Oyu Tolgoi Underground Mine, South Gobi

Oyu Tolgoi sits in the South Gobi about 235 km east of Dalanzadgad and 80 km north of the Chinese border, and the underground project beneath the original open pit is one of the largest block caves anyone has tried to build. Rio Tinto’s 2020 definitive estimate put the underground capital cost at $7.06 billion, with roughly another $0.3 billion in pandemic-related overruns on top.

Project Scope

Five shafts serve the mine, at 1,148 to 1,385 metres deep. Shafts 2, 3 and 4 are 10 to 11 metres in diameter, which puts them among the largest-diameter mine shafts anywhere. Shaft 1 was sunk between 2005 and 2008, years ahead of any underground production, which is unusual sequencing and reflects how long the access works take relative to the orebody development.

Hugo North Lift 1 is the first block cave panel. The first two drawbells were fired in June 2022, and initial throughput is designed at 95,000 tonnes a day, ramping toward an average of about 500,000 tonnes of copper a year between 2028 and 2036. On that curve the mine becomes the fourth-largest copper producer in the world by 2030.

The workforce is more than 96 percent Mongolian, and Rio Tinto reports $13.4 billion of cumulative in-country spend since 2010.

Why It Matters

Block caving trades capital intensity for operating cost. You spend years and billions developing undercut levels, drawbells and materials handling before the first tonne moves, and once the cave is propagating you have very little ability to change your mind. Oyu Tolgoi shows both ends of that bargain. A 2013 dispute over a $340 million tax bill combined with cost overruns triggered a share collapse and mass layoffs, and the original $5.3 billion underground estimate had blown out to $7.2 billion by 2014.

The political exposure hasn’t gone away either. Rio Tinto bought out Turquoise Hill for $3.3 billion in December 2022 to simplify the ownership, and in June 2026 it renegotiated shareholder loan terms with the Mongolian government, cutting its administrative charges by half after protests briefly closed the copper export route to China. On a 50-year asset, that renegotiation is a recurring cost line rather than a one-off.

Project Team & Details