Rio Tinto faces major engineering change at Oyu Tolgoi

[Redator]

Rio Tinto (LON: RIO) (ASX:RIO) has approved a shift in underground development at its Oyu Tolgoi copper-gold mine in Mongolia, pausing progress in the Entrée Resources joint venture (JV) area due to ongoing delays in license transfers.

The company said the ramp up of production from Oyu Tolgoi remains on track to deliver an average of around 500,000 tonnes of copper from 2028 to 2036, with options including bringing Panel 1 or Panel 2 South into production first depending on the timing of the Entrée licence transfers.

“With lateral development work only just beginning in Panel 1, this is the right time to pivot and bring forward development in Panel 2 South to maintain our options,” said Katie Jackson, chief executive of Rio Tinto Copper.

“Our understanding of the orebody is growing as production and development progresses, further increasing our confidence and flexibility.”

While limited development will continue in parts of Panel 1 outside the JV boundary, Rio Tinto confirmed that resources will now be reallocated to expedite progress in the more accessible Panel 2 South.

The development freeze in the Entrée JV area stems from a delay in transferring licences to Oyu Tolgoi LLC (OTLLC), the operating entity jointly owned by Rio Tinto (66%) and the Mongolian Government (34%).

Entrée Resources (TSX:ETG) expressed disappointment over the holdup. CEO Stephen Scott noted that the transfer process began in February 2025 but remains incomplete.

“The parties have always intended for OTLLC to hold title to the Shivee Tolgoi and Javkhlant mining licenses on behalf of the JV participants,” said Scott. “It is a requirement of the 2008 JV agreement and contemplated in the 2009 Oyu Tolgoi investment agreement.”

He cautioned that any significant delay in development at Lift 1 Panel 1 could adversely impact the project’s cost, schedule, and Entrée’s financial position and share price.

As one of the world’s largest known copper-gold resources, Oyu Tolgoi plays a pivotal role in Rio Tinto’s growth strategy and Mongolia’s economic development.

Despite the revised strategy, Rio Tinto reaffirmed its 2025 copper production guidance of 780,000 to 850,000 tonnes.

Open pit mining at Oyu Tolgoi first started in 2011, and the copper concentrator, the largest industrial complex ever built in Mongolia, began processing mined ore into copper concentrate in 2013. Last year, underground production also kicked off, which is expected to elevate Oyu Tolgoi into one of the world’s top copper producers by 2030.