OyuTolgoiPhase2:Plans,IssuesandRisksAnOverviewofOyuTolgoiPhase2MiningPlansandsomeoftheissuesandrisks
associatedwithblockcaveundergroundmining,internationalmetalpriceuncertainty,projectpowersupply,andimpactsonwaterresourcesusedbyherders
(SatelliteimageofOyuTolgoiMine,November2015,http://landsatlook.usgs.gov)
Preparedfor
CEEBankwatchNetworkPrague,CzechRepublicwww.bankwatch.org
andOTWatch
http://www.minewatch.mn/
January10,2016
ResearchDirector,SouthwestResearchandInformationCenterAlbuquerque,NewMexico87107USA
www.sric.org
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TablesofContents
Introduction 2WhoownstheOyuTolgoi(OT)Mine? 3WherearetheplansforOTPhase2described? 3WhatisplannedintheOTPhase2mineexpansion? 4Whatactionsareneededtocompleteapprovalofthe
OTPhase2expansion? 14WhatisBlockCaveMining? 16WhichBlockCavemineshasRioTintooperatedorplanned? 18WhataretheenvironmentalImpactsofBlockCaveMining? 19HowlargeistheSubsidenceZoneattheOTHugoNorthLift1 30 undergroundminepredictedtoextend? WhatareSomeoftheMajorImpactsofOTPhase1and2on WaterResourcesUsedbyHerders? 36HowdoInternationalMetalMarketPricesaffectOyuTolgoiPhase242 DevelopmentandFundingPlanandTechnicalReports?Howmuchhaveinternationalmetalmarketpricesfallensince 43
theOTPhase2TechnicalReport(OTTR2014)wasreleased?Whataresomeoftheplansandissuesassociatedwithdeveloping46 apowersupplyforOTPhase2?ArealternativesourcesofpowerpossibleforOTPhase2?49SourcesCited 51BriefBiographyoftheAuthor 55
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IntroductionOyuTolgoi’sPhase2planstomine1.5billiontonsoforearedescribedasthe“ReserveCaseMine”intheOctober27,2014OyuTolgoiTechnicalReport(OTTR2014),themostdetaileddescriptionofOTPhase2publicallyavailable.OTTR2014waspreparedusingtheCanadianNationalInstrument43-101“StandardsofDisclosureforMineralProjects,”whichisrequiredforminingcompanieslistedonCanadianStockExchangessuchasTurquoiseHillResources(TRQ),66%ownerofOyuTolgoiLLC).(OTTR2014atP.i)The“ReserveCase”oretobeprocessedduringPhase2willcomefromtwosources:
1) theSouthernOyuTolgoi(SOT)openpitand2) ThedeeperHugoNorth“Lift1”ore,minedusingtheundergroundblockcaving
method.OthermineralresourcesidentifiedattheOyuTolgoisitebutnotproposedforthe“ReserveCase”mine-“Phase2”-aredescribedaspartofthelong-term“LifeofMineCase”(OTTR2014).“LifeofMineCase”depositsinclude:HugoNorth“Lift2”–anoredepositbeneath“Lift1”,theHugoSouth,andtheHerugadeposits.OTTR2014identifiesaseriesofdecisionoptionsrelatedtotheminingofthe“LifeofMineCase”depositsduringthenext10years,andbeyond,thatcouldleadtodevelopmentoftheseadditionaldeposits,includingextractionduringtheminingofthe“ReserveCase”oreintheopenpitandHugoNorthLift1in“Phase2”thatwouldbecompletedintheyear2055.DevelopmentandfinancingplansforminingtheOT“ReserveCase”oreisthesubjectoftheMay18,2015OyuTolgoiUndergroundMineDevelopmentandFinancingPlan(OTUMDFP2015)signedinDubaibyGovernmentofMongoliarepresentativesandOyuTolgoiLLC’scorporateowners.TheOTUMDFP2015addressesarangeofsubjectsincludingthecostofconstructionofOTPhase2,OTPhase2impactsontheMongolianeconomy,proposedschedulesforactionondevelopmentofafutureOTpowersupply,aninvestigationoftheeconomicviabilityofacoppersmeltertorefinethe30%copperconcentratecurrentlyproducedatOT,andtaxandfinancialaccountingconsiderations,amongothermatters.ThisreportsummarizestheminingactivityproposedbyOTinitsPhase2developmentplan,describestheblockcavingundergroundminingtechnologyplannedforthelargedeeporebodytobeminedinPhase2,environmentalimpactsandreclamationpotentialofblockcavemines,andissuesandrisksassociatedwithafutureOTpowersupply,internationalmetalmarketpriceuncertainties,andOTPhase1and2impactsonwaterresourcesandherdersandtheirlivelihoodintheregionsurroundingtheOTminelicensearea.
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WhoownstheOyuTolgoi(OT)Mine?TheOyuTolgoicopperandgoldproject(OyuTolgoi)isbeingdevelopedbytheOyuTolgoiLimitedLiabilityCorporation(OTLLC).OTLLCis66%ownedbyTurquoiseHillResourcesLtd(TRQ)and34%ownedbyErdenesOTLLC.RioTintoplc(RioTinto)maintainsacontrollinginterestinthroughitsownershipof51%ofTRQandisthemanageroftheOTproject.TheGovernmentofMongolia(GOM),throughErdenesOTLLC,owns34%ofOT.(OTUMDFP2015)WherearetheplansforOTPhase2described?OTPhase2miningplansaredescribedintheOyuTolgoiTechnicalReportreleasedOctober27,2014(OTTR2014),a547-pagereportpreparedusingtheCanadianNationalInstrument43-101StandardsofDisclosureforMineralProjects,amineralresourceestimationandreportingregulation.OnAugust,27,2015,OTannouncedithadsubmittedrevisionsoftheschedulesinitsMarch2015FeasibilityStudytotheMongolianMiningCouncilthat“align”withtheMay18,2015OTUndergroundMineDevelopmentandFinancingPlan(OTUMDFP2015)andtheOTTR2014.(TRQ8-2015)OyuTolgoihasnotmadetheMarch2015OTFeasibilityStudyavailabletoinvestorsorthepublic.ItisnotlistedinSEDAR.comrecordsofCanadiancorporationpublicfilingforOTalongwithpreviousNI43-101complianttechnicalreports,orontheOTorTRQwebsites.AsOT’sMarch2015FeasibilityStudyisnotavailablefromtheOTsiteorotherpubliclyavailablesources,thisReportreliesontheOTTR2014asthemostcurrentavailableversionOT’splansforPhase2.OTTR2014isavailableathttp://www.turquoisehill.com/i/pdf/2014-10-27_OyuTolgoiTechReport.pdfandhttp://www.turquoisehill.com/s/oyu_tolgoi.asp?ReportID=379189CompletionofanupdatetotheMarch2015OTFeasibilityStudyisoneoftheobligationsrequiredundertheOTUMDFPrequiredbeforefinalapprovalbytheBoardsofDirectorsoftheOTowners.
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WhatisplannedinOyuTolgoi’sPhase2mineexpansion?OTPhase2proposestheextractionandprocessingoforefromthecurrentlyoperatingSouthernOyuTolgoiopenpit(SOT)whilealsoconstructingandoperatinganundergroundmineusingtheblockcavingminingmethodtoextractorefromaportionoftheHugoNorthoredepositcalled“Lift1”throughtheyear2055.OTTR2014forecastsoverallmineproductionduringPhase2,calledthe“ReserveCase”inOTTR2014,continuingthrough2055.OTPhase2oreproductionisprojectedtobeaverageabout115,000tonsperday(tpd),equaltoabout40milliontonsperyear,duringthe2020–2039periodwhentheundergroundHugoNorthLift1blockcavemineisproposedtooperate.FutureOTexpansionthatarenotincludedinOTPhase2couldinvolveadditionalundergroundminingatHugoNorthLift2beneathLift1,andundergroundminingattheHugoSouthDepositandtheHerugaDeposits.OTopenpitoreproductionwouldfallfromthecurrent100,000tonsperdayto20,000tonsperdayduring2019–2039period,whentheHugoNorthLift1mineisprojectedtoproduce95,000tonsoreperday.ThisproposedmixofopenpitandundergroundoreiswouldkeepthecombinedtonnageofOToreprocessedtoabout115,000tonsperdaybetween2019whenNorthHugo“Lift1”undergroundorewouldbegintobeextracted,and2039whenoreextractionfromtheOTPhase2portionoftheHugoNorthundergroundminewouldbecompleted.OTPhase2plans,schedulesandresourceestimatesareshowninFigures1–9thatprovideFiguresfromOTTR2014andanAugust2015OTInvestorandAnalystSiteVisitPresentation(TRQ8-2015b)withannotationsandcommentarybytheauthor..
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Figure1-OyuTolgoiandSurroundingLicenses–ProjectLocation
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Figure2-LocationandDepthofOyuTolgoiDeposits
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Figure3–OTPhase2RestartMilestones
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Figure4–OTPhase2ProbableDevelopmentSchedule
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Figure5–OTPhase2Medium-TermTimeline–2015–2026++
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Figure6–OTPhase2OreDescriptionandProductionSequence
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Figure7–OTMultipleDevelopmentOptionsbeyondPhase2
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Figure8–LocationofOTPhase2andOT“LifeofMineCase”depositsthatmaybeminedinadditiontothePhase2oredepositsinthefuture
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Figure9–“HugoNorthLift1MineDesignProject”and“Isometric[View]ofMineDesign”
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WhatactionsareneededtocompleteapprovaloftheOTPhase2expansion?TheMay18,2015OTUMDFPAgreementbetweentheGovernmentofMongoliaanditspartnersinOTLLC(OTUMDFP2015)identifiesaseriesofstepsneededtocompleteapprovalofOTPhase2.Thesteps“requiredbeforetheaspirationslistedinthatagreementcanbegintoberealized,”atsection4.7onp.6,include:
“[The]PartieswishtoproceedexpeditiouslywiththeconstructionoftheUndergroundStage.However,thePartiesagreethatconstructionofUndergroundStagewillcommenceonlyafter:
(a)OTLLChassatisfiedtherequirementstoobtainthirdpartyprojectfinancetofundtheUndergroundStage(the“UGProjectFinance”);and
(b)TheUndergroundStageisapprovedbyeachoftheBoardsofRioTinto,TRQandOTLLC”
Atsection5.5.a.atp.6,theMay2015GOM-OTAgreementsays,
“UptoUSD$6billionofexternalfundingwillberaisedthroughthirdpartyprojectfinancing(includingUGProjectFinance)andotherbankfinance,productoff-takearrangementsorotherformsoffinancing.”
