and areas with forestry typically are descr ...

s (35.5%) compared to the

urban area An urban area, built-up area or urban agglomeration is a human settlement with a high population density and infrastructure of built environment. Urban areas are created through urbanization and are categorized by urban morphology as cities ...

s (23.2%), as herders in the countryside struggle to survive as their traditional

dissolves.Theunissen, Tirza (25 June 2014)
Poverty, Inequality, and the Negative Effects of Mongolia’s Economic Downturn.
''In Asia''. Retrieved 18 August 2014.

Corruption related issues

Gantömöriin Uyanga, an MP has announced that former PM Sanjaagiin Bayar, who signed the OT Investment Agreement with 3 of its Cabinet Members, owns 7 properties abroad on the names of his daughters, ex-wife, and girlfriend worth of several billion dollars. However, S.Bayar has approached the Independent Agency Against Corruption with request to conduct investigation upon himself. His request reads: "Recently media coverage on possible money laundering through purchase of number of real estates abroad with the sources stating that I, Bayar Sanjaa, have abused my position as Prime Minister and lobbied the approval of the Oyutolgoi Agreement. In matter of these claims I hereby request the Agency to conduct investigations upon me in accordance with the Mongolian legislation". Also Sangijav Bayartsogt, the former Deputy Speaker of Parliament and one of the 3 ministers who signed the OT agreement has had his secret offshore account revealed by "The Guardian", a British Newspaper. According to the report the Deputy Speaker of Parliament, Sangijav Bayartsogt, confirmed having a secret Swiss bank account containing more than one million US dollars, in the name of an offshore entity "Legend Plus Capital Limited". The Guardian reported Bayartsogt Sangajav saying, "I shouldn't have opened that account. I should have included the company in my declarations," to the International Consortium of Investigative Journalists (ICIJ). "I don't worry about my reputation. I worry about my family. I probably should consider resigning from my position."

References

External links

* *
Ivanhoe Mines Mongolia Inc web page

Mongolian mining directory

World Bank, EBRD approve destructive Oyu Tolgoi mining project

NGOs key recommendations for Oyu Tolgoi copper and gold mine project in Mongolia
{{DEFAULTSORT:Oyu Tolgoi Mine Gold mines in Mongolia Ömnögovi Province Underground mines in Mongolia Surface mines in Mongolia Copper mines in Mongolia