Service Providers
Size, sophistication and skills
Size and sophistication these were two main qualities that allowed the Oyu Tolgoi project to singlehandedly create a world-class hub of technology and expertise in otherwise isolated Mongolia. Size, because the OT mine will be the fourth largest copper mine in the world once it reaches peak production by 2030; the scale of such development incentivized the arrival of global experts for a single client. Sophistication, because the OT is one of only 11 projects using block caving, making Mongolia a center of excellence for this mining method; the OT’s underground, going down to 1.3 km, is crossed by 100,000 meters of tunnels, all equipped with sensors and cameras that allow for realtime monitors in a digital twin-like concept.
One of Rio Tinto’s flagships and largest investments, the OT is, without doubt, a world-class project, the ideal ground for pioneering best-in-class technologies and methodologies, all the more extraordinary when it takes place in a country where modern mining is very young, uncoincidentally the same age as the OT. The OT has no predecessor in the country, but the availability of a highly qualified supply chain makes it possible for the OT to have many successors moving on.
The OT’s size and sophistication were essential to attract the most modern technology, equipment, and service providers, but it was the successful skills transfers realized between foreign and local companies that led to the development of a true local hub.
Unlike many other jurisdictions where GBR reports from, Mongolia’s mining service and equipment sector is majority operated by locals. In less than two decades, Mongolians have acquired expertise in all areas of mining technology and service, from welding to electrics, structural mechanical works, technical reports, and the latest software applications.
Key to the development of strong mining expertise in the country has been the close interplay between international and local companies; if during the boom years, these collaborations had no time to take place or mature, the post-boom period taught foreign investors that due diligence and a strong local partner are the safest ways to go about Mongolia. Moreover, where former international companies collapsed, Mongolian ones emerged; for instance, foreign-owned AIDD (Australasian Independent Diamond Drilling), which had operated in Mongolia since 2004, ran into financial difficulties and was bought by its former country manager, Mongolian national Tulga Tsenddorj. Tsenddorj renamed and rebuilt AIDD into Phoenix Drilling in 2016. Dunnaran Baasankhuu also saw an opportunity when her former employer, Australian law firm MinterEllison, decided to exit Mongolia in 2022; Dunnaran took over and turned it into independent legal practice Dunnaran + Partners.
Joint ventures and partnerships have also become a staple mechanism for either entering the country or solidifying one’s presence. Multinational explosives company Orica collaborates with local explosives producer Mera Group, together working for the OT. The latest explosives company that entered the market, Titanobel, formed a JV with one of the largest local groups, Max, while Redpath, a Canadian full-service underground contractor, created a JV with local Hasu Megawatt (the JV company is called Dayan Contract Mining). Engineering and construction company RJE Global found a local partner in MMS Engineering, an EPC contractor. Many other such examples can be found throughout the Mongolian mining supply scene.
As a result of these collaborations, skill transfers have been realized quite rapidly. Orica prides itself on 97% local employees and a government recognition as the “best technology introducer in the country.” Redpath, also a contractor for OT under Dayan JV, has trained close to 500 people who are now part of OT. At the OT itself, 97% of the total workforce is local, and OT-trained engineers and other mining specialists go and work not only at other mining sites in Mongolia but also in other places in the world, taking “Mongolia to the world stage,” as Deirdré Lingenfelder, the CEO of Oyu Tolgoi (OT) said, with bitter-sweet pride.
With a population of under 3.5 million, the raw numbers of available technicians, engineers and geologists are very small, and are shrinking further as more people leave the country. One in three Mongolians are saying that they plan to leave the country in the next three years, according to a survey conducted by recruitment and HR company Mongolia Talent Network. Different sources point out that only about 25 mechanical engineer graduates join the labor force every year. Mark Gabel, the CEO of MSM Group, told GBR that he signs visa requests for Mongolians going to South Korea every week.
Article header image courtesy of Saade Construction