OnDecember14,2015,TurquoiseHillResources(TRQ)announcedthatthesigningofa,“USD4.4billionprojectfinancingfacility”.(TRQ12-2015).ThefacilityprovidesloansthroughagroupofinternationalfinancialinstitutionsandexportcreditagenciesrepresentingthegovernmentsofCanada,theUnitedStatesandAustralia,alongwith15commercialbanks.The$4.4billionprojectfinancefacilityOT’sownerssignedprovidesasetoffourloanswithpaybacktermsof12–15years.TheloansagreedtobyOTLLCandthelendershaveadebtcapacityof$6.0billionforOyuTolgoi,providingtheoptionforanadditional$1.6billion.
FuturestepstocompletetheloanprocesssummarizedbyTRQinitsDecember14,2015releaseare:
“TurquoiseHill,RioTintoandOyuTolgoiwillnowcontinuetoworktowardscompletingthe2015feasibilitystudy,includingtheupdatedcapitalestimateandsecuringallnecessarypermitsforthedevelopmentoftheundergroundmine.“OncethesestepshavebeencompletedandsubjecttotheboardsofTurquoiseHill,RioTintoandOyuTolgoiapprovingaformal‘noticetoproceed’,thefull$4.4billionfacilitywillbedrawndownbyOyuTolgoisubjecttosatisfactionofcertainconditionsprecedenttypicalforafinancingofthisnature.”
TheMay2015OTUMDFPAgreementatsection5.2acknowledgesthat,“ApprovalofUGProjectFinanceisadecisionfortheBoardsofRioTinto,TRQandOTLLCandtheShareholdersofOTLLC.OyuTolgoiBoardapprovalofUGProjectFinanceisrequiredbythelendersundertheProjectFinancetobeunanimous.”
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TheOTUMDFPatP.3identifiestheCapitalCostofOTPhase2as$6.7billionUSD,including$4.7billioninundergrounddevelopmentcapital,$1.5billioninsustainingand$0.6billionUSDinValueAddedTax(VAT)andDutiesonCapital.TheOTUMDFP2015andOTTR2014donotincludeplansforeitherasupplementaloranewEnvironmentalandSocialImpactAssessment(ESIA)forOTPhase2.OTTR2014,atp.446says,“The[2012OT]ESIAaddressesaprojectwitha27-yeardesignlife.”OTPhase2isprojectedfora40-yeardesignlifefromfeasibilitystudiesandfinancialin2016through2055.OTTR2014,says,
“ItisanticipatedthattheProjectwillcontinueinoperationwellafterthatdate[of2055],possiblyathigherproductionrates.Suchplansarestillatanearlystage,sowhiletheyarereferredtointheESIA,theyarenotevaluatedintheESIAbecauseofthelimitedamountofinformationavailable.
“Similarly,anumberoffuturedevelopmentsofproject-associatedfacilitiesarestillunderevaluation,andnocleardecisionhasyetbeenmadeastothepreferredapproachtobeadoptedbytheProject,”includingarailroadlineandapowersupply.
OTPhase2plansprovidethat,
“certainotheractivitiesandfacilitiesareexpectedtobedevelopedovertime,eitheraspartoforinsupportoftheproject,whichdonotconstitutepartoftheProjectforthepurposesoftheESIA.Theseinclude:• Projectexpansiontosupportanincreaseinorethroughputfrom100–160ktpd.• Long-termProjectpowersupply.UnderthetermsoftheIA,OTLLCwillsource
electricityfromwithinMongoliawithinfouryearsofthecommencementofProjectoperations.OTLLCmaydevelopacoal-firedpowerplantwithintheOyuTolgoiMineLicenceAreatoprovidetherequiredpowerfromMongoliansources.
WhiletheimpactsandmanagementofthesefutureProjectelementsarenotdirectlyaddressedintheESIA,theyareconsideredinthecumulativeimpactassessment.”(OTTR2014,P.445)
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WhatisBlockCaveMining?The2005OyuTolgoiIntegratedDevelopmentPlan(IDP)ExecutiveSummarydescribestheblockcaveundergroundminingmethodthatwillbeusedinOTPhase2toextractorefromtheHugoNorthLift1undergroundmineas:
“[A]safe,proven,andhighlyproductivemethodforextractingbulkoretonnagesfromundergroundmines.Itinvolvesundercuttingpartoftheorebodyacrossaplanarea,causingtheoverlyingrocktocollapse.Thecollapseoftheore,or“cave,”is“bydesign”andisaccomplishedinadeliberate,controlled,andpredictablemanner.Initially,theoreisundercutandinducedtocavebyblasting.Thereafter,theblastedorefallsintoanarrayofdrawpointsbeneaththeinitialcaveareaandisremovedbyload-haul-dump(LHD)equipment.Asbrokenoreisremoved,thepilewithinthecaveslumps,creatingavoid,whichinturnpromotesfurthercaving.”(IDPES2005)“Blockcavingisexpectedtoresultinsurfacesubsidence.Topreservetheintegrityofthemineshaftsandprincipalinfrastructure,theshaftsandinfrastructurewillbegroupedtogetherina“farm”approximately1,500mduewestofthecentrelineoftheresource.”(IDPES2005P.47)(Emphasisadded)
TheSMEMiningEngineeringHandbook2011(SME2011)describesBlockCavingas,
“[A]massminingsystemthatusestheactionofgravitytofractureablockofunsupportedore,allowingittobeextractedthroughpreconstructeddrawpoints.Byremovingarelativelythinhorizontallayeratthebaseoftheorecolumnsusingstandardminingmethods,theverticalsupportoftheorecolumnaboveisremovedandtheorethencavesbygravity.Asbrokenoreisremovedfromtheorecolumn,theoverlyingorecontinuestobreakandcavebygravity.”
“Althoughsomerelativelysmallerblockcaveorebodiesarecavedandminedasasingleproductionblock,mostexistingandplannedblockcaveminesuseeitherofthefollowing:
•Anextendedblockcavingsystemthatdividesthedepositintodiscreteproductionblocks;or•Asinglecavefront(orseriesoffronts,or“panels”)advancingforward
throughtheorebody,continuallyopeningupnewproductionareasastheearliercavedareasbecomeexhausted.
“Theblockcavingmethodtypicallyallowsforrelativelylargevolumesofproductionaftertheminehasbeendevelopedandproductionramp-uphasbeenachieved.Thepreproductiondevelopmentperiodcanbesignificant(typically5–10years,dependingonthelengthoftimetoachievetheinitialaccess).Theup-frontcapitalrequiredpriortoanyreturnoninvestmentisveryhighbecausemuchoftheproductionlevelsandinfrastructuremustbeinplacebeforecavingcanbegin.“Aftertheminehasreacheditssustainedmaximumproductionrate,theoperating
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costtendstobeverylowwithminimaladditionalinfrastructurerequiredtomaintainthehighproductionvolumes.Blockcavingisgenerallytheleastexpensiveofallundergroundminingmethods,andcaninsomecasescompetewithopen-pitminingincost.”(SME2011atP.1356)
NorevisionofOyuTolgoi’s2012EnvironmentalandSocialImpactAssessment(ESIA2012)isproposedtoaddressOT“Phase2”asdefinedbythe“ReserveCase”inOTTR2014.TheProjectDescriptionportionoftheESIA2012providesan“OverviewofBlockCaving”thatsays,An“OverviewofBlockCaving”isprovidedintheOTESIA2012-ProjectDescription(A4),atP.21of77:
“Blockcavingisahigh-tonnageundergroundbulkminingmethodgenerallyappliedtolargehomogeneousoredeposits.Ideally,theoretobecavedshouldbestructurallyweak,andthewasteoverburdenshouldbeweakenoughtocollapseovertheorewithoutinducementastheoreisextracted.
“Blockcavinginvolvesexcavationofnaturalsupportfrombeneaththeore,causingthestructureoftheorebodytofailandcollapseintotheexcavatedvoidundertheforceofgravityandlocalgeo-mechanicalstresses.Thebrokenoreisthenpulledoutfromunderthecavedsectionthroughadrawpointarrangement,subsequentlyremovingsupportfromoreandoverburdenatincreasingheightabovetheinitialexcavation,andeventuallyextendingthecaveupwardtothesurface.“Theattractiveaspectofblockcavingisthatonlyarelativelysmallportionoftheoremustbedrilledandblastedpriortoextraction.Oncethecaveinitiates,productioncontinueswithoutfurtherprimarydrillingandblastinguntiltheorecolumnaboveisexhausted.“Theblockcaveminingsequencebeginswithaccessandinfrastructuredevelopment,followedbyexcavationoftheextractionlevel,andundercuttingtheore.Thesequenceculminatesinsteady-stateproductionfromindividualdrawpoints.“Oreinthecolumnisdilutedbymaterialinadjacentcolumnsandultimatelybyoverburdenandadjacentwasterock.Whenthecolumndrawdowniscompleteanddrawpointgradedropsbelowaminimumvalue,thedrawpointisabandoned.Greatcareistakeninestablishinguniformdrawpracticesthroughouttheminetomaximisedrawpointlifeandminimisedilutionandstressloadingfromundergroundworkings.“Blockcavingisacapital-intensiveminingmethod,requiringsignificantinvestmentearlyintheminelifeforinfrastructureandprimarydevelopment.Onceinplace,themethod’shighup-frontcostsareoffsetbyhighproductionratesandlowoperatingcosts(relativetootherundergroundmethods)overaconsiderablelengthoftime,resultinginalowoverallcostpertonne.Blockcaveminingisamongtheleastcostlyofallundergroundminingmethodspertonneoforeextracted.
