The CIMIC Group’s mining services arm Thiess has secured a $130m contract for Rio Tinto’s $5.4bn Oyu Tolgoi project in Mongolia’s southern Gobi desert.

The contract will be carried out in joint venture with local contractor Khishig Arvin, and is for an underground decline for the copper and gold project.

Cimic executive chairman and CEO Marcelino Fernández Verdes said: “This project is key to unlocking Oyu Tolgoi’s potential and is a great addition to Thiess’ diverse mining portfolio.”

Thiess’ work is set to start this month and scheduled for completion in 2020.

As part of the contract, the company’s responsibilities will include construction of a box cut and development of twin declines, incorporating a service and conveyor tunnel.

Thiess managing director Michael Wright said: “The combination of our underground development expertise and ability to leverage our experienced Mongolia-based team provides us with the foundations for success.

“We are proud to facilitate the growth of a world-class copper and gold operation and deliver long-term solutions at Oyu Tolgoi. Building local capability is integral to our approach and, with the assistance of our partnership with Khishig Arvin, more than 90% of our workforce will be Mongolian personnel.”

"Oyu Tolgoi is expected to produce more than 500,000t of copper per annum."

In May, Rio Tinto and its partners, the Government of Mongolia and Turquoise Hill Resources, have approved the next stage in development of the Oyu Tolgoi mine.

First production from the underground is expected in 2020.

Once underground production is fully ramped-up in 2027, Oyu Tolgoi is expected to produce more than 500,000t of copper per annum.

Oyu Tolgoi is jointly owned by the Government of Mongolia (34%) and Turquoise Hill Resources (66%, with Rio Tinto owning 51%).

Image: The Oyu Tolgoi mine is located in the South Gobi region of Mongolia. Photo: courtesy of Rio Tinto.