Rio Tinto (LSE:RIO) and Turquoise Hill (TSX:TRQ) have approved the next stage in the development of the Oyu Tolgoi copper and gold mine in Mongolia. The development of the mine will begin mid-2016, following the approval of a $5.3 billion investment by the partners and granting of all necessary permits. As quoted in the press release: …

First production from the underground, which has an average copper grade of 1.66 per cent, more than three times higher than the open pit, is expected in 2020. When the underground is fully ramped up in 2027, Oyu Tolgoi is expected to produce more than 500,000 tonnes of copper a year, 1 compared with current annual production of 175,000-200,000 tonnes. The mine also benefits from significant gold byproducts, with an average gold grade of 0.35 grams per tonne.
This expansion provides an attractive investment for all shareholders with an expected internal rate of return of more than 20 per cent. 2 The material from this brownfield expansion will utilise the existing concentrator and infrastructure. The size and quality of this tier one resource provides additional expansion options, which could see production sustained for many decades

Jean-Sébastien Jacques, deputy chief executive, said:

Rio Tinto’s partnership with Mongolia began over a decade ago and we are proud of what we have already achieved in building a world-class and safety-focused operation which has already been selling copper for nearly three years. Today’s investment takes it to another level and will transform Oyu Tolgoi into one of the most significant copper mines globally, unlocking 80 per cent of its value.

Click here for the full press release.