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“Blockcavinghasanumberofpositiveattributesincludingnowasterockstorageonthesurfaceandnolargeopenpits.Oneconsequenceofblockcavemining,however,isthepotentialforsurfacesubsidenceorsettling.Surfacesubsidenceiscausedasthematerialabovetheorebodygraduallymovesdownwardtoreplacetheorethathasbeenmined”.
WhichBlockCavemineshasRioTintooperatedorplanned? FiveexistingandproposedblockcaveminesareorhavebeenownedinwholeorinpartbyRioTinto,currentmajorityowneroftheOyuTolgoi,LLC.Theseinclude:Closed-Palaboracoppermine,LimpopoProvince,SouthAfrica–57%RioTinto,26%public,17%Anglo-American;currentlyclosed.See,forexample,“PalaboraMineClosureFactSheet”athttp://www.palabora.com/documents/factsheet_closure.pdfOperating-Northparkescopperandgoldmine,CentralNewSouthWales,Australia–formerly80%ChinaMolybdenumCo.,Ltd.(acquiredfromRioTintoin2013),20%Sumitomo;See,forexample,http://www.geovia.com/sites/default/files/Australian_Journal_Mining_Jan2008_LR.pdf-DeepOreZone(DOZ)blockcavemine,GrasbergMine,Papua,Indonesia–40%RioTinto,60%PTFreeportIndonesia;See,forexample,GrasbergBlockCave”,athttp://www.infomine.com/publications/docs/InternationalMining/Chadwick2010k.pdf)Planned-HugoDummettNorthandSouthdeposits,OyuTolgoigoldandcopperproject,SouthGobiRegion,Mongolia;and-ResolutionCopperproject,Superior,Arizona,US-55%RioTinto,45%BHPBilliton.See,forexample,“UndergroundMining”athttp://resolutioncopper.com/the-project/underground-mining/)
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WhataretheenvironmentalImpactsofBlockCaveMining?Large-scalepermanentsurfacesubsidenceabovetheextractionzoneistheprimarylong-termenvironmentaldamageresultingfromblockcavemines. Thesurfacecollapse,subsidenceandfracturingofthelandsurfaceabovethemineresultingfromextractionoforeusingtheblockcaveminingmethodsleadstoenvironmentaldamagethatisnotamenabletotopographicorbiologicalreclamationtoestablishproductivepost-mininglandusesbecausethedamagedlandsurfaceaffectedbytheblockcave-inducedsubsidenceisphysicallyunstable.Asdescribedin“OreBodyAccess,”MiningMagazine,03May2011says:
“Oneoftheprimarydisadvantagesofblockcavingisthatitremovesmuchofthesupportingrockfromunderneaththeoverburden,whichoftenleadstosubsidenceofthesurface.Cavinginducedsubsidencemayendangermineinfrastructureandisamajorconcernforoperationalsafety.”Changestosurfacelandformsbroughtaboutbysubsidencecanbedramaticandmayleadtoapronouncedenvironmentalimpact.Therefore,theabilitytopredictsubsidencehasbecomeincreasinglyimportantforoperationalhazardandenvironmentalimpactassessments.”(emphasisadded)(MiningMag.2011)
Surfacesubsidencecratersareatypicalfeatureatblockcaveminesaroundtheworld.Thirtyoftheundergroundblockcavingminesaroundtheworldaresummarizedin“Characterizationandempiricalanalysisofblockcavinginducedsurfacesubsidenceandmacrodeformations,”Woo,K.,etal,ROCKENG09:Proceedingsofthe3rdCANUSRockMechanicsSymposium,Toronto,May2009,(Woo2009)at:http://www.geogroup.utoronto.ca/rockeng09/proceedings/innerFrames/PDF/Session19/4044%20PAPER.pdf.Woo2009identifiesthreezonesofsurfaceimpactfromblockcaving,aninner“CavedZone,”asurrounding“FracturedZone”anda“Subsidence”zonesurroundingtheinnerzoneofgreatersurfacedeformation.Figures10–17demonstrateblockcavingminingimpactstothelandsurfaceaboveandsurroundingtheoreextractionzone,including:
- a“cavedzone”directlyabovetheblockcavingminingarea,wherethesurfacecollapsesintothevoidbelowthesurfacefromwhichorehasbeenextracted;
- a“fracturedzone”overtheareaaroundthe“cavedzone”affectedbythecollapseovertheorebodywhere“tensioncracks”developatthesurfaceandbelowthesurface;and
- a“continuoussubsidencezone”affectedbysurfacedisruptionandinstability.
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Figure10–(IncludedinFigure12)“Definitionofblockcavingsubsidencezonesandits
quantificationwithrespecttoanglesex-tendingfromtheundercut”(Woo2009)TheillustrationofblockcavingfromWoo2009issimilartotheillustrationofblockcavinginOyuTolgoi’sIDOP2012showninFigure11.
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Figure11–(IncludedinFigure12)“DefinitionofSubsidenceZone(afterMMT–PermissionfromRioTinto)”fromOyuTolgoiIDOP2012,P.325,-Figure16.22
Figure12–22showtheblockcaveminingmethodproposedbyOTandtheassociatedcollapseandsubsidencezonesfromOTTR2014andothersourcesidentifiedintheFigureswithannotationsandcommentarybytheauthor.
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Figure12–“DefinitionofSubsidenceZones”
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Figure13–BlockCavingandSubsidence–“MostProbablePredictionofSubsidencefortheResolutionCopperMine,aRioTinto-BHPBillitonprojectinArizona,USA
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Figure14–IllustrationsofOTPhase2“OreFlow”and“CaveMonitoring,”andSurfaceSubsidencepredictionatRT-BHPResolutionCopperMine.
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Figure15–OTHugoNorthLift1SubsidenceZonepredictionsfrom2010and2012
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Figure16–ComparisonofOTPhase2SubsidenceAreapredictedin2012andCentralUlaanbaatar.
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Figure17–OverlayofOTPhase2SubsidenceZonepredictedin2012onCentralUlaanbaatar.
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Thesurfacesubsidenceresultingfromblockcaveminingleavesapermanentholeinthegroundabovetheminewherethesurfacecollapsesintothemine,aringofcontinuoussubsidencearoundtheedgeofthecollapsezone,andringoffracturelandaroundtheedgeofthecontinuoussubsidencezone.Reclamationtoreestablishtopographicallystablelandscapewithsustainablevegetationisnotpossibleatblockcaveundergroundminesasthelandsurfaceabovetheblockcavemineisphysicallyunstableandunsafeforoperationofreclamationequipment,andforpeopleandanimalsenteringthefracturedrockorsubsidencezone.Theextentofthe“cavedzone”isdefinedbya“caveangle”or“angleofbreak”illustratedinFigures10,11and12.Theextentofthefracturezoneisdefinedbyan“angleoffractureinitiation,”andtheextentofthecontinuoussubsidencezoneisdefinedbyan“angleofsubsidence.”Woo2009includes,inadditiontoanoverviewoftheblockcavingminingmethod,descriptionsandillustrationsoftheopencavezoneandsurroundingsubsidencezoneatoperatingminesat30blockcaveminesaroundtheworld,includingimagesofcollapseandsubsidencezoneat18blockcavingmines.Figure18below(Woo2009,Figure5),showssatelliteimageryofsurfacesubsidenceatblockcavemineswheretopographicconditionshaveasmallimpactonthestructureofthecollapsezone.
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Figure18–“Macrodeformationpatternsobservedinwhichtopographiceffectsareminor”
atblockcavemines(Woo2009)TheshapeofthesubsidencezonesintheFigureshow–the“macrodeformationpatterns”–asidentifiedinWoo2009are:TypeA=circular,TypeB=elliptical,TypeC1=irregularwithscarps,butwithoutadistinctcollapsezone,andTypeC2=irregularwithadistinctcollapse
structure/gloryhole“wheretopopographiceffectsareminor.”
NoscaleisprovidedfortheimagesinWoo2009.
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HowlargeistheSubsidenceZoneattheOTHugoNorthLift1undergroundminepredictedtoextend?SurfacesubsidencezonepredictionmapsfortheHugoNorthLift1blockcaveminehavebeenincludedintheOTIntegratedDevelopmentPlansfrom2005,2010and2012.Theprojectedextentofthelandarealikelytobeaffectedbythecaved,fracturedandsubsidencezoneattheHugoNorthminesiteincreasedsubstantiallyintheIDOP2012fromthatprojectedinIDP2010.TheIDP2010projectionofthecaved,fractureandsubsidencezonesabovetheHugoNorthLift1undergroundminebelowshowsthe“shaftfarm”area–thesiteshaft2–outsidetheprojectedcontinuoussubsidencezone.
Figure19-(AlsoinFigure15)“ProjectedSubsidenceZone”(IDP2010,P.373(Figure
23.89.8)InthisFigure,thegridlinesarespaced500metersapart.TheprojectedHugoNorthminesubsidencezonepresentedinIDOP2012,showninFigure20below,hasexpandedmore500meterstothewestresultinginthe“CavedZone”includingthe“ShaftFarm”areatheShaft2siteandotherinfrastructurefeatureswellinsidetheinnerring–theprojected“cavedzone”ofthesubsidencezone–inadditiontoShaft1.
