Oyu Tolgoi announces Q2 2021 performance results

• Keeping its globally competitive safety performance
• Marking the 10th anniversary of our Open Pit mine
• Working closely with Umnugovi province in our efforts against COVID-19
• Maintaining its highest water use efficiency per tonne of ore production
• In-country spend reached US$12.7 billion
• Spent US$3.7 billion on national procurement

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

The COVID-19 cases increased significantly in Mongolia during Q2 2021, causing a series of lockdowns in the country and South Gobi region which limited the ability to maintain normal roster changes for its workers. This resulted in personnel numbers below 25% of planned requirements at certain points during the quarter. The COVID-19 restrictions adversely impacted both the open pit operations and underground development progress. We are prioritising commencement of the undercut process as soon as all criteria are achieved and strive to increase the value we are bringing to our country. As at July 9, 2021, 93% of our workforce is fully vaccinated and appropriate controls continue to be followed at site. We continue to cooperate with the government authorities to implement and maintain control measures to protect the health and well-being of our workers as well as the local community.

Acting Chief Executive Officer of Oyu Tolgoi, Jacques van Tonder, said, “We are closely cooperating with the administration of Unmugovi aimag by transparently providing information about our operation and the COVID-19 situation at the mine site. Our donation of the necessary personal protective equipment and 9,000 doses of the Sputnik-V vaccine was the demonstration of how we are fighting together against the global pandemic. I would like to express my sincere gratitude for the great resilience of our employees, contractor companies and the government officials who are supporting us in this difficult time to run our operation safe and effectively. In addition, the Oyu Tolgoi family is celebrating the 10th anniversary of our Open Pit mine, creating value and contributing to the national and local economies. Oyu Tolgoi is proud to be contributing 10 per cent of the national budget, according to the recent independent study by National University of Mongolia.”

“At Oyu Tolgoi, we’re getting close to the commence the caving operations (undercut) so that we would be able to deliver the full benefits of Oyu Tolgoi to our stakeholders including the people of Mongolia. We look forward to seeing the required criteria achieved including registration of the updated Resources and Reserves and acceptance of the updated Feasibility Study by the relevant governmental agencies to enable us commencing the undercut.”

• Prioritised the safety and achieved an All Injury Frequency Rate (AIFR) of 0.14 per 200,000 people/hours worked. This still indicates Oyu Tolgoi’s strong safety performance among other operations of Rio Tinto where the average AIFR stood at 0.39 for the same quarter.
• Maintained excellent water-conservation practices, achieving the highest water use efficiency rates per tonne of ore production, using 0.34 cubic meters of raw water per tonne of ore processed – three times less than similar operations worldwide. Achieved an average water-recycling rate of 89.1 per cent, compared to a target of 80 per cent.
• 96.2 per cent of Oyu Tolgoi’s workforce are Mongolian citizens.
• Paid US$503 million in the form of taxes, fees and other payments to the Government of Mongolia in the second quarter of 2021. Since 2010, Oyu Tolgoi has paid US$3.4 billion in taxes, fees and other payments, including VAT to Mongolian suppliers.
• Partnered with 628 suppliers in the second quarter of 2021, including 407 national businesses, accounting for 75 per cent of the total operations procurement spend.
• Q2 2021 Performance Scorecard can be viewed here.

• Q2 2021 concentrate shipments to customers were impacted by the COVID-19 related border restrictions which resulted in force majeure being declared from 30 March 2021. Shipments to Chinese customers recommenced on April 15, 2021 and we continue to work closely with local and Chinese authorities to manage the supply chain disruptions. The force majeure will remain in place until there are sufficiently sustained volumes of convoys crossing the border to ensure the ability to meet our ongoing commitments to customers and to return on-site concentrate inventory to target levels.

Underground Development Update

• Project progress has been significantly affected by the heightened COVID-19 constraints in Mongolia. To comply with the COVID-19 restrictions, the mine site manning levels were less than 25% of planned requirements. Despite these restrictions, as the Material Handling System 1 had been ahead of the definitive estimate schedule, it is now 90% complete with technical criteria achieved to support undercut commencement, subject to the ongoing impacts of the COVID-19 and satisfactory resolution of the non-technical undercut criteria.
• In the quarter, there was very little progress on the Conveyor to Surface Decline, with no progress on the majority of other planned works including shafts 3 and 4. However, recent easing of quarantine constraints and increasing workforce vaccination rates on site has supported gradual improvements in the site resourcing. The impact of the additional restrictions experienced in the first half is ongoing and still to be determined.
• Contractual commitments to future works such as the Material Handling System 2 and concentrator upgrades have been delayed pending approval by the board as part of the increased budget approval required to complete the project.
• An update on panels 1 and 2 will be provided when the work to understand potential flow on impacts is complete, particularly from shafts 3 and 4 delays.

Other Updates

• All stakeholders remain committed to moving the project forward and ensuring a long-term solution to the issues under discussion. As previously reported, a number of additional milestones need to be met in order to ensure that the project can commence caving operations (undercut) including: key regulatory milestones including registration of the updated Resources and Reserves and acceptance of the updated Feasibility Study (OTFS20) by the relevant governmental agencies of Mongolia; project budget uplift in line with the definitive estimate to be approved by the Oyu Tolgoi board; funding plan in line with the Heads of Agreement signed in April between Rio Tinto and Turquoise Hill Resources (TRQ) to be approved by the Oyu Tolgoi Board; and milestones for the power solution.