Rio Tinto and its partners in the Mongolian Government and Turquoise Hill Resources are set to proceed with a $5.3bn expansion of the Oyu Tolgoi copper and gold mine in Mongolia.
Development of the underground mine is set to begin in mid-2016, with first production expected in 2020.
After completing ramp-up of the underground in 2027, the mine is expected to produce more than 500,000t of copper per annum, compared with existing of 175,000t-200,000t.
Material from the brownfield expansion will use the existing concentrator and infrastructure.
Rio Tinto deputy chief executive Jean-Sébastien Jacques said: "Long-term copper fundamentals remain strong and production from the Oyu Tolgoi underground will commence at a time when copper markets are expected to face a structural deficit.
"In line with Rio Tinto’s other tier one assets, Oyu Tolgoi offers opportunities for further expansions, leveraging existing infrastructure and supply chains and will provide attractive returns for all shareholders and Mongolia more broadly for decades to come."
Production at the open-pit mine at Oyu Tolgoi started in 2013 and more than 440,000t of copper has been sold since then.
Mongolia Prime Minister Chimediin Saikhanbileg said: "The development of the underground will create further jobs, support Mongolian suppliers and unlock substantial value for all stakeholders, delivering benefits for all Mongolians for generations to come."
The latest decision follows the signing of a $4.4bn project financing agreement in December 2015 with international financial institutions and export credit agencies representing the governments of the US, Canada and Australia for the mine development.
Oyu Tolgoi is jointly owned by the Government of Mongolia (34%) and Turquoise Hill Resources (66%, which Rio Tinto owns 51% of).
Image: It is assumed that the Oyu Tolgoi mine will produce more than 500,000t of copper a year. Photo courtesy of Rio Tinto.