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Figure20–(AlsoinFigures15-17)ProjectedSubsidenceZonefromIDOP2012:“TheprojectionshowninFigure16.33merelyillustratestheextentofsurfaceareathatthegeneralizedsubsidenceprojectionsencompass.Furtherstudyisrequiredtomore
accuratelypredictactualcavepropagation.”(IDOP2012,p.358).InthisFigure,thegridlinesarespaced1,000metersapart.
Propagationofthe“CavedZone”toincludetheShaftFarmArea–theShaft2,Shaft1andotherinfrastructurefeaturesisalsoillustratedintheProjectDescriptionportionoftheESIA2012,asshowninFigure21,below.
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Figure21–“ProjectedBlockCaveSubsidenceZone,”(ESIA2012-ProjectDescriptionFigure4-10p.23of77)
OyuTolgoi’sIDP2010acknowledgedtheseverityoftheimpactofthecavedzoneonShaft1noting,
“Thesubsidencezonefromtheextractionleveltothesurfaceisprojectedat60o,perSRK’sRecommendation[Figure3inthisreport](Figure23.8.8).Allplannedinfrastructureisoutsidethiszone,exceptforShaftNo.1.ShaftNo.1islocatedinsidethe60osubsidenceareaattheedgeof65osubsidenceline.ItisassumedthatShaftNo.1willbestrippedofallconveyancesoncefullproductionisachievedandwillbeusedforventilationonly.”
OyuTolgoi’sIDOP2012illustrationoftheprojectcaved,fractured,andsubsidencezones(Figure20inthisReport),showsthattheextentofthe60osubsidenceareahasexpandedtoincludeShaftNo.2andmostoftheShaftFarmarea.The60osubsidencelineindicatedinIDOP2012isapproximately500meterswestofthelocationofthe60osubsidencelineinIDP2010,engulfingtheShaftNo.2site.NeithertheIDOP2012northeESIA2012addressconsequencesoftheprojectedcave,fractureandsubsidencezonesonshaftNo.2,ortheotherinfrastructureidentifiedaswithintheprojectedsubsidencezone.WhiletheIDP2010assertedthatallinfrastructureotherthanShaftNo.1weretobelocatedoutsidethe60oangleofsubsidencezonetopreventimpactsfromcaving,fracturingandsubsidence,manyOTminefacilitiesareshownwithinthe60oangleofsubsidenceshownforthemineintheIDOP2012.TheseminefeaturesincludeShaftNo.2,andthe“ShaftFarm,”amongotherinfrastructure.Thelackof
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attentiontotheimpactsofsubsidenceonareaswithinthe60osubsidenceangleasprojectedinIDOP2012appearstobeasignificantdefectinESIA2012.WhileOTTR2014providesadiscussionofblockcaveminingontheHugoNorthLift1,itdoesnotprovideafigureorotherinformationthatillustratesthefullprojectedsubsidencezonefromtheOTPhase2,the“ReserveCase”mine.OTTR2014says,
“Thepredictedfracturelimits(determinedasthepointofhavinganotableimpactonkeyinfrastructuresuchashoistingshafts)bytheendofminingHugoNorthLift1areshownbytheredoutlineinFigure16.13.Afencewillbeconstructed100moutsidethisredoutlinetorestrictaccess.Thesubsidenceanglesarepredictedtobenearlyverticalatthenorthernandsouthernlimitsofthecave,whereconfinementishighest,andareapproximately55°intheeastandwest,whereconfinementislowest.Allshaftsandpermanentinfrastructureareplannedtobesituatedoutsidethepredictedfracturelimits.“Shaft1isclosesttothefracturelimits.Shaft1willbeusedasahoistingshaftuntiltheShaft2loadoutandprimarycrusherarecommissionedbyearly2019.ThereaftertheprimaryfunctionofShaft1isforintakeventilation.Thisprovidesadditionalcontingencyagainstanunexpectedlylargercavesubsidencedamagearea,asabaldconcretelinedshaftcanwithstandhighergroundmovementthanashaftreliantontheclosetolerancesofoperatinghoistinginfrastructure.”Constructingafence100metersoutsidethesubsidencezone–“theredline”inFigure22below–istheonlyreclamationmeasure,otherthanmonitoringtheextentofsubsidence,identifiedinOTTR2014.
Figure22belowisareproductionofFigure16.31inOTTR2014.NoscaleisprovidedfortheFigureinOTTR2014toallowcomparisonwiththeIDOP2012andESIA2012FiguresillustratingOT’sprojectedsubsidencezone.TheOTTR2014Figureappearstoprojectamuchsmallersubsidencezonethan2012IDOPbasedonthelocationofthe“ShaftFarm”inthelowerleftofFigure22.NoanalysisisprovidedorcitedfortherevisionoftheOTPhase2subsidencezoneinOTTR2014fromthatprojectedintheIDOP2012orESIA2012.
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Figure22 – “Figure16.31SubsidencePredictionsfromModeling”OTTR2014,p.310
AsisclearfromacomparisonofthesubsidencezoneillustrationsfromIDOP2012andOTTR2014,thefullextentofthesubsidencezoneisnotshownineitherofthedocuments.As2014OTTRhassolittledetailaboutblockcavingmethodsorconsequencesandnoESIAupdateassociatedwithit,the2012ESIAandsupplementremainthesoleavailableenvironmentalimpactassessmentforOyuTolgoi’sopenandundergroundmineplans.IntheESIA2012,aneightsquarekilometer – 8km2 – caved,fracturedandsubsidencezoneispredictedtodevelopedaboveOyuTolgoi’sHugoNorthUndergroundBlockCavingMine.ESIA2012,initsdiscussionofthe“NatureoftheImpact”ofproposedOyuTolgoimine,in“SECTIONC:IMPACTASSESSMENTCHAPTERC4:TOPOGRAPHY,LANDSCAPE,GEOLOGY&TOPSOILS(“ESIA2012C4”,filename:ESIA_OT_C4_Topography_EN.pdf)projectsthefullareaoftheprojectedcaved,fracturedandsubsidencezoneabovetheHugoNorthmineisprojectedasmorethan8squarekilometers.ESIA2012–C4atP.10of18states,
“[T]heremovaloforethroughtheblockcavingislikelytoresultinasubsidence
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zonelaterintheminelifeasthecavingpropagatestothesurface.Initialestimatesarethatthissubsidencezonewillcoveranareaofover8km2andbecharacterisedbyadepressionsurroundedbyacircularcliff-likefeaturewithanoverallcliffheightinexcessof20m,whichmightbemanifestasasingleclifformultiplesmallercliffs.Dependingonthenatureofthesurfacemanifestationofthisfeature,theimpactwillbeontopographyandlandscape;andalsoonhydrogeologyandhydrology(seeESIA2012SectionC5),andpotentiallypresentapotentialcommunitysafetyissueifcliffsareunstableonceherdersareallowedbackintotheareafollowingmineclosureandrestoration.”
TheESIA2012addsthat,
“thefullextentofthesubsidencezoneisprojectedtomorethanthreetimesthesizeoftheopenpitmineplannedatthesite,projectedtobetwosquarekilometers(2km2)”,atESIA2012,C4p.10.
Figure17showstheextentofOTPhase2undergroundblockcavingmineandassociatedcollapseandsubsidencezonebasedonthe2012IDOP“ProjectedSubsidenceArea,”byoverlayingtheprojectedOTPhase2subsidencezoneonanGoogleEarthimagesatelliteimageofcentralUlaanbaatar.OTTR2014doesnotidentifyspecificeffortstocontinueinvestigationstodelineatetheOTPhasecollapseandsubsidencezonethatwouldrespondtotherecognitioninIDOP2012atP.358that“furtherstudyisrequiredtomoreaccuratelypredictactualcavepropagation.”NosupplementalornewESIAisproposedbyOTtoaddresstheblockcavemineplannedinOTTR2014.
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WhatareSomeoftheMajorImpactsofOTPhase1and2onWaterResourcesUsedbyHerders?IssuesrelatedtotheimpactsofOToperationsonwaterresourcesusedbytheherderfamiliessurroundingthemineareahavebeenidentifiedin“IndependentEnvironmentalPanel(IEP)Report–ExecutiveSummary”developedfromtheinvestigationofKhanbogdSoumherdcomplaintsfiledtotheInternationalFinanceCorporation(IFC)ComplianceAdvisor-Ombudsman(CAO)andinIndependentAuditReportsavailableathttp://ot.mn/esia-audit-reports/.TheIndependentExpertPanelReportsummarizedintheExecutiveSummaryhavebeenpreparedpursuanttotwoformalcomplaintsfiledbyherdersandherdersupportorganizationswiththeInternationalFinanceCorporation(IFC)ComplianceAdvisor/Ombudsman(CAO)in2012and2013.AsofJanuary2016,onlytheIEPReportExecutiveSummary,ratherthanthefullreport,ispublicallyavailable.IFCisoneofthelenderscommittingfundstoOTPhase2identifiedintheDecember14,2015announcementoftheOTPhase2multi-bankfundingfacility.TheherdercomplaintsfiledwiththeIFCCAOandassociateddocumentsareavailableat:
Mongolia/OyuTolgoi-01/SouthernGobi:http://www.cao-ombudsman.org/cases/document-links/links-191.aspx
andMongolia/OyuTolgoi-02/SouthernGobi:http://www.cao-ombudsman.org/cases/document-links/links-196.aspx
TheIndependentAuditReports(IARs),preparedperiodicallysinceOctober2013,identifyissuesassociatedwithcompanyperformancetoaddressofnon-conformancewithOTprojectcommitmentsfromtheESIA(SeeIARApril2015,P.18)OTTR2014doesnotacknowledgeordiscusstheissuesrelatedtonon-conformancewithOT’scommitmentsaddressedintheIARsortheIEPES2015.The“ENVIRONMENTALSTUDIES,PERMITTINGANDSOCIALORCOMMUNITYIMPACT”sectionofOTTR2014,beginningatP.441,summarizesthetypesofimpactsidentifiedinESIA2012andDraftESIAspreparedtoaddressOToperations.ThatsectionoftheOTTR2014doesnotprovideanassessmentofthenature,extentofseverityofimpactsofOToperationstodateoranychangestopreviousESIAsnecessarytoaddressimpactsthathaveoccurred. Similarly,OTTR2014doesnotincorporaterecentlycompiledinformationonwaterresourceimpactsofcurrentOToperationsorprojecthowtheimpactsidentifiedintheIARs,IEPES2015andthefullIEPReportwillbeaddressedinthefuture,suchasanESIAforOTPhase2.
