50384 - Oyu Tolgoi WCF

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Summary of Investment Information

Project Number

50384

Company Name

OYU TOLGOI LLC

Date SPI Disclosed

Nov 18, 2024

Country

Mongolia

Region

East Asia and the Pacific

Projected Board Date

Dec 20, 2024

Environmental Category

B - Limited

Status

Active

Last Updated Date

Jan 1, 2025

Department

Infra-WBG Dir. Minerals & Metals

Industry

Metals and Mining

Previous Events

Approved : Dec 19, 2024
Signed : Dec 20, 2024
Invested : Dec 30, 2024

Sector

Copper

Project Description

The proposed Project entails the provision of a working capital loan facility to Oyu Tolgoi LLC (“Oyu Tolgoi” or the “Project Company”), to support the completion of its underground mine development. Oyu Tolgoi is developing the Oyu Tolgoi copper and gold mine in the Southern Gobi region of Mongolia. The Oyu Tolgoi mine represents one of the world’s largest copper deposits and is expected to produce around 500,000 metric tons of copper per year by 2029.

Associated Advisory Engagement

IFC has provided advisory services including a participatory water monitoring program and the From Disclosure to Development (D2D) program in Mongolia, both of which have been completed. IFC trained rural communities and local authorities on water management as well as worked with mining companies in the South Gobi region to agree on a voluntary code of practice (VCP) for water management. In 2019, mining companies across Mongolia adopted the VCP disclosure template for water usage, which was reported by the Extractive Industries Transparent Initiative (EITI) in its 2022 Mongolia EITI Reconciliation Report. The D2D program provided advisory support to Oyu Tolgoi and the Ministry of Mines and Heavy Industry (MMHI) to improve access to and use of existing digital data, enhancing sector transparency. IFC is exploring potential future engagements in relation to climate advisory and digital disclosure opportunities.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	80.0
Equity

Development Impact

This Project will enable Oyu Tolgoi to continue its contribution to Mongolia’s GDP through value addition and job creation and support the Government of Mongolia’s fiscal position through continued fiscal transfers, including taxes and royalties. Additionally, the Project will enable one of the largest copper mines in the world to continue growing production, which is anticipated to build resilience in the global copper value chains, and essential for the global energy transition.

The mineral sector is a major contributor to Mongolia's exports and constitutes about one-third of the government's revenue. It currently represents around a quarter of Mongolia’s GDP. Mongolia is a signatory to the EITI and is currently rated “Moderate”. The World Bank and the International Monetary Fund (“IMF”) have longstanding programs building on regulatory and fiscal regimes to support governance, fiscal stability and transparency. The Project is aligned with the Country Partnership Framework promoting resilience, strengthening economic governance, and boosting competitiveness.

Oyu Tolgoi is also fully committed to best practices in terms of governance. It has a strong focus on stakeholder engagement through the Tri-Partite Council (TPC), a platform established to facilitate dialogue with the local community. Oyu Tolgoi is also investing in sustainable development projects in the Umnugovi province.

Considering the: (i) legal framework and commitments of the Mongolian government regarding macroeconomic management, sector governance, and transparency; (ii) continued engagement of the World Bank and the IMF; and (iii) strong commitment of Oyu Tolgoi to transparency, good international industry practice, sustainability and stakeholder engagement, IFC believes that the overall governance risks to the Project are adequately mitigated and remain low.

IFC's participation brings both financial and non-financial additionality deriving from provision of capital to support the short-term liquidity needs of the company to finalize the ramp up and completion of the Oyu Tolgoi underground development. IFC’s participation provides mobilization of debt financing from Mongolian commercial banks thereby supporting local capital markets. Furthermore, IFC will continue to support Oyu Tolgoi on Environmental & Social matters including guiding the company on managing these in a sustainable manner, in line with good international industry practice. IFC will provide continued advisory support, including on community and stakeholder engagement practices, and potentially on climate advisory.

Indicator	Metrics	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Community Development Outlay ($)	USDMill	Pre-dates IFC investment	Pre-dates IFC investment	7.8
Direct Employment (#) Operations And Maintenance	individuals	Pre-dates IFC investment	Pre-dates IFC investment	4727
Domestic Purchases ($M)	$M	Pre-dates IFC investment	Pre-dates IFC investment	1474
Female Direct Employment (#) Operations And Maintenance	individuals	Pre-dates IFC investment	Pre-dates IFC investment	1102
Payment To Government ($M)	USDMill	Pre-dates IFC investment	Pre-dates IFC investment	422

E&S Category Rationale / Risks and Mitigation

The Project is considered as an additional short-term investment (working capital facility) under the umbrella of the original project (#29007), which has been in portfolio with a satisfactory E&S performance. This new Project does not present any new significant E&S risks or impacts other than those covered under the original umbrella project. IFC’s long term financing for OT (under project #29007) will remain in place beyond the maturity of the short-term facility with no change in the covenants or E&S requirements for the original project. The proposed Project is an E&S Category B project.

Contacts

For Inquiries About the Project, Contact

Oyu Tolgoi LLC
Tsogtsaikhan Baatar
Manager Finance - Copper
+976 1133 1880
TsogtsaikhanB@ot.mn
Monnis Tower, Chinggis Avenue 15 Sukhbaatar District – 14240, Ulaanbaatar, Mongolia
http://www.ot.mn\

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Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

The Environmental and Social Impact Assessment in English and Mongolian language versions are available together with this document and the IFC Environmental and Social Review Summary on the Company’s online website: http://www.ot.mn and on IFC’s website at: https://disclosures.ifc.org/project-detail/ESRS/29007/oyu-tolgoi-llc and at Oyu Tolgoi’s offices below:

Monnis Tower, Chinggis Avenue 15 Sukhbaatar District – 14240, Ulaanbaatar, Mongolia

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. Its purpose is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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