Full-scale construction at Ivanhoe Mines’ flagship Oyu Tolgoi copper-gold-silver mining complex is continuing toward a projected peak level of activity that is expected to be reached during the third quarter of this year. Overall construction reached a 23.3% level of completion at the end of May and remains ahead of schedule.
Construction of the concentrator, the centrepiece component of Oyu Tolgoi’s phase one development, reached 32% completion at the end of May and commissioning of the concentrator's first production line is expected to begin in the second quarter of 2012.
The total number of workers engaged at the construction site has more than doubled since March 1, 2011, as part of the build up to the peak of construction and currently stands at 12,497. Counting construction and head office jobs, plus more than 3000 vocational trainee positions being funded by Oyu Tolgoi in the largest training program ever undertaken in Mongolia, the project’s total designated Mongolian workforce now is about 10,000. The project is committed to ensuring that 90% of all jobs created during the mine’s operation will be held by Mongolians.
Targeted completion of construction of the first phase of Oyu Tolgoi remains ahead of schedule. Pre-stripping excavation of the open-pit mine is due to begin during the third quarter. The project has set an objective of delivering the first ore from the mine to a mill circuit test in the concentrator in June 2012. The goal of achieving commercial production remains on schedule to begin in the first half of 2013.
Following receipt of approvals by national and local authorities in Mongolia, the Oyu Tolgoi Project has begun work on the construction of a 95km high-voltage power line from the Oyu Tolgoi site to the Mongolia-China border, where it is planned to connect to a proposed supply line in China. The Mongolia section of the line is expected to be completed by the end of this year.
The arbitration proceeding between Ivanhoe Mines and Rio Tinto regarding Ivanhoe’s Shareholders’ Rights Plan is expected to resume later this month following the expiry of a six-month suspension that was agreed upon by the companies as part of the Heads of Agreement signed in December 2010.
Ivanhoe’s chief executive officer Robert Friedland says that the arbitration will not adversely affect construction progress at Oyu Tolgoi. “Ivanhoe Mines is highly confident that the rights plan, overwhelmingly supported by 95% of the votes cast by our minority shareholders a year ago, is not in breach of any of Rio Tinto’s existing contractual rights. We are committed to vigorously protecting the rights of all of our shareholders and have received very strong support from institutional shareholders for our insistence that all shareholders be treated fairly during any takeover bid.”
On June 7, Ivanhoe and Oyu Tolgoi LLC made the third and final prepayment to the Government of Mongolia in a ceremony held in Ulaanbaatar and attended by senior project representatives and government cabinet ministers. Oyu Tolgoi LLC, the licence holder and owner-operator of the project, is 66% owned by Ivanhoe and 34% owned by Erdenes MGL LLC, a Mongolian government state-owned company. The US$100 million third prepayment, which was due by June 30, completed a total prepayment package of US$250 million that was an attendant arrangement to the long-term Oyu Tolgoi Investment Agreement.