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Figure23–“WaterImpactsonHerderssurroundingOThavebeensignificantandaregrowing”
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TheinformationgatheredintheIARandIEPreviewsarecriticaltothepublicandinvestorawarenessofOT’simpactsonandriskstolocalwaterresources,socio-economicandculturalheritageconditionssincethemineoperationsbegan.Updatingwaterresource,socio-economicandculturalheritageconditionsisnecessarytoaddressdeficienciesorinaccuraciesinbaselinedatacompiledpriortoOTstart-up.UpdatingtheassessmentofimpactstothesecriticallyimportantelementsofthelivesofherdersandtheirfamiliessurroundingOTisessentialtodeterminingarewhetherimpactshaveoccurredaspredictedoraremoreorlessseverethatthanpredictedintheESIA2012.TheIndependentExpertPanel(IEP)foundimpactsonherderwaterresourcesthataffectherdersocio-economicandculturalconditionssignificantlyandmoreseverelythanpreviouslyidentified.IEPES2015reportsthat:
“ThedirecteffectoftherelocationoftheBorOvoospringontheherders’accesstowaterandwaterqualityisthecompletelossofthespring.ThetemporaryreplacementwatersourceattheSouthernfencelineoftheMLAdeliverswater,howeveritdoesnotreplicatethefunctionsforlivestockherdingneithertheecologicalfunctionsofwildlifehabitatofBorOvoospring.“ThelossoftheoriginalBorOvoospringhascausedlongerdistancesforherderstoaccesswateratthecurrentwateroutletofthediversionpipe;withtheestablishmentofthelatestfencelinealongtheMLAborder,thishasbecomeevenmorepronounced.”
and“ThelossofaccesstosummerpastureandlossofwatersourcesduetowatershedwideimpactsbytheOTmineandinfrastructuredevelopment(includingcoalroad)hasresultedinfarreachingandirreversibledisturbancetotraditionalnomadiclivestockhusbandryinKhanbogdSoum,especiallyinJavkhalantBageffectingthewholeherdingcommunity.Thesearchforwaterandpastureandinabilitytoletwinterpasturesrest,isdegradingremainingpastures;withtheeffectsoffragmentation,mechanicaldisturbance,dustandlitteralonginfrastructurecorridors,thecumulativeimpactsaresevereandwillcontinuetoincreaseasminedevelopmentproceeds.”(IEPES2015)
OTTR2014assertsthatOThasnot,“seen…anyconnectionbetweenthedeepaquiferandtheshallowherders’wellsinnear-surfacestreambedaquifers,”atP.413,failingtoacknowledgeorignoringthe“interaquiferflow”betweenshallowherders’wellsandthedeepaquifercausedbypoorboreholeconstructionidentifiedintheIARs.TheApril2015IndependentAuditReportisdescribedbyitsauthorsasa“DesktopAudit”asitwas“conductedasadesk-topreviewofthedocumentationprovidedandteleconferenceswithOTsitepersonnel”withoutsupportingfieldobservations,orinterviewswithareaherdersandotherauthorities.(IAR4-2015,P.18)WaterandWasteManagementNon-ConformanceIssuesidentifiedintheApril2015IARaddresscontinuingproblemsassociatedwiththeUndaiRiverDiversion(IssueM1.1)and
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InterconnectedHydrologicUnits(IssueM1.5)associatedwith“cascadingwells.”(SeeSchneider2013,Bale2014amongothersources)RegardingtheUndaiRiverDiversion,theIAR4-2015,atP.19,identifiesthecontinuingconcernthat,
“TheUndaiRiverDiversionhasnotbeencompletedinaccordancewiththeESIAduetoadelayinissuanceofaLandUsePermit.Atemporaryapproach(theUndaiRiverPartialAdjustmentandProtectionProject)hasbeencompletedtodivertsurfaceflowandtocaptureandre-routegroundwaterflowfromtheUndaiRiverandaroundthezoneofinfluenceoftheopenpit.ThecurrentUndaiRiverPartialAdjustmentandProtectionProjectdoesnotfullymeetthedesignrequirementsasspecifiedintheESIA.”
CommentsonthisissueintheIAP4-2015asaresultoftheDesktopAuditinclude,
“TheUndaiRiverDiversionhasnotbeencompletedinaccordancewiththeESIAduetoadelayinissuanceofaLandUsePermit.Atemporaryapproach(theUndaiRiverPartialAdjustmentandProtectionProject)hasbeencompletedtodivertsurfaceflowandtocaptureandre-routegroundwaterflowfromtheUndaiRiverandaroundthezoneofinfluenceoftheopenpit.ThecurrentUndaiRiverPartialAdjustmentandProtectionProjectdoesnotfullymeetthedesignrequirementsasspecifiedintheESIA.”
AtP.20,theIAP4-2015identifiesthecontinuingconcernthat,
“Mitigationsarerequiredintheeventofinterconnectionofhydrogeologicalunits.Thesemitigationshavenotyetbeenimplementedinallinstances.OTisprogressingeffortstoabandonorconverttoproductiveusetheseinterconnectingbores.”
CommentsonthisissueintheIAP4-2015asaresultoftheDesktopAuditinclude,
“EvidenceexistsofexplorationboresinterconnectinghydrogeologicalunitswithintheGuniiHooloiborefield,intheGalbynGobiregion,andwithintheMLA.FuturedispositionofthesewellsiscurrentlyunderevaluationbyaworkgroupestablishedwiththeKhanbogdsoum.Therearesomerequestsforconversionofthewellsforcommunityuse;thisrequesthasbeenforwardedtothecommunities’team.“BesteffortsarebeingmadebyOTtoprogressthesealingofinterconnectingboreswithinandoutsideoftheMLA,howevertheissueisoutstanding.PerrequestfromtheworkgroupOThasprovidedboringlogsforallinterconnectingbores.”
OTTR2014,atp.24,says,
“Althoughithasarequirementtomakeitsself-discoveredwaterresourcesavailabletobeusedforhouseholdpurposes,itisconfirmedinthe[OTInvestmentAgreement]IAthatOTLLCholdsthesolerightstousethesewaterresourcesfortheProject.OTLLChastherightundertheIAforawateruserightfortheperiodofitsmininglicence.”
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OTTR2014,atP.52says,“OTLLCwillmakeitsself-discoveredwaterresourcesavailabletobeusedforhouseholdpurposes,herderfamilies,andagriculturalactivitiesofthelocalsoumcommunities.”
NeithertheIARorOTTR2014describethe“bestefforts”thatOTisreportedtobemakingtoaddresstheinterconnectedaquiferproblemsaffectingshallowwellsusedbyherdersresultingfromOTwellconstruction,orhowtheperformanceofthosebesteffortswithbeevaluated.OTTR2014doesnotidentifywhether,when,how,andinwhatamount,OTwould“makeitsself-discoveredwaterresourcesavailabletobeusedforhouseholdpurposes,herderfamilies,andagriculturalactivitiesofthelocalsoumcommunities”throughthelifeoftheOToperation,orhowOTself-discoveredwaterresourceswillbeusedtoaddressreplacementofandcompensationforlossestoherderwaterresourcesintheUndaiRiverwatershedorareasofaquiferinterconnectionresultingfromfaultyboreholeconstruction.
OThasnotyetproposedaplanforuseof“itsself-discoveredwaterresourcesavailabletobeusedforhouseholdpurposes,herderfamilies,andagriculturalactivitiesofthelocalsoumcommunities”throughthelifeoftheOToperation.Herdershavebeenimpactedbyboreholesconnectingshallowanddeepaquifers – “cascadingwells” – formanyyears.Cascadingwellswerefirstidentifiedbyherdersin2004.Herders’livestockmanagementandculturalpatternshavebeenseverelydisruptedbytheineffectivenessoftheUndaiRiverDiversionandtheReplacementBorOvoospringsince2013whenthecurrentUndaiDiversionconstructionworkswerecompleted.Developmentandimplementationofplansto“makeitsself-discoveredwaterresourcesavailabletobeusedforhouseholdpurposes,herderfamilies,andagriculturalactivitiesofthelocalsoumcommunities”throughthelifeoftheOToperationwouldbeappropriatetoaddress:
“OTLLC....obligationswithregardtowaterutilisation:[including]-Notreduc[ing]fromthecurrentlevelthequalityandquantityoftheexistingpotableandlivestockwatersuppliesusedbyexistingusersatthedateoftheIA[OTInvestmentAgreement2009]withinthewaterresourcesareadefinedintheDEIAReports.”(OTTR2014P.53)
BoththeIARconsultantsandIFCCAOOyuTolgoi-01andOyuTolgoi-02ComplaintfilesacknowledgethataJune8,2015MemorandumofUnderstandingtoformaTri-PartiteCounciltohasbeenagreedtobyKhanbogdSoumadministration,RepresentativesofHerdersofKhanbogdSoumandOTLLCtoaddresstheHerderComplaintsfiledwiththeIFCCAO.TheCouncilprovidesanimportantnewvenuewherethepartiescan,
“consider,address,resolve,exchangeinformationabout,makeproposalsandrecommendationsinrespectof,implementandrelaytotheappropriatelevels,any
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issuesrelatingtoherders,pastureandwaterandanyotherrelevantissues…”associatedwiththeHerders’IFCCAOComplaints.”
