OT LLC CEO Andrew Woodley: Oyu Tolgoi will start exploration at high grade zone this week

By Ch.KHALIUN
Mongolian Mining Journal spoke with the president and executive director of Oyu Tolgoi LLC, Andrew Woodley, regarding current issues at the company.
I guess the media must be asking a lot about the underground mine. But I want to know about the open pit mine. In last week’s parliamentary session, it was said that the copper concentrate export of Oyu Tolgoi’s (OT) open pit mine has been decreasing, and the decrease is expected to continue. What is the cause of the sudden fluctuation?
I don’t know based on what sources the discussion was held at Parliament. But in the last year, we had logistic issues at the border, so a great amount of reserves from exploration and export was accumulated. After fully resolving the logistics issue ,we exported a great amount of concentrate by the end of the previous year. We sold the generated concentrate and continued exploration, so export was high at the end of 2014. Since the new year, the company’s activities has been progressing normally.
Three years have passed since OT started exploration at the open pit mine, so in some places ore grades are good, while some are poor. In the first quarter of 2015, exploration was made at low grade areas, so the export amount was low. At the beginning of this week, we are going to explore in a high grade areas, so the results of the second quarter of 2015 will be higher.  These are the reasons for sale and production fluctuations, but there wasn’t a high fluctuation as mentioned at Parliament.
In the underground mine plan, it was stated that Mongolia will control purchase and project selection. How will this change sales and project selection?
The general principle will be the same as in the open pit mine purchase process. Firstly we will make purchases from domestic producers. On this issue, we hope to effectively cooperate with Erdenes Oyu Tolgoi.

How will the construction of railroad to Gashuunsukhait lower OT’s transportation costs?

The railroad construction to Gashuunsukhait will have a great positive influence on OT’s production. But the main consumer of the railway will be coal mines, so it will provide a chance to all mines.
When will Mongolian managers start working at the decision making level of the company? Some people were involved in professional trainings, and some believe that they reached the necessary level. What is their current position?
We are a Mongolian company, and our shareholders are Mongolians, so we pay attention to this issue. Four leaders that were involved in trainings will work in the management level. In particular, one of them is chairing my task group. We will discuss his appointment to the managerial position soon. Moreover, we will keep training our Mongolian staff. I would like to say that Mongolians gain high skills in a short period of time.
How much will OT save by purchasing electricity from Tavan Tolgoi power station?
We haven’t yet established an agreement on power purchase from Tavan Tolgoi power station. But purchasing power from Tavan Tolgoi power station will bring positive results for sure.
How will the exploration technology of the underground mine be different from the open pit mine? Will the changes affect project expenditure?
In regards to the economic condition and various technological solutions, we will change not only conveyers but seek other solutions in the other parts of our exploration. We will have to study all solutions, and finalize our feasibility study. We will be reporting about solutions that will be made in the feasibility study.
Besides the management service payment, a new expense called “manager’s payment” was included in the underground mine plan. How will the additional payment to Rio Tinto increase OT expenses?
I don’t think there is a concept about manager’s payment. Rio Tinto provides information technology and software services to OT through the management service. We make purchases from many subsidiaries of Rio Tinto, so we save on expenses and receive quality services. In some cases, we take advice from Rio Tinto. The concept might refer to that kind of expenses.

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