Rio Tinto flags delays at Oyu Tolgoi copper project

UK-Australian resources firm Rio Tinto expects the underground project at its Oyu Tolgoi copper mine in Mongolia to be delayed and to exceed the original budget.

First sustainable underground production is now expected between May 2022 and June 2023, a delay of 16-30 months from the guidance issued in a 2016 feasibility study.

This range includes a contingency of up to eight months to reflect "unexpected and challenging geotechnical issues", complexities in shaft two construction, and detailed work still required to reach a more precise estimate, Rio Tinto said.

The estimate for the project's development capital needs has been raised to $6.5-7.2bn, an increase of $1.2-1.9bn from the previous disclosure of $5.3bn.

Shaft two of the underground project is on track to be commissioned in October this year and progress is being made on construction of shafts three and four. Oyu Tolgoi produced 13,100t of copper in April-June and 28,500t in the first half of 2019.

Rio Tinto affirmed its confidence in the project. Oyu Tolgoi is a world-class orebody and business that is already producing copper and employing around 16,000 people, chief executive of copper and diamonds Arnaud Soirat said.

Significant progress has been made on key elements of the mine's construction during 2019. "However, the ground conditions are more challenging than expected and we are having to review our mine plan and consider a number of options. Delays are not unusual for such a large and complex project, but we are very focused on finding the right pathway to deliver this high value project," said Stephen McIntosh, the group's executive in charge of growth and innovation.