MongolianandEnglishlanguageversionsoftheJune8,2015MoUareavailableontheIFCCAOpagesfortheOTComplaintsat:http://www.cao-ombudsman.org/cases/document-links/links-191.aspxandhttp://www.cao-ombudsman.org/cases/document-links/links-196.aspxThisrecentdevelopmentmayprovideaeffectivevenueforairingandresolvingherdersandSoumGovernmentcomplaintsregardingOTimpactsiffundedadequatelytoprovidesufficientsupportforsustainedparticipationbyherderandSoumrepresentativesincludingtheirtimeandtravelandsustainedprofessionaltechnicalsupport.
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HowdoInternationalMetalMarketPricesaffectOyuTolgoiPhase2DevelopmentandFundingPlanandTechnicalReports?AllprojectionsofthefuturevalueandeconomicimpactsofOTPhase2presentedintheMay18,2015OyuTolgoiUndergroundMineDevelopmentandFinancingPlan(OTUMDFP2015)arebasedontheinternationalmarketpricesforthecopper,goldandsilverthatwouldbeextracted.December1,2015marketpricesforcopper,goldandsilveraresignificantlylowerthanthepricesusedinthedevelopmentofOTPhase2expansionplansforcopper,gold,andsilver,thethreemetalcommoditiesbeingproducedatOT.Aslongaslowermetalpriceslast,thevalueofOTcopper,goldandsilverproductionwillbereducedbelowtheestimatedOTPhase2incomeandvaluewhichwerebasedonhigherprojectedprices.IncomederivedfromthemineandgovernmentpaymentsassociatedwithCurrentOTPhase1operationsthatreflectthevalueofmineproductionwillalsobereducedduetolowermetalpricesthanthoseprojectedintheOTTR2014.ThecentralroleofinternationalmarketpricesintheassumptionsregardingthefuturevalueandeconomicimpactofOTPhase2asprojectedinOTUMDFP2015,signedbyOT’sownershiponMay18,2015inDubai,isshownatP.4inthetableof“ImpactsontheDomesticEconomy”thatare,“basedonanumberofassumptionsrelatingtoscope,costs,schedule,technicalaspectsandmarketconditions.”TheOTUMDFP2015isanagreementbetweenthe“GovernmentofMongoliathroughErdenesOyuTolgoiLLC”(“EOT”–thecorporateentitycreatedbytheGovernmentofMongoliatorepresentits34%shareintheOyuTolgoi)andOyuTolgoi’scorporateownersoftheremaining66%oftheOyuTolgoiMine:TurquoiseHillResourcesLimited,THROyuTolgoiLtdandOyuTolgoiNetherlandsB.V.,(together“TRQ”)andRioTintoInternationalHoldingsLimited(“RioTinto”)andOyuTolgoiLLC(“OTLLC”).RioTintocontrolsthemajorityofsharesinOyuTolgoithroughitsownershipof51%ofTurquoiseHillResourcesLimited.TheOTUMDFP2015listsagreements“inprinciple”amongOT’sownersandnotes,atP.5,thattheactualcost–usingtheword“quantum”fortheestimated“actualamount”–“offundingrequirementswillbedeterminedbyanumberoffactorsincludingthebusinessperformanceofOTLLCandvariancesinthecopperandgoldprices.”TheDubaiAgreementsaysatP.5,thatformal“Approvalof[OTPhase2financing]isadecisionfortheBoardsofRioTinto,TRQandOTLLCandtheShareholdersofOTLLC.OyuTolgoiBoardapprovalof[OTPhasefinancing]isrequiredbythelenders…tobeunanimous.”InadditiontooutliningagreementsinprincipleandtheactionsnecessaryforformalapprovalofprojectfinancingtostartOTPhase2,theOTUMDFP2015includes
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commitmentsrelatedtoprogressonanOTpowersupply,researchonafutureOTcoppersmelter,andfinancialreportingandtaxconsiderationsandotheractivities.Uncertaintyregardingfuturepricesforcopper,goldandsilverandothercommoditiesreflectstheglobalmarketuncertaintyaboutwhetherthesteepfallinpricesforthosemetalssince2010willbealong-termorshort-termtrend.Ascopperisthesourceofmorethan75%ofthevalueofOyuTolgoiPhase2,thisuncertaintyfocusesonquestionsregardingfuturecopperprice.HowmuchhaveinternationalmetalmarketpricesfallensincetheOTPhase2TechnicalReport(OTTR2014)wasreleased?December2015internationalmarketpricesforcopper,goldandsilveraresignificantly:20–30%lowerthanthoseusedinOTTR2014resourceevaluationsandeconomicprojectsforOTPhase2.Copper,goldandsilverpriceshavebeendroppingsteadysincetheOctober2014releaseofOTTR2014,whichtheMay2015OTOTUMDFPand2015OTFeasibilityStudy(notdisclosedtothepublic)havebeen“aligned”with(THR2015).The“ReserveCase”isthetermintheOTTR2014fortheOTPhase2expansion.OT’s2014“ReserveCase”summary(OTTR2014atP.4)projectstheminingof1.5billiontonsoforeatcoppergrade(“content”)of0.83%,goldgradeof0.32gramspertonandsilvergradeof1.94gramspertons.OTPhase2oreisestimatedtocontain24.9billionpoundsofcopper,11.9millionouncesofgoldand78.0millionouncesofsilver.ThevalueofrecoveredmetalfromOTPhase2usedinOTTR2014are:
“[f]ormineplanning…themetalpricesused…werecopperat$3.01/lb,goldat$1,250/ozandsilverat$20.37/ozand….costfortheundergroundminearebasedon$15.32/t.”(OTTR2014atP.20).
Atthoseprices,thetotalvalueofthemetalrecoveredfromOTPhase2wouldbeabout$88.4billiondollars,ofwhichmorethan82%–$74.7billion–wouldcomefromcoppersales.SinceOTTR2014wasreleased,copper,goldandsilverprices(andothercommoditiesthatareimportanttotheMongolianeconomy)havefallensignificantly.IfDecember1,2015internationalmarketpricesforcopper-$2.11/lb,gold-$1,065/oz,andsilver-$14.21/oz,areusedtocalculatethevalueoftheoreproposedforminingatOTPhase2,thetotalvalueofthemetaltoberecoveredwouldfallmorethan$22billion,from$88.4billionto$66.1billion,withthecoppervaluefallingfrom$74.7billionto$52.4billion,alsomorethan$20billion.Figure24–“MarketPriceUncertainty”including“5YearCopperSpot”–included5-yeartrendincopperspotmarketpricesshowscoppersportmarketpricesbetweenNovember2010andDecember2015.
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Source: The source for the “5 year Copper Spot Chart” www.kitco.com, is alsothesourceusedforcommoditymetalpricesontheTurquoiseHillResourceswebsiteathttp://www.turquoisehill.com/s/commodity_metal_prices.asp.TheDecember1,2015copperpriceof$2.11/poundis30%lessthantheOTTR2014planningpriceforcopperof$3.01.TheDecember1,2015goldpriceof$1,065/ozis15%lessthantheOTTR2014planningpriceforgoldof$1,250/oz.(seewww.kitco.com forgoldpricecharts)TheDecember1,2015silverpriceof$14.21/pzis30%lessthantheOTTR2014planningpriceforsilver.(seewww.kitco.com forsilverpricecharts)ThereductionintotalmetalvalueforOTPhase2usingDecember1,2015metalpricesinsteadofOTTR2014metalplanningpricesisabout25%,withthetotalvalueofthecoppertobeminedintheOTPhase2falling30%.Howlongthecurrentdepressioninmetalcommoditypricesrelativetopeakpricesin2010and2011willlastisnotpredictablewithanycertaintyandisthefocusofintensespeculationbycopperproducers,investors,banksandcopperconsumers.
MarketPriceUncertainty-Marketpricesforthecopper,goldandsilverhavefalleninvaluesinceOTPhase2mineplanswerereportedinOTTR2014where“metalpricesused…werecopperat$3.01/lb,goldat$1,250/ozandsilverat$20.37/oz”(OTTR2014P.20).Atthoseprices,thetotalvalueofthemetalrecoveredfromOTPhase2wouldbeabout$88.4billiondollars,ofwhichmorethan82%-$74.7billion-wouldcomefromcoppersales.
