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Mongolia
Oyu Tolgoi 70% complete but power is an issue
Construction of a siding at the pebble crusher complex at Ivanhoe Mines’ Oyu Tolgoi project.
IVANHOE Mines expects construction at the
Oyu Tolgoi Copper-Gold Project in southern
Mongolia to be 70% complete by the start of
2012 with commercial production scheduled
for the first half of 2013. The site based construction
workforce is about 14,760 with
about 11,680 working on site each day and
the balance on leave.
About 7820 Mongolians are employed at the
site with an additional 3300 Mongolians participating
in offsite training and educational programs.
These Mongolian employees will form
the bulk of the eventual production workforce.
Oyu Tolgoi is expected to annually produce
an average of 450,000 tonnes of copper and
330,000 ounces of gold over the next 10
years. It is projected to account for one-third
of total Mongolian GDP by 2020.
An obstacle to the timetable of Ivanhoe and
joint developer Rio Tinto remains the provision
of power with the Chinese government
yet to agree to supply power across the border.
Extra diesel generators have been installed
and the companies have launched an
investigation into alternative power sources
should electricity from China not be available
on schedule. Ivanhoe has conceded that production
could be delayed.
In May 2011, the project received final approvals
to construct a 220 kilovolt power
transmission line along a 95km route south
to the Chinese border. Construction of the
transmission towers was completed in October
and the stringing of power cables will
start in spring 2012, if agreement is reached.
As part of the investigation into alternatives,
Ivanhoe may need to bring forward construction
of a coal-fired power plant at the mine. It
said in a statement: “Although a power plant
is expected as part of the Oyu Tolgoi project’s
future development, there is no provision in
the current capital cost estimates for 2011
and 2012 and the financing that would be required
is not contemplated as part of the
company’s current financing plan.”
The plant would increase initial capital expenditure
and delay commercial production.
Ivanhoe has acknowledged that constructing
the plant in Mongolia is the best choice
for the project.
New acquisition for Xanadu-Noble alliance
XANADU Mines is acquiring the Khavtsgait
Coal Project which is within a highly prospective
coal-bearing sedimentary basin in northern
Mongolia. The project covers 2869
hectares in this basin, which is known to host
premium hard coking coal. It is in Khuvsgul
province, about 60km east of the provincial
centre of Murun and 250km west of the established
rail spur at Erdenet.
The acquisition is being undertaken by
Ekhgoviin Chuluu LLC (EC), a vehicle established
by strategic alliance partners Xanadu
and Noble Group to seek out and develop premium
metallurgical coal opportunities. The
highly prospective exploration licence overlies
an early to middle Mesozoic aged coal-bearing
sedimentary basin. Similarly aged basins in
northern Mongolia, such as the Ovoot Coking
Coal Project of Aspire Mining, are known to
host premium hard coking coal deposits.
The opportunity was recognized as part of
a thorough regional reconnaissance exploration
program conducted by EC’s geologists.
Initial exploration, including trenching,
indicates the stratigraphic sequence at
Khavtsgait is consistent with the alliance’s
newly discovered Nuurstei coking coal project,
which is about 60km to the west.
It represents the third major metallurgical
coal acquisition in Mongolia for EC, which
was created in March 2011. Xanadu’s chairman
Brian Thornton says, “The Khavtsgait
acquisition further underpins the core strategy
of EC – to identify and develop significant
metallurgical coal opportunities, close to existing
infrastructure, that will meet anticipated
current and future demands from China and
North Asian markets. With the acquisition of
a second metallurgical coal project in Khuvsgul
by EC, our exploration focus on the newly
emerging metallurgical coal basins of northern
Mongolia is coming to fruition.” EC plans
to begin a comprehensive exploration program
at Khavtsgait immediately.
The acquisition follows EC’s recent
Javkhlant coking coal joint venture where
drilling started recently. The project is in Gobi
Altai province, about 22km from the Burgastai
border crossing into China and only 200km
from the Chinese rail network at Hami. EC can
earn up to 80% of the 1005sqkm exploration
licence by meeting various spending commitments
over two years.
Reconnaissance mapping and exploration
has identified numerous coal and carbonaceous
mudstone sub-crops, containing coal
fragments, which occur over a strike of 40km.
30 | ASIA Miner | January/February 2012