What does Rio Tinto's $5.4 billion expansion at Oyu Tolgoi mean for copper price recovery?
But will the momentous deal opens the door to quicker recovery of copper prices?
According to Rio Tinto,.global copper prices will recover faster than expected with demand outstripping supply within two year rather than the previously estimated three to four years.
• Related content: [VIDEO] Oyu Tolgoi copper-gold mining complex, Mongolia
Rio Tinto’s head of copper and chairman of the International Copper Association said decisions by the industry to slow copper production in response to weak prices meant the market could become balanced this year.
Jean-Sebastien Jacquest told the Financial Times in an interview: “It was expected to be oversupplied but because of disruption in the marketplace and because of decisions made by the industry to slow down some projects we could face a situation where the market is balanced this year.”
“If you had asked me the question in December last year I would have said the inflection point would be three or four years down the road and today it is likely to be 18-24 months down the road,” he added.
The agreement with the Mongolian government will allow construction of an underground mine at the site of an existing open-pit operation, marking a major step forward for the Oyu Tolgoi project. Rio Tinto settled disagreements on taxes and royalty payments with Mongolia last year. Expansion efforts have stalled since 2013 when the first convoy of trucks carrying copper to China departed from the existing open-pit mine.
“Mongolia is back to business,” said Prime Minister Chimediin Saikhanbileg on Tuesday. “Unlocking Oyu Tolgoi’s underground mine will have a significant impact on the Mongolian economy, which will benefit Mongolian citizens for generations to come.”
The Oyu Tolgoi project is significant for Rio Tinto has the miner looks to take advantage of new minerals in developing countries as it desperately tries to reduce its dependence on iron ore, which has crash and burned in recent months.
• Related content: REPORT: Early production in gold, copper and iron ore falls flat
Rio Tinto said in a statement: “With a new pathway to development of the underground mine agreed, the focus now shifts to completing the project finance, the feasibility study and securing all necessary permits so that the underground mine development can proceed.”
According to sources, the expansion of an underground mine at Oyu Tolgoi would take roughly five to seven years to get started once all finances and approvals in place.
BHP, Rio Tinto & Vale launch Charge On Innovation Challenge
Mining giants BHP, Vale and Rio Tinto have launched the 'Charge On' Innovation Challenge to solve one of the biggest challenges the industry faces today - decarbonising mining operations.
'Charge On' Innovation Challenge
In partnership with Austmine, Australia's leading mining equipment, technology and services industry association, founding patrons BHP, Vale and Rio Tinto have launched the competition to encourage technology innovators to develop new concepts for large-scale haul truck electrification systems. The main goal is cutting emissions from surface mining operations.
“The mining industry needs to be at the forefront of tackling the climate challenge. The Charge On Innovation Challenge is a great example of the current collaborative work being done by the mining industry and mobile equipment manufacturers to decarbonise mining fleets,” the trio said in a media statement.
“In addition to providing a zero-carbon energy source, the conversion of mobile mining equipment to battery-electric can potentially unlock value, as electric motors have fewer moving parts when compared to standard equipment.”
A number of non-traditional mining sector vendors are actively developing technologies that can assist in mine electrification. By submitting a Challenge to the market, the Patrons of Charge On expect to:
- Demonstrate there is an emerging market for charging solutions in mining
- Accelerate commercialization of solutions
- Indicate to suppliers, the mining industry seeks interoperable solutions
- Maintain multiple actors and competition in the supply chain
- Integrate innovations from other sectors into the mining sector
"We expect some solutions identified in the Challenge could provide propulsion to existing diesel-electric trucks. This may present a pathway to early implementation for dynamic charging solutions," the trio said.
Found patrons BHP, Vale and Rio Tinto are pledging their commitment to fighting climate change:
"The mining industry has an important role to reduce emissions and do our part to achieve the Paris Agreement goals to limit the impacts of climate change."
The Charge On Innovation Challenge asks vendors to present interoperable solutions that can safely deliver electricity to large battery-electric off-road haul trucks in a way that maintains or improves current productivity levels. Specifically, mechanisms capable of delivering in the order of 400kWh of electricity to each truck within a haul cycle (ie load, travel, dump, return, queue). The delivered electricity is to charge a battery, and if applicable directly propel the truck.
Austmine CEO Christine Gibbs Stewart commented: “We expect the Challenge will attract companies from a broad range of sectors including mining, automotive, aerospace, agriculture, and defence to deliver selected charging concepts to create a standard product that can interface with all trucks."
More information about the challenge will be released on May 18.
The competition echoes growing efforts being made across the industry to tackle emmissions and promote electrification. In march this year, the Electric Mine Consortium was launched. It's founding members include Gold Fields, Dassualt Systemes and Sandvik who pledged their commitment to decarbonising mining operations.