Top Miner Builds on Success with New Office for Community Development
Challenge
Mongolia’s South Gobi Desert is one of the planet’s most remote, unforgiving places. Its inhabitants, largely nomadic herdsmen, are brave, resourceful and resolute amid vast, often-frozen, expanses, sparse flora and fauna and fierce dust storms which can torment cities up to hundreds of miles away across the Chinese mainland.
This is the home of the Oyu Tolgoi (OT) mine, one of the earth’s largest and most challenging copper deposits and owned by the Mongolian government, Rio Tinto and Turquoise Hill Resources. With all its technical complexities and tough environs, Rio’s newest project is core to an unprecedented, market-driven transformation of one of the most impoverished, yet dynamic frontier economies.
The mine and its economic and sustainability-related benefits are aligned with the UN-led Sustainable Development Goals (SDGs). The SDGs also are integral to Rio’s comprehensive “4Ps” strategy: Performance, Portfolio, Partners and People. The OT demonstrates an example of resource-driven economic diversification at its best.
Solution
In January, Rio joined the Mongolian government to establish a special initiative to enhance local community development and exploration. It opened a new office, the “Mongolia Delivery Centre” (MDC), in the capital Ulaanbataar that has 80 staffers who support OT locally and Rio globally. It houses data analysts and software engineers from its information systems and technology (IS&T) team.
MDC staff will also have a priority focus on sustainable development for Khanbogd, the mine’s adjacent community. Much work is already underway, as Rio has provided Khanbogd with a permanent power supply, sealing of local roads and funding for new education and healthcare. Meanwhile, construction for a new bulk water-supply system and waste-management facilities is ongoing.
In ways big and small, Rio and its partnerships have already fostered an unprecedented sustainability ecosystem in Mongolia through robust public-private collaboration. In all, mining represents 90 percent of national exports and contributes to one-third of GDP, through supply chains and other economic activity, in this country the size of Australia with a population of just 3.1 million.
“Rio remains fully committed to Oyu Tolgoi and Mongolia …. We remain committed to creating opportunities for talented Mongolians to build careers on a global stage. This is a true win-win.”
– Jean-Sébastien Jacques, Rio Tinto Chief Executive
OT, the nation’s largest private sector employer with a 14,000-strong workforce—94 percent of which is Mongolian—appears front and center. Of these employees, 75 percent are engineers, professionals and others who serve in leadership roles. In total, Rio has committed $7 billion in Mongolia through salaries, supplier payments, investments in communities and $1.5 billion in taxes, royalties and other payments to the government.
Results
Indeed, in strict compliance with 70 national laws and governance standards, Rio has strong connections with the Mongolian government, which will receive more than 50 percent of OT’s economic benefits over the asset’s predicted half-century lifespan.
In partnership with Mongolia’s Ministry of Education, Culture and Science, Rio has advanced Mongolia’s technical and vocational and training systems through a $126 million commitment. Since 2015 it has led to the building and improvement of training centers spanning seven towns and cities, training for 1,200 teachers and hundreds of scholarships for Mongolian students at home and abroad.
Through direct and indirect cooperation with over 630 national businesses—representing more than half of all national procurement—Rio and OT are leaders in private-sector engagement, too. By targeting capacity and technology, Rio is pioneering a “Made in Mongolia” strategy to enhance supply chains.
About Rio Tinto
Since its founding in 1873, Rio Tinto plc has become one of the world’s leading diversified mining multinationals. With headquarters in Melbourne and London, it has 50,000 employees and red metal operations across Australia, Mongolia, Chile, the U.S. and Indonesia.
About Turquoise Hill and Oyu Tolgoi
Located in the South Gobi Desert, the Oyu Tolgoi (OT) copper-gold mine is jointly owned by the government of Mongolia, with 34 percent, and Turquoise Hill Resources with 66 percent. Turquoise is, in turn, 51 percent owned by project manager Rio. At 80 km north of the Chinese border, OT is one of the world’s largest quality copper mining projects.
About the Copper Alliance®
The Copper Alliance® is a network of regional copper centers and their industry-leading members. It is responsible for guiding policy and strategy and for funding international initiatives and promotional activities. Headquartered in Washington, D.C., the organization has offices in four primary regions: Europe and Africa, Asia, Latin America and North America. Copper Alliance programs and initiatives are executed in more than 60 countries through its regional offices and country-level copper promotion centers.