Copperprices,aswellasgoldandsilverprices,havefallensteadyformorethan5years.Current,December2015,marketpricesforcopper,goldandsilverarewellbelowthoseusedforOTPhase2mineplanninginOTTR2014.IfDecember1,2015interna4onalmarketpricesforcopper-$2.11/lb,gold-$1,065/oz,andsilver-$14.21/oz,wereusedtocalculatethevaluetoberecoveredfromOTPhase2ore,thevalueofOTPhase2produc4onwouldfallfrom$88.4billionto$66.1billion-adropofmorethan25%;withthecoppervaluefallingfrom$74.7billionto$52.4billion–adropof30% 19
Metalmarketpricesfromwww.kitco.com
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Metalmarketpriceuncertaintymayinfluencetheultimatedesign,costandcorporateboardapprovalofOTPhase2,allofwhicharenecessarybeforeacceptanceofthemulti-bankloanfacilityofferedtoOTbyaconsortiumofbanksDecember14,2015.OTmanagementrecognizesthechangeinmetalpricesduringtherecentyearsaffecttheprojectedvalueofOT.TurquoiseHill,RioTintoandOTmanagementcontinuetobeoptimisticthatinvestmentinOTexpansionwillgeneratecopper,goldandsilverthatwillfindanimproved,higherprice,market,whentheOTPhase2expansioniscompleted.RioTintomanagement’sviewontheeffectsoftherecentfallinthecopperpriceonOTaresummarizedinaNovember26,2015articletitled,“CopperpricesmayweighonRioTinto’sloomingdecisiononOyuTolgoiexpansion,”thatreportsRioTinto’schiefexecutiveforcopperandcoalJean-SebastienJacques’sandRioTinto’sbeliefthat“thecoppermarketisfacingtwoorthreeyearsmoreofpain,itistheonecommoditytheyexpecttorecoverthefastest.”(Mining2015)Similarly,Mr.Jacqueswasreportedtohavesaidthat, “"Weareprettybullishaboutthecoppermarketinthelongtermandthereasonisweexpecta6to8milliontonneshortfall[ofcopper]inthenext10years,”hesaid.“OyuTolgoiwillbepartofthesolutiontoprovidethecopperthatisrequiredinChinaoranypartoftheworldatthatpointintime.”(INVEZZ2016).Forperspective,OTPhase2,the24.9billionpoundsofcopperOTPhase2isprojectedtoproduceisequalto1,250,000tonsofcopperallowingforanaverageof31,250tonsperyearfor40years.ThecopperproducedbyOTPhase2willbeintheformofcopperconcentrate,about100,000tonsperyearcontainingabout33%copper,unlessanduntilacoppersmelterorothercopperrefineryisconstructedtofurtherprocesstheOTcopperconcentrate.Whileavery,verylargemine,OT’sannualcopperproductionislessthan1%ofthe6-8millionton“shortfall”incoppersupplyprojectedbyMr.Jacques.OTPhase1producescopper,gold,andsilverfrom100,000tonsoforeperday.OTPhase2willproduce115,000tonsperdayofore–95,000tonsfromtheNorthHugoLift1UndergroundMineoncefullproductionisreached.FullproductionatNorthHugoLift1isprojectedtobeachievedintheearly2020s–about5-7yearsaway.OTmanagementprojectsthatthelowpriceconditionsinthecoppermarketwillendafteracouplemoreyears,beforeOTPhase2hasreachedfullproductionlevels.
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WhataresomeoftheplansandissuesassociatedwithdevelopingapowersourceforOTPhase2?ApowersupplysourcetooperateOTPhase2atfullcapacityhasnotyetbeenbuilt.OTTR2014discussionofthepowersupplyneedsfocusondevelopmentofan“IndependentPowerProject”[IPP]includingacoal-firedpowerplantusingcoalfromtheTavanTolgoidepositwestofOT.PowersupplyneedsforOTareprojectedtogrowfrom145Megawattsatstart,to246MWwhenundergroundminedevelopmentiscompleted.DevelopmentofaTavanTolgoiIPPintimetomeetOTPhase2demandbythe2020-2022periodasprojectedinOTTR2014facesmanyobstaclesincludingfundingchallenges,mixedpoliticalsupportandoperatingissues.AlternativesourcessuchaswindpowermaybeabletobeconstructedintimetomeetOTPhase2powerdemandandatlowercost,asatleastfiveutilityscalewindprojectsareinvolvedinpermittingorconstructingmorethan350megawattsinSouthernorEasternMongolia.OTPhase2“OperatingAssumptions,”asprovidedinOTTR2014atp.24,include,
“ThesupplyofpowerhasbeenrecognisedasbeingcriticaltotheprojectexecutionofOyuTolgoiinthe2009InvestmentAgreement].OTLLChasbeengiventherighttoimportpowerinitiallybutmustsecurepowerfromsourceswithinMongoliafromthefourthyearofoperation.SigningofaPSCAwiththeGOMinAugust2014hasresetthefouryearsobligationwhiletheopportunityfortheestablishmentofanIPPatTavanTolgoiisstudied.OTLLChasretainedtherighttoconstructapowerstationatOyuTolgoi.“(OTTR2014,P.24)
OTTR2014recognizesthat,
“TheOyuTolgoiProjectisenergy-intensive,withrequirementsofapeakof145MWsincestart-up,increasingto246MWinthelongertermaftercompletionoftheundergrounddevelopment.Areliableandstablepowersupplyisessentialforoperationsandsafety.”(OTTR2014,P.383)
Initsdiscussionof“Power”atP30,OTTR2014says,
“OTLLChasaPowerPurchaseAgreementwiththeInnerMongoliaPowerCorporationtosupplypowertoOyuTolgoi.Thetermofthisagreementcoversthecommissioningofthebusinessplustheinitialfouryearsofcommercialoperations.“InAugust2014,OTLLCsignedaPowerSectorCooperationAgreement(PSCA)withtheGOMfortheexplorationofaTavanTolgoi-basedindependentpowerproducer(IPP).TheaimofthePSCAistolayoutaframeworkforlong-termstrategiccooperationbetweentheGOMandOTLLCforacomprehensiveenergyplanfortheSouthGobiregion.ParticipationinthePSCAmeetsOTLLC’sobligationintheIAtoestablishalong-termpowersupplywithinMongoliawithinfouryearsfromthecommencementofcommercialproduction.SigningofaPSCAhasresetthefour
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yearsobligationwhiletheopportunityfortheestablishmentofanIPPatTavanTolgoiisstudied.
“ThePSCAprovidesaframeworkforabroadrangeofpower-relatedissues,includingtheestablishmentofapowergenerationsource,transmissionlines,andpowerimports.ThecentrepieceofthePSCAisanopen,internationaltenderprocesstoidentifyandselectanIPPtoprivatelyfund,construct,own,andoperateapowerplanttosupplyelectricity,withOyuTolgoiastheprimaryconsumer.“FullevaluationoftheIPPoptionisexpectedtotake9–12months.OTLLCplanstoactivelyparticipateintheprocessesofthePSCAtoensurethatthereisatimelyandreliablepowersupplysolutionforOyuTolgoiandthisapproachisendorsed.”
OTTR2014,atP.53recognizesthat,
“ThePowerPlantProjectwillimplementtheenvironmentalprotectionprovisionsoftheIAasdescribedintheESIA(July2012).ASupplementalESIAspecificallyforthePowerPlantProjectisforthcoming.”
TheOTTR2014discussionofaTavanTolgoiPowerPlantforOTPhase2donotacknowledgethemanychallengescurrentlythefacingdevelopmentoftheTavanTolgoiPowerPlantandtheoperationoftheassociatedcoalmineneededtofeedtheplant.SomeofthesechallengeshavebeenrecognizedbyErdenesMongolseniormanagement,theofficersoftheGovernmentofMongoliacorporationthatholdsa34%shareofOTLLC.InAugust,2015,threemonthsaftertheMay18,2015OTUMDFP,Mr.Ch.Otgochuluu,ErdenesMongolsenioreconomist,said,“TurquoiseHillhasissuedafinancialguaranteeworthonebillionUSdollarsfortheconstructionofTavantolgoiPowerPlant.TheGovernmenthasgivendirectionstoassociatedofficialstolaunchdevelopmentoftheplantfromspringof2016.”AsnofeasibilitystudyfortheTavanTolgoiPowerPlant,oranyalternativepowersupplyforOTPhasehasbeenreleased,itisuncleariftheUSDonebillionfinancialguaranteefromTurquoiseHillissufficientfortheconstructionof246-megawattpowersourceOTsaysitneedsfromTavanTolgoi.AtacostofUSDonebillion,the246-megawattplantwouldcostabout$4.06/watttoconstruct.Mr.OtgochuluunotedthatfullcostoftheOTPhase2projectislikelytorisesignificantly,notingthat“[t]hefirstestimationofrequiredinvestmentforundergrounddevelopmentislikelytoincreasefrom5.7billionto7-8billionUSdollars.”IfMr.Otgochuluuestimatesareaccurate,projectedOTPhase2costswouldriseto17–33%morethantheUSD6billionmaximumvalueofthemulti-bankloansforannouncedDecember18,2015.
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Developmentoftheupdated2015OTPhase2feasibilitystudyandrevisedconstructioncostsarecriticalstepsthatarerequiredtobecompletedpriortotheconsiderationoffinalOTPhase2projectapprovaloftheBoardsofalloftheOTLCCpartnersasrequiredbytheOTUMDFP2015.SignificantadditionalpowerbeyondOTPhase2demandwillbenecessaryforoperatinganycopperrefiningsmelterconsideredbyOTLLCoranyfutureexpansionbeyondPhase2.AninvestigationoftheeconomicviabilityofaddingacoppersmeltertotheOTcomplexisrequiredbySeptember2016intheOTUMDFP2015.AcoppersmelterwouldbeusedtoupgradeconcentrategradecoppercurrentlyproducedatOTwithabout33%coppercontenttorefinedcoppermetalwith95–99%+coppercontent-dependingonthespecificsmelting,refiningand/orconvertingprocessesselected.CurrentlytheupgradingofOTconcentratestothemorevaluable99%+coppermetalproductisconductedatsmeltersinChina.DevelopmentofcoalproductioncapacityattheTavanTolgoidepositthatwouldfeedaTavanTolgoiPowerPlantisalsofacingsignificantdifficultiesandmaybestalledforanextendedperiod.InearlySeptember2015,Forbesmagazinereportedthat,
“MongolianMinisterMendsaikhanEnkhsaikhansaidthatthelong-delayed$4billionTavanTolgoicoalmineprojectwasunlikelytogoahead,accordingtotheBusinessMongolianewsite,partlyduetoChina’sslowinggrowth.“It’snotonlybecauseofparliament[wheretheprojecthasfacedopposition],butalsobecauseoftheChinesesituation,”Mendsaikhansaid.ThenewsletternotesthatMongoliareliesonChinatobuy“nearlyallofitsmineralsandpetroleum,”whichaccountedfor86percentofexportsinthefirsthalfof2015.”(FORBES2015)
Justweekslater,thefailuretosecureloanstooperatetheTavanTolgoicoalminewasconfirmed,castingashadowoverthelikelihoodofdevelopmentofTavanTolgoidepositonalargeenoughscaletopowerOTPhase2whenthatpowerisneeded.LaterinSeptember2015,www.mining.comreported,
“Mongoliastrugglestodevelopitslargestcoalminingproject,TavanTolgoi,withreservesof7.4billiontonnesofcoal,aftertheMongolianGovernmentfailedtosecure$4billioninfunds.Developmentofthemine,haltedbypoliticsandweakgovernmentinstitutions,reflectstheresourcecurseasMongolia’sParliamentfailedtotransferownershipofthecoalmine.ThetransferofownershiptoaconsortiumofChineseandJapanesecompanies,waspartofMongolia’splantoincreaseinvestors’stakeholdingsin2015and2016.
