Oyu Tolgoi copper mine: Mongolia’s strategic mineral giant powering the global energy transition

Located in the South Gobi Desert near Mongolia’s southern border with China, the Oyu Tolgoi copper and gold mine is one of the world’s most valuable and geopolitically significant mineral assets. As of 2025, it stands at the heart of two major global forces: Mongolia’s aspiration for economic self-reliance and the world’s accelerating demand for copper amid the green energy transition. With full underground production still ramping up, Oyu Tolgoi is expected to be one of the five largest copper mines globally by the end of the decade.

What is the Oyu Tolgoi copper mine and why is it central to global mineral security in 2025?

Oyu Tolgoi was discovered in 2001 by Canadian firm Ivanhoe Mines and has since grown into Mongolia’s single largest investment and export engine. The mine contains estimated reserves of over 40 million tonnes of copper, along with vast quantities of gold and silver. The initial open-pit operation began in 2013, but the real economic potential lies in the Hugo North Lift 1 underground expansion, which entered production in early 2023.

The asset is considered critical not only for Mongolia’s economic development—accounting for around 20% of national exports and 50% of foreign exchange inflows—but also for the global supply of copper, which is essential for electric vehicles, grid infrastructure, and renewable energy systems.

Who owns and operates Oyu Tolgoi, and how did the governance structure evolve after 2022?

The mine is operated by Oyu Tolgoi LLC, a joint venture where Rio Tinto holds a 66% interest and the Mongolian government, via Erdenes Oyu Tolgoi, owns 34%. Until December 2022, Rio Tinto held its interest through Turquoise Hill Resources, which it acquired in full for US$3.3 billion, ending years of tension over project control.

This acquisition came after a broader restructuring agreement that included Rio Tinto agreeing to waive US$2.4 billion in debt owed by the Mongolian government. The settlement reset Rio Tinto’s relationship with the host country, enabled full-speed underground development, and resolved a decade-long governance impasse.

What is the production capacity of the Oyu Tolgoi mine as of 2025?

In 2025, Oyu Tolgoi is producing copper from both its open-pit and emerging underground operations. Output levels are gradually increasing as block cave mining continues to ramp. The mine is expected to produce between 160,000 and 200,000 tonnes of copper in 2025, with full production from the underground—estimated at 500,000 tonnes per year—targeted by 2028.

The underground ore is of significantly higher grade than the open-pit feedstock, and as additional drawbells and panels are activated, throughput will scale rapidly. In May 2025, Rio Tinto reported record monthly production figures, citing higher-than-expected underground development performance.

What infrastructure and logistics enable the export of Oyu Tolgoi’s copper concentrate?

Oyu Tolgoi’s location—over 550 km south of Ulaanbaatar and just 80 km from the Chinese border—offers a key logistical advantage. Copper concentrate is shipped overland to the Ganqimaodu–Gashuun Sukhait crossing into China, where it enters smelting and refining networks.

A dedicated railway spur completed in late 2023 has substantially improved logistics, reducing reliance on trucking and streamlining export volumes. However, power remains a constraint. The mine currently depends on electricity imported from China, though a planned coal-fired power plant is under development to ensure domestic energy security. Discussions about integrating solar or wind sources into the power mix are ongoing but remain in exploratory stages as of mid-2025.

What historical milestones and development challenges have defined Oyu Tolgoi’s timeline?

The mine’s development history is marked by discovery optimism, political setbacks, and complex engineering. After the 2001 discovery, Mongolia and Ivanhoe agreed to terms in 2009, leading to construction of the open-pit mine, which launched production in 2013.

The underground expansion was approved in 2016 but quickly encountered cost overruns, technical delays, and political disputes. By 2020, budget estimates had ballooned to US$7.06 billion, triggering renewed tensions.

In 2021, a breakthrough agreement saw Rio Tinto agree to waive debt and restructure funding in exchange for project approvals. In 2022, Rio Tinto completed its Turquoise Hill buyout, and in 2023, sustainable production from the underground began. As of 2025, development of Panel 0 and Panel 2 South is ongoing, with additional panels deferred due to permitting delays.

What environmental and political risks are associated with Oyu Tolgoi in 2025?

Environmental and geopolitical risks persist. The mine is located in a water-scarce desert ecosystem, and herder communities continue to raise concerns about dust, groundwater depletion, and ecological degradation. Water use reportedly exceeds 1 billion gallons per month, though Rio Tinto claims that advanced recycling systems have mitigated impact.

On the political front, Oyu Tolgoi is under scrutiny from both Mongolian regulators and foreign courts. In early 2025, the Mongolian government filed a US$438 million tax claim against Oyu Tolgoi LLC. Simultaneously, UK authorities opened a corruption investigation related to earlier project approvals.

Adding to the uncertainty, Prime Minister Luvsannamsrain Oyun-Erdene, who had backed the 2022 Rio Tinto deal, resigned in April 2025, raising concerns over potential renegotiations or resource nationalism ahead of the 2026 election cycle.

How does Oyu Tolgoi contribute to Rio Tinto’s global copper strategy and the green energy transition?

Rio Tinto has positioned Oyu Tolgoi as a cornerstone asset in its portfolio of critical minerals. As other major mines in Chile, Peru, and Zambia face declining ore grades and regulatory headwinds, Mongolia’s flagship project offers long-life, high-grade production with significant upside.

Copper is essential for clean energy systems, with electric vehicles requiring 2–4x more copper than internal combustion vehicles. With global demand expected to outstrip supply by 2027, Oyu Tolgoi offers Rio Tinto a hedge against market volatility and a strategic advantage in meeting long-term decarbonization targets.

The mine’s contribution could eventually account for up to 5% of global mined copper supply, solidifying Mongolia’s position in the green mineral hierarchy.

What are the most recent developments at Oyu Tolgoi in 2025?

In its Q2 2025 operational update, Rio Tinto confirmed that underground production is ahead of schedule in Panel 2 South, with delays in Panel 1 prompting resource reallocation.

The company also reported completion of several underground conveyor and ore-handling systems, which are critical to scaling block-cave extraction volumes.

Separately, Rio Tinto settled a longstanding shareholder class action with former Turquoise Hill investors in early 2025, paying US$138.75 million to close claims related to transparency lapses around project cost estimates.

These developments point to operational stability, but also underscore the continued legal, technical, and political complexity of operating in Mongolia.

What is the long-term outlook for Oyu Tolgoi and how will it shape Mongolia’s economic future?

Looking ahead, Oyu Tolgoi’s projected production life extends beyond 2055, with potential for additional ore bodies in the broader South Gobi basin. As part of Mongolia’s “Vision 2050” development strategy, the mine is expected to anchor mineral-based growth and infrastructure development across the southern region.

For global markets, Oyu Tolgoi represents a rare example of a massive, scalable, and geopolitically pivotal copper supply source coming online at a time of acute structural shortage. Whether the project reaches its full potential depends on resolving regulatory disputes, maintaining political stability, and investing in local energy and transport infrastructure.

In the medium term, however, Oyu Tolgoi remains one of the most strategically important copper mines in the world—both for its economic output and its role in the critical minerals race.