Sustainability Commitments

Cooperation Agreement with Local Communities

Oyu Tolgoi has reached US$11.6 billion in total in-country spend since 2010, marking the largest foreign investment in the country to date. The total in-country spend has substantially contributed to the country’s economic development through taxes, fees, national and local procurement, salaries and other contributions provided to communities and the society over the past 10 years. 76 percent of the total spend has been with the purchase of goods and services from hundreds of Mongolian suppliers with Oyu Tolgoi working collaboratively with national and local suppliers to increase capability to ensure the highest international standards.

The company has also made a significant investment in people through not only employment but also the development of the workforce. Over 93 percent of Oyu Tolgoi’s workforce are Mongolian nationals, who are professionals and young graduates from universities and colleges. Many employees have been given the opportunity to work at Rio Tinto operations in Australia, the United States, UK, Canada, and Singapore.

Oyu Tolgoi has had and continues to have a positive impact on the communities surrounding the mine, including partner communities (Khanbogd, Manlai, Bayan-Ovoo and Dalanzadgad soums), using formats such as the Cooperation Agreement signed in 2015 by the Umnugobi aimag, Khanbogd soum and Oyu Tolgoi LLC (the “Cooperation Agreement”). In Khanbogd, the partnership with Oyu Tolgoi LLC led to the connection of the town to a permanent power supply, funding for new educational and healthcare facilities, sealing of local roads, and programs to help improve social conditions. Construction of a new water supply system with capacity to support 13,000 residents was completed in 2016. Oyu Tolgoi LLC funded the construction of a 35.1 kilometres sealed road between Oyu Tolgoi and Khanbogd which was commissioned in late 2018 and opened in early 2019. In 2019, Oyu Tolgoi LLC reached an agreement with local herders with regards to the complaint made to the Compliance Advisor and Ombudsman’s Office. This agreement was made possible by the strong commitment of Oyu Tolgoi LLC’s management as well as the extensive engagement by Oyu Tolgoi LLC’s communities team with locals and international stakeholders to successfully implement a solution in compliance with agreed commitments.

In addition to the above achievements, under the Cooperation Agreement, Oyu Tolgoi LLC makes an annual contribution of US$5 million to the Gobi Oyu Development Support Fund (“DSF”), an independent fund that supports sustainable community development. Since its creation in September 2015, the DSF has invested US$27 million (including US$5.2 million in 2020) in 250 sustainable development projects and programs, which have resulted in the creation of more than 426 permanent jobs, and scholarships for 234 students, among many other achievements.

Examples of projects implemented through the DSF include:

• provided higher education student scholarships to 234 students in 2016 through 2020 to support qualified young professionals in Umnugobi aimag;
• improved Khanbogd waste management to contribute to a safe and clean community environment;
• maintained strong partnership with local stakeholders on preventing COVID-19 pandemic and coordinated a series of contributions (cash and in-kind donations) to improve local emergency response capacity while enabling uninterrupted business operations;
• contributed to youth development and constructed a swimming pool in a sports complex in Umnugovi aimag; and
• contributed to the traditional nomadic economy and constructed Khanbogd soum fodder plant storage.

Oyu Tolgoi also supports several other community support programs including:

• sustainable livelihood pilot projects in Khanbogd including a partnership to create a new local brand of camel milk;
• partnerships with local herders to monitor hand wells since 2012 under the Participatory Environmental Monitoring (PEM) program administered by a local NGO established by Khanbogd community members and herders; and
• continued constructive community engagement with local stakeholders through the Khanbogd Tripartite Council (TPC) and Herder Complaint Resolution process.

In order to update the community knowledge base, Oyu Tolgoi LLC is completing the Umnugobi socio-economic and environmental baseline study with the National Statistical Office and the United Nations Population Fund. The study provides Oyu Tolgoi LLC with the opportunity to understand key social trends and changes in the local community over the last 10 years reflecting our contributions to the community as well as an opportunity to understand the impact of working with the community.

Mining processes produce mineralised waste with this waste being pumped to storage areas for long term storage. Every effort is made to minimise the footprint of these facilities to reduce non-productive land area as much as possible. One way to minimise the footprint is to maximize density of the tailings through thickening, or reduction in water content, and by designing of storage facilities to maximise water drainage and collection for re-use. Minimising footprint not only positively reduces environmental impact on land area and water use, but also minimizes costs for the operations.

Tailing Storage Facility

Oyu Tolgoi LLC stores mineralised waste in tailings storage facilities, which are engineered structures designed to minimise the impact on the local environment. Tailings Storage Facility 1 has been in use since 2013 and is currently 54 metres high. In 2020, 39 million dry metric tonnes were pumped to the tailings storage facility, meeting the anticipated level rise of 6.5 metres. The Oyu Tolgoi tailings facility uses the downstream method of wall construction and the latest independent review of the facility was carried out in November 2020.

Oyu Tolgoi LLC’s tailings risk is managed in a structured way with three levels of assurance used to monitor and reduce risk. The first level of assurance is based on the work of site teams and processes, the second level of assurance is provided by the project manager, Rio Tinto, with in-house specialists providing technical reviews and monitoring the application of Rio Tinto’s Global Standard and the third level of assurance is provided by regular external reviews of the facility. The facility has been risk reviewed against the Australian National Committee On Large Dams framework and actions have been taken to reduce risk.

Waste Management

As a result of the development of the underground portion of the mine, the amount of waste generated at Oyu Tolgoi has significantly increased. For the past three years, Oyu Tolgoi LLC has focused on continuous improvement of non-mineral waste management through the development of the long-term non-mineral waste management strategy and the reduction of the waste that goes to the Waste Management Centre by improving the ability to reuse and recycle waste materials and segregating waste in the work areas. Oyu Tolgoi LLC has successfully established relationships with national recycling contractors and a Memorandum of Understanding was signed with the local Red Cross to allow Oyu Tolgoi LLC to send the reusable items to local communities.

Oyu Tolgoi LLC also started a pilot program to prepare organic compost using food waste. Initial results of the project are promising. As a result of these activities in 2020:

• 25% of total waste was diverted from the Waste Management Centre through reuse and recycling;
• the amount of waste landfilled per person per day has decreased from 6.7 kg to 2.5 kg since 2016;
• a composting project was implemented using food waste and scraps to increase the recycling and re-use rate; and
• over 2038 m3 of wood was reused in cooperation with the local Red Cross Primary Committee.

Oyu Tolgoi Donation to support COVID-19 Efforts

Since January 2020, the movement of goods and people within Mongolia has been restricted within and across its borders to prevent the spreading of the novel coronavirus (COVID-19). Following the first positive test of a COVID-19 case in Mongolia on March 10, 2020, the Government of Mongolia increased its restrictions on flights in and out of the country and on the movement of goods and people within and across its borders. Oyu Tolgoi is complying with all of these directives and is working closely with the Mongolian authorities to prioritize the health and safety of all its employees and the wider community.

Oyu Tolgoi and its employees donated MNT455 million to support the COVID-19 outbreak prevention efforts, including MNT100 million to the Government of Mongolia through the Mongolian National Mining Association,MNT200 million to the Umnugovi Emergency Committee, and MNT10 million to the Khanbogd Emergency Committee through the Gobi Oyu Development Support Fund.

Oyu Tolgoi miners also launched a donation campaign and raised over MNT145 million, which was donated to the Ministry of Health. Employees from thirty-eight contractor companies joined the campaign as #WeAreAllInThisTogether.