Oyu Tolgoi released its 2019 ‘Year in Review’ report today. The
report covers key areas of the business which are safety, people,
partnership, cash and growth.
Once again, the company delivered
historic milestones across the business against a backdrop of challenges
faced throughout 2019. Oyu Tolgoi achieved sustainable and efficient
surface operations and maintained outstanding safety performance along
with the shipment of its five millionth tonne of copper concentrate.
Total in-country spend, since 2010, reached US$10 billion.It was also
the 10th anniversary of the Oyu Tolgoi Investment Agreement which was signed in October 2009.
The
company registered a significant number of national procurement
contracts under the “Made in Mongolia” strategy, spending US$431 million
on 564 national businesses in 2019, further building on its sustainable
supply chain and supporting Mongolian economic diversity at both the
national and community level.
Oyu Tolgoi LLC Chairman of the Board of Directors, Ambassador Batsukh Galsan,
said, “2019 was another important year in progressing the
implementation of the company’s 10-year development strategy. We
continued our contribution to the prosperity of the country by
supporting its responsible mining industry, while developing the skills
and capabilities of our employees, advancing underground development,
and significantly contributing to the development of the local
communities”.
Oyu Tolgoi LLC CEO, Armando Torres,
said, “Our Operations in 2019 reached a new safety record, not only for
the company but also across Rio Tinto Group. Sharing our world-class
safety culture and practices with Mongolia’s institutions, and our
communities, has been one of our corporate social responsibility
priorities.
“Despite entering low grade ore at the open pit
mine, and challenging global market circumstances, both copper and gold
production exceeded the production guidance in 2019 thanks to the hard
work of our professional, highly skilled, national workforce. The open
pit mine and concentrator improved efficiency and the company maintained
its position as an industry leader.
“In 2019, the
construction of crucial infrastructure of the underground mine –
“Chandmani” Underground Operation & Service Centre and Production
Shaft 2 – was completed. These are important steps to the development of
the underground mine in making Oyu Tolgoi one of the world’s largest
copper mines”.
Highlights of the 2019
Safety
In 2019, the All Injury Frequency Rate (AIFR) across Oyu Tolgoi was
maintained at 0.16 per 200,000 people hours worked, which is the same
record-breaking performance as in 2018. In particular, Surface
Operations finished 2019 with AIFR 0.09 per 200,000 hours worked. This
was the best performance of the company, and across Rio Tinto Group,
which has 60 operations in 36 countries.
Production & Financial Performance
Oyu Tolgoi delivered a strong performance with sales revenue of
US$1,166 million, which was slightly lower than 2018 figure of US$1,180
million.
The in-country procurement spend increased year-on-year
and reached 87 per cent of the total operational procurement in 2019.
Between 2010 and 2019, the company spent US$3.1 billion on national
procurement.
Underground mine development
Oyu
Tolgoi Underground development continued to further advance its
performance by breaking a number of records and completing the
construction of critical infrastructure. Shaft 2, the main production
shaft and primary access point for people and materials, was completed.
The 1,300-metre construction, which is equivalent to 15 Shangri-La
Ulaanbaatar towers in total height – 14 below ground and one above,
includes the largest friction rope hoist system in the world. Another
key infrastructure delivered is the ‘Chandmani’ Operations and Service
Centre, the gateway and control center for the Underground mine.
Lateral
development productivity consistently exceeded targets with 40 per cent
month-on-month improvement especially during the second half of the
year, reaching 14,606 equivalent metres at the end of the year (32,925
equivalent metres to date).
Detailed work on the Underground
mine design continued and is expected to be completed in the first half
of 2020, with the Definitive Estimate provided in the second half of
2020, as previously disclosed to the market.
Community partnership and investment in human development
The
socio-economic and environmental baseline study of Umnugovi showed
major changes in the province over the last 10 years, including
three-fold GDP growth, local manufacturing increasing 36 times, and the
lowest level of poverty at the national level proving long-term,
constructive and robust partnerships with Umnugovi aimag.
Through
the Gobi Oyu Development Support Fund, in partnership with the local
communities, the company funded the first meat factory in Umnugovi, with
a certified laboratory, a new 10-bed capacity hospital in Mandal-Ovoo
soum, a new 100 children kindergarten in Manlai soum, and a boiler house
in Bayan-Ovoo soum.
The national road safety campaigns “No
Need to Rush” and “Play by the Rules”, organized in partnership with the
National Police Agency (NPA), resulted in year-on-year reduction in the
number of traffic accidents by 63.9 per cent across the country and
16.3 per cent in Ulaanbaatar as per the data provided by the NPA.
Oyu
Tolgoi’s vision commits Oyu Tolgoi to invest in human development. In
2019, Oyu Tolgoi signed a Memorandum of Understanding with the Mongolian
National University of Science and Technology to collaborate in
upgrading geotechnical and underground mining engineer training. A
collaboration agreement between Oyu Tolgoi, Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ), GCR Mongolia and SMS was also
signed to train 350 Technical and Vocational Education and Training
(TVET) college graduates in technical skills equivalent to Skillset I of
Australian Quality Training Framework standards. Oyu Tolgoi has
invested US$67.7 million in TVET support to-date, and over 2,600
students have participated in Oyu Tolgoi educational programmes.
Oyu
Tolgoi maintained its strong environmental performance in 2019. The
company’s water usage is less than 0.4 cubic meter per tonne ore, and
its average water recycling rate is 87 per cent. These are both world
class performance indicators.
The company’s “Made in
Mongolia” strategy was expanded to a range of product lines including
local food product supply, steel products, and variety of electric
products manufactured in Mongolia. In 2019, US$9 million per annum “Made
in Mongolia” contracts were signed creating over 200 local jobs,
further strengthening Mongolia’s in-country supply chain.
The full Oyu Tolgoi 2019 Year in Review is available here.
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