The effect of the coronavirus (COVID-19) spread is now being felt in slowdowns at some of the biggest mining projects that are in the construction phase, and notably two world class copper projects, namely Anglo American’s Quellaveco in Peru and the underground development part of Rio Tinto’s Oyu Tolgoi in Mongolia.
Anglo American has announced the temporary withdrawal of the majority of employees and contractors from its Quellaveco copper project in Peru, following the Government of Peru’s announcement of a 15-day national quarantine to curb the spread of COVID-19. Construction work on the project will therefore be significantly slowed, with only critical areas of the project continuing as normal, until such time as workers can return safely.
Mark Cutifani, Chief Executive of Anglo American, said: “The safety and health of everyone must come first, ever more so at times such as these. We are in the process of safely demobilising most of the 10,000 strong construction workforce at our Quellaveco copper project, in support of the Government of Peru’s measures to control the spread of COVID-19. Our development of this world-class project has progressed ahead of schedule and within our budget and we would expect to be able to accommodate this slowdown within our market guidance on both timing and costs at this stage.”
The Quellaveco copper project is expected to begin production in 2022, with an expected capital cost of $5.0 to 5.3 billion. During the first ten years of full production, Quellaveco is expected to produce approximately 300,000 tonnes per year at a cash cost of $1.05 per pound of copper.
Rio Tinto is working with the Government of Mongolia to ensure Oyu Tolgoi is operating in accordance with the restrictions the Mongolian authorities have put in place to contain the spread of COVID-19. The company stated: “The first priority of the Rio Tinto and Oyu Tolgoi teams is the health and safety of all of our employees, contractors and the wider community.”
Since January the movement of goods and people within Mongolia have been restricted within and across its border and this has further escalated recently as the first case of COVID-19 has occurred in the country.
Work on the Underground Project continues, however, progress is being slowed as a result of these measures. “There is restricted access for teams from Rio Tinto, Oyu Tolgoi and our construction partners to oversee development and provide specialist technical services. The availability of specialist service providers at the site is essential to safely continue work on technical activities such as the headframe commissioning of Shafts 3 and 4.”
The full impact of the slowdown on the Underground Project is unknown at this time and the company says it will update the market once more information is available. The mine design for the Underground Project currently remains on track to be completed in the first half of this year, with a definitive estimate to be provided for the development of this world-class orebody in the second half of 2020.
Despite the impact of COVID-19, the open pit of the Oyu Tolgoi mine continues to operate and deliver shipments of copper concentrate to its customers.
Rio Tinto Copper & Diamonds chief executive Arnaud Soirat said “Our focus is on ensuring the safety and health of all of our people at Oyu Tolgoi and we support the decisive action taken by the government to limit the spread of COVID-19. It has inevitably resulted in a restriction on the movement of goods and people in the country and this is slowing down construction activity at the Underground Project. It is too early to determine the impact of this and the team is doing all they can to minimise the disruption in a challenging environment. We will continue to work with our suppliers, customers and the government.”