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Ore galore

June 5, 2015

Industries:
Mining
Geography:
Asia

Miners have struck gold in an isolated area of Mongolia, putting the country on a fast track for economic development.

Demchig Monastry Southern Gobi

When spring comes to the southern Gobi desert, Mongolian herders move their camels past the grounds of Oyu Tolgoi, a vast copper and gold mine now under development. The image is a perfect snapshot of Mongolia, where mining is catapulting a traditional society into the 21st century.

“This is one of the largest deposits in the world,” says Odd Reknes, Atlas Copco Country Manager for Mongolia, who has spent much of the last four years at Oyu Tolgoi, not far from the Chinese border. “We are talking about a full mining life of at least 60 years. This is fantastic for the Mongolian people.”

The site dates back to 2001, when the Ivanhoe Mines exploration company drilled 140 holes in the Gobi desert – and found nothing. Then, just on the verge of calling it quits, they struck gold. Oyu Tolgoi turned out to be a massive deposit, containing an estimated 36 million metric tons (79 billion pounds) of copper, and 1 275 metric tons (45 million ounces) of gold. It took five years for Ivanhoe to negotiate an agreement over the mine with the Mongolian government, which owns a 34% share. The balance is held by Ivanhoe, which is in turn partly owned by Rio Tinto, the Anglo-Australian global mining house.

Oyu Tolgoi (or “turquoise hill”) is already making a huge difference to the economy of Mongolia, which has in the past depended on foreign aid. “This is a major investment,” says Damian Rogers of Rio Tinto, General Manager for Underground Mining at Oyu Tolgoi. The project’s 2011 budget tops SEK 14 billion (EUR 1.4 billion).

The Mongolian economy will certainly get a boost once the copper-gold mine at Oyu Tolgoi begins production at its initial open-pit operation as early as 2012. Ultimately, the mine is expected to provide 30% of the country’s gross domestic product.

Developing Oyu Tolgoi brings fantastic opportunities, but it also presents some major hurdles. The mine is a 12-hour drive from the capital city of Ulaanbaatar on a desolate track through the desert.

“At present, there is little infrastructure,” says Rogers. “We have an unpaved road from China that handles about 100 trucks a day, making deliveries of steel and equipment.” That road will be paved, if plans proceed, and a new airport will also be built in the vicinity.”

Finding and training local employees represents another challenge. Atlas Copco opened its customer center in Mongolia in 2005 and currently employs more than 20 people. More recently, with construction gearing up, the company has begun supplying equipment to the mine, including large rigs for rock drilling and cable bolting. Huge open-pit mining machines are due to arrive soon.

“Our commitment is to employ as many local people as we can to work on the project.” Damian Rogers of Rio Tinto, General Manager for Underground Mining at Oyu Tolgoi

A team of Atlas Copco technicians services the equipment, nearly all of them Mongolian. “We recruit fresh, young graduates from the university in Ulaanbaatar, and then we train them,” Reknes says. Since there is nothing to do near the mine, most staff works a shift of six weeks on and four weeks off. “Oyu Tolgoi does have a very nice canteen, and its own sports facilities. And we have 290 days of sunshine a year.”

As part of the effort to support the local economy, Rio Tinto has a special department that works with small businesses near Oyu Tolgoi. “We develop suppliers who might build something for us, or grow vegetables for our mess hall,” Rogers says. “Our commitment is to employ as many local people as we can to work on the project.”

Gobi gold rush

As construction moves ahead, Atlas Copco is gearing up to become a major presence at the Oyu Tolgoi mine. In 2010, most of Atlas Copco’s management team spent three weeks in Mongolia learning about the operation.

“We have to build up the infrastructure within our own company,” says Odd Reknes, Atlas Copco Country Manager for Mongolia. “Rio Tinto expects the same level of service from us in Mongolia as they receive in a country like Canada.”

By the end of 2011, Atlas Copco expects to have 50 employees in Mongolia.

Study Abroad

Atlas Copco is committed to training Mongolian technicians to operate and maintain its equipment. In January 2011, the company sent five Mongolian technician-trainees to its factory in Örebro, Sweden, to spend two weeks learning about the latest technology.

“The project went very successfully,” says Damian Rogers, a general manager for Oyu Tolgoi. “We plan to send another group next year.”

New operators train by using a computer simulator at the mine before they try out the real machines. They also study English, helping everyone communicate regardless of whether their mother tongue is Swedish or Mongolian.

Written by Nancy Pick

“Our commitment is to employ as many local people as we can to work on the project.” Damian Rogers of Rio Tinto, General Manager for Underground Mining at Oyu Tolgoi

Infrastructure Mongolia Mining Rock drilling rigs Training Asia