“Mongolia’scontinuouslydevelopingminingsectorandvastresourcescauseobstaclesinmanagingMongolia’sresources.ThedevelopmentofOyuTolgoiandTavanTolgoirepresentaminingboomthatcouldbeshort-lastingasthecountryexperiencesboom-bustcyclesinlinewithinternationaldemandandinternationalcommoditymarketprices.Mongolia’sdouble-digitgrowthofthelastfewyearsandin2014slowedto7.8%.In2011,therewas17.3%GDPgrowth.”(Mining9-2015)
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ThecurrentdownturnincopperpricingisacauseofadownturninoperationsofmanycopperminesaroundtheworldthoughRioTintomanagementcontinuetoinvestmentinOTinanticipationofaupturnincopperpricesinthenext2-3years.(TRQ8-2015)ArealternativesourcesofpowerpossibleforOTPhase2?WhileOTTR2014atP.438notesthat,“Copperdemandwillalsobenefitfromagreaterlong-termfocusonrenewablesourcesofenergyandenergy-efficienttechnologiessuchaswindturbinesandelectric/hybridvehicles,whichareofcopper-intensivefabrication,”OTTR2014offersnorenewableenergyoptionsfortheOTpowersupply.AtthesametimethatForbes2015wasreportingonthelong-termobstaclesfacingTavanTolgoicoalproduction,itwasalsoreportingonenergyproductiontrendsinChinamovingawayfromcoaltorenewableenergyproduction.InSeptember2015Forbesalsoreportedthat,
“RenewableenergyisalsokeytoChina’stransitionawayfromcoal.Chinainvested$90billioninclean-techinvestmentslastyear,accordingtoBloombergNewEnergyFinance,farmorethantheU.S.Non-fossilfuelsources–solar,wind,hydroandnuclear–areexpectedtomakeup20%ofChina’senergymixin15years.Chinaalreadyhasmorewind-generatingcapacitythananycountryintheworldanditislikelythisyeartoovertakeGermanyastheworld’slargestsolarcountry,measuredbyinstalledcapacity.By2030,China’snon-fossil-fuelenergybasealonewillbealmostequivalenttothetotalelectricalcapacityoftheU.S.today.”(FORBES9-2015b)
OptionsforwindpowerproductioninMongoliaattheindustrialscaleneededbyOTareidentifiedinthe“ScalingUpRenewableEnergyinMongoliaInvestmentPlan”summarizedattheMongoliaNationalRenewableEnergyCenter’swebpageat:http://www.nrec.mn/web/data/main/main1441093417.pdf. TA-8757MONScalingUpRenewableEnergyinMongolia(InvestmentPlan),28August2015(NREC2015) The“ScalingUpRenewableEnergyinMongoliaInvestmentPlan”(NREC2015)identifiesfiveactivewindpowerdevelopmentprojects,withpotentialtogenerateatotalof350MW,asfollows:–OyuTolgoiWindPowerProjectbyQleantechLLC,102MW–SainshandWindPark,SainshandWindParkLLC,52MW–ChoirWindFarm,AydinerGlobalLLC,50.4MW–TsetsiiWindFarm,CleanEnergyAsiaLLC,50MWand-ABSolarWind,ABSolarWindLLC,100MWNREC2015saysthat,“Allhavegovernmentapprovalandtheirreadinessallowsconstructiontostartin2016.”
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OT’sownershipshouldconsiderinvestmentinrenewableenergysourcesforthemine’sfuturepowersupply.ThewindprojectslistedhavepotentialtocomeonlinebeforeaTavanTolgoicoal–firedpowerplantfedbyTavanTolgoicoalandatpotentiallylowercost.ProgressontheSainshandWindProjectthroughMarch,2015,includedanannouncementbyFerrostaalIndustrialProjectsGmbHthatitwillbeginconstructionofitsSainshandWindFarminApril,slatedtobeMongolia’ssecondandlargestwhenitiscompletedin2016.The$115millionparkwillhave27towersandaninstalledcapacityof54megawatts.Itwilldeliver54megawattstoMongolia’selectricalgrid,OliverSchnorr,directorofSainshandWindParkLLC,saidinatextmessage.(BLOOMBERG3-2015)TheSainshandprojectwouldbethesecondutilityscalewindprojecttobeconstructedinMongolia.Thefirst,the50-MWSalkhitWindFarmbeganoperationsin2013.Ifthe$115millioncostfor54megawattSainshandwindprojectisaccurate,thecostperwattfortheprojectwillbe$2.12/watt.EuropeanBankforReconstructionandDevelopment(EBRD)reportsthatcostdesignandconstructionofthe50megawattSalkhitWindProject,theonlyoperatingindustrialscalefindfarminMongolia,was$123million,acostof$2.46/watt.(EBRD2013)TheprojectcostofSainshandwindprojectwouldbeonly53%perwattoftheprojectedcostofa246-megawattTavanTolgoiPowerPlantifitwouldcost$1billion,acostof$4.06/watt.IfthemoreconservativecostoftheSalkhitWindFarmwereusedforcomparison,thecostofwindpowerforOTPhase2wouldbe40%lessthatthecostperwhatforTavanTolgoipowerat$4.06/watt.InApril2015,NewcomLLC,developeroftheSalkhitwithfundingfromtheEuropeanbankforReconstructionandDevelopment(EBRD)amongothersourcesannounced“The$100millionTsetsiiplantreceiveditspermitfromtheNationalDispatchingCenter,whichmanagesMongolia’sgrid.”NewcomChiefExecutiveBolorJargalsaikhansaid,“ThewindfarmisthefirstprojectofCleanEnergyAsiaLLC,whichis51percentownedbyUlaanbaatar-basedNewcomand49percentbyJapan’sSBEnergy,whichisSoftBankCorp.’senergyarm.Theoperatorsplantoexpandpowercapacityfrom50to250megawattswithin10years.”(BLOOMBERG4-2015)
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5YearCopperSpotMarketPriceChart
Informationoninternationalmarketpricesandtrendsiscompiledfrom:www.kitco.com,thesourceusedforcommoditymetalpricesontheTurquoiseHillResourceswebsiteathttp://www.turquoisehill.com/s/commodity_metal_prices.asp.
BriefBiographyofPaulRobinson
SouthwestResearchandInformationCenterPOBox4524
Albuquerque,NewMexicoUSA87107www.sric.org
William“Paul”RobinsonworksasResearchDirectoratSouthwestResearchandInformationCenterinAlbuquerque,NewMexico,ascientificandeducationalorganizationworkingtopromotethehealthof people and communities, protect natural resources, ensure citizen participation, and secureenvironmentalandsocialjusticenowandforfuturegenerations,wherehehasemployedsince1976.Paulhaspreparedpeerreviewedtechnicalpapers,contractpublications,andeducationalmaterialsandexperttestimonyrelatedtomines,mills,andmineraldevelopmentpolicythroughouthis37-yearcareer.Hisconsultingclientshaveincludedlocalandinternationalnon-governmentalorganizations,law firms, industry trade associations, projectdevelopers,NativeAmericanTribes inTheUS, FirstNationsBandsinCanada,andgovernmentregulatoryandforeignassistanceagencies.PaulearnedhisMastersinCommunityandRegionalPlanning(aterminaldegree)withanemphasisonNaturalResourceManagementfromUniversityofNewMexico(UNM)in1992andaBAfromtheTechnology Assessment Program at Washington University, St. Louis, Missouri in 1974. TheprofessionalprojectforhisMastersaddressed“PlanningforReclamationoftheUraniumWasteSitesintheFormerEastGermany.”Paul’s peer reviewed professional papers have been published by; British Columbia Chamber ofMines, NM Bureau of Mining and Mineral Resources, CO School of Mines, Freiberg TechnicalInstitute–GermanyandEuropeanUnion–ScienceandTechnologyDirectorate..Paulhascoordinatedthree-country - Mongolia, Russia and US – educational and scientific exchanges addressing minereclamation,waterandrenewableenergyannuallysince2007.Paul’stechnicalreviewsofenvironmentalanalysesandmineoperatingplansinMongoliasupportofcivilsocietyorganizationsinvolvementinmulti-lateralbankloanapplicationshaveaddressedtheBigBend, Boroo andGatsuurt goldmines andOyu Tolgoi copper-goldmine. Paul provided an invitedpresentation on “Social and Environmental Responsibility inMining: International Experience andLessons Learned Regarding Accumulated Damage from Abandoned Mines, and Long-term RisksAssociated with Waste Management, and Renewable Energy Use” at Conference on Social andEnvironmental Responsibility in the Mineral Industry in Russia” in Moscow in October 2012available at http://www.wwf.ru/about/what_we_do/mining/conference. With co-author GalinaAnosova,Paulpreparedapeer-reviewpublicationon“MiningandMineralDevelopmentPolicyintheSelengeRiverWatershed”forScienceforWatershedConservation:MultidisciplinaryApproachesforNatural Resource Management Conference, Convened by United States Geological Survey (USGS),InstituteofGeneral andExperimentalBiology, SiberianDivision-RussianAcademyofSciences, andMongolian Academy of Sciences, September, 2004, available at:http://www.sric.org/mining/docs/USGS-siberia.pdf.HepreparedtechnicalreviewsaspartofPublicExpertizaCommitteereportsinRussiafortheDybycksagoldmine,AginskoeAutonomousOkrugandtheKhiagdauraniummine,BuryatRepublic.Afullresumeisavailableuponrequest.
