Oyu Tolgoi expands domestic supply chain with locally manufactured safety boots

As part of its “Made in Mongolia” procurement strategy, Oyu Tolgoi LLC signed MNT 2.7 billion leather safety boots supply contract with Khos-Az LLC, a national shoe factory. The three-year contract sets out framework for supplying 5,000 pairs of safety boots, which complies with the international “S3” standard, to the Oyu Tolgoi mine site. Mr Arnaud Soirat, Chief Executive of Copper and Diamonds Rio Tinto, attended the contract signing ceremony with Khos-Az LLC.

With the capacity of producing 100,000 pairs of shoes a year with 80 employees, Khos-Az will manufacture first ever internationally accepted safety boots in Mongolia while shortening the lead time and increasing the value-add in country further.

Oyu Tolgoi miners are now able to wear domestically manufactured safety boots following intensive multiple tests and trials to ensure international standards are met. The previous safety boots used at the mine site caused inconveniences when employees go through the full-body scanners at the airport due to metal toe protections. Thus, Mongolian engineers at Khos-Az were able to create new safety boots with high-quality plastic toe protection, making them lighter and more comfortable.

“We are delighted to win an open tendering as part of the ‘Made in Mongolia’ strategy, implemented by Oyu Tolgoi and supplying leather safety boots made out of Mongolian cow skin with the help of the skills of Mongolians while ensuring international standards. With this strategy, I hope that many products will be produced in Mongolia and eventually find their way to the international market,” said Mr Zorigt, General Director of Khos-Az LLC.

Notes for editors

• Established in 2015, “Khos-Az” LLC is the first private shoe factory since privatisation of shoe factories in Mongolia. The company is capable of producing 100,000 pairs of shoes a year. Having over 80 employees, 80 per cent of shoes made by “Khos-Az” LLC comprises of special protective and safety footwears. In 2015, the company opened its second factory equipped with Italian and Taiwanese smart technologies through its own financing. The factory expanded its production capacity two-fold, and is now able to produce a wide range of models, such as MEN, WOMEN, CHILDREN, BASICS, and for HERDERS as well.
• Oyu Tolgoi operation’s procurement cooperated with 689 suppliers at the end of the second quarter of 2019, of which 484 are national businesses that account for 76 per cent of total operations procurement spend. Between 2010 and the second quarter of 2019, Oyu Tolgoi spent US$2.9 billion on national procurement.
• 77 Umnugovi suppliers provided goods and services to Oyu Tolgoi as of June 2019. Between 2010 and the second quarter of 2019, Oyu Tolgoi spent US$488 million on procurement from Umnugovi.
• Between 2010 and the second quarter of 2019, Oyu Tolgoi spent US$9.5 billion in-country in the form of salaries, payments to Mongolian suppliers, taxes, donation and other payments to the Government of Mongolia.