Soaring construction costs at one of the world’s most promising copper projects have hit the mining industry, giving skittish investors reason to question how much the sector has truly changed.
Canada’s Turquoise Hill Resources Ltd., which owns two-thirds of the Oyu Tolgoi (OT) project in Mongolia, unexpectedly announced this month that an underground expansion of its mine will take much longer, and will cost much more, than originally planned.
Already expected to cost US$5.3-billion, the OT expansion will now require up to an additional US$1.9-billion in capital spending to complete. Sustainable production from the project has also been delayed by 16 to 30 months from original estimates, to between May, 2022, and June, 2023.
On a conference call, Turquoise Hill attributed the woes to geotechnical issues and ground conditions. “We must stop and pause and take the appropriate action, and that’s what we’re doing,” chief executive officer Ulf Quellmann said.
Global giant Rio Tinto PLC owns 51 per cent of Turquoise Hill and operates the OT project, having acquired the controlling stake from Canadian mining financier Robert Friedland. Turquoise Hill used to be called Ivanhoe Mines Ltd.
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