The massive Oyu Tolgoi gold-copper mine has been mired in controversy for years and disrupted by protests from locals worried about environmental damage and foreign influence.
Rio started production from an open-pit mine several years after Mongolian authorities inked a deal in 2009.
The miner then secured an agreement in 2015 paving the way for a second and more valuable phase underground. About 80% of the mine’s reserves are believed to lie beneath the surface.
“The start of Oyu Tolgoi underground mining operations demonstrates to the world that Mongolia can work together with investors in a sustainable manner and become a trusted partner,” Prime Minister Luvsannamsrai Oyun-Erdene said, according to official news agency Montsame.
Oyu Tolgoi has been expected to contribute up to one-third of Mongolia’s gross domestic product once fully operational.
The mining company imports an average of 170MW or 1.3 billion kWh of electricity from China each year but Montsame reported an agreement would be signed on Thursday to supply power locally.
Rio Tinto and Turquoise Hill Resources are to be responsible for added financing until the first half of 2023, when sustainable underground production is achieved, Montsame said.
Oyu Tolgoi is 66% owned by Turquoise Hill Resources, a Canadian subsidiary of Rio, and 34% by the Mongolian government.
Turquoise Hill said in a news release that it “expects to begin caving operations in the coming days”. The Canadian company’s shares rose 16% in New York overnight.
- AFP, with additional editing by George Russell