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Covid-19 puts brakes on Rio's Oyu Tolgoi project

Measures put in place by Mongolia’s government to contain the spread of COVID-19 have slowed progress on the underground development of Rio Tinto’s Oyu Tolgoi project, although openpit operations continue, the major said on Monday.
Covid-19 puts brakes on Rio's Oyu Tolgoi project Covid-19 puts brakes on Rio's Oyu Tolgoi project Covid-19 puts brakes on Rio's Oyu Tolgoi project Covid-19 puts brakes on Rio's Oyu Tolgoi project Covid-19 puts brakes on Rio's Oyu Tolgoi project

Rio Tinto's Oyu Tolgoi mine is a combined open pit and underground mining project approximately 235 kilometres east of Mongolia's Ömnögovi Province capital Dalanzadgad

Staff reporter

"Since January the movement of goods and people within Mongolia have been restricted within and across its border and this has further escalated recently as the first case of COVID-19 has occurred in the country," said Rio.

"Work on the underground project continues, however, progress is being slowed as a result of these measures," the major said.

The restrictions have meant reduced availability of specialist technical service providers Rio needs to continue work on tasks such as commissioning the headframe of two shafts at the mine.

Rio said the full impact of the slowdown was "unknown at this time and the company will update the market once more information is available".

However, it said the mine design remained on track to be completed in the first half of 2020, "with a definitive estimate to be provided for the development of this world-class orebody in the second half of 2020".

Meanwhile, the openpit at Oyu Tolgoi "continues to operate and deliver shipments of copper concentrate to its customers", although Rio did not say whether volumes had been affected.

RBC's Tyler Broda said Rio's announcement was "likely to be the first of many changes to the underlying project path, production profile and capex spending across not just Rio Tinto but the entire mining industry".

"With growing restrictions on activities, mining companies are likely to see delays across the board, with a side benefit of delaying capex, for the benefit of the balance sheet," said Broda.