Rio Tinto to trial Chinese battery swapping technology at Oyu Tolgoi

Staff Writer | November 6, 2024 | 9:41 am Suppliers & Equipment Top Companies Asia Australia China Copper 
Pentwater Capital Management LP, the second-largest investor in Turquoise Hill Resources (TSX: TQR) has increased its stake in the Canadian company while rejecting again Rio Tinto’s C$43-a-share offer for the 49% of the miner it doesn’t already own. The activist investor disclosed it had bought around 1.24% of common stock at C$41.01 per share in Turquoise Hill, for a total of C$102.5 million on September 15. It means it currently owns 13.77% of Turquoise Hill’s shares Rio Tinto agreed on earlier this month to take over Turquoise Hill after sweetening an initial offer by around 20% to “a best and final” $3.3 billion. Penwater, which joined minority shareholder SailingStone Capital Partners in publicly opposing Rio Tinto’s offer as too low, restated its discontent. “The proposed price implies an equity value of C$8.65 billion, which is a fraction of the free cash flow that Pentwater expects Turquoise Hill to generate over the next decade,” it said in the statement. Pentwater noted it expects Turquoise Hill to generate over C$10.5 billion of free cash flow through 2030 assuming a $3.50 per pound copper price and almost C$14.2 billion of free cash flow assuming copper prices of $4 per pound. It also said it was weighing options to thwart the deal, including but not limited to the possible exercise of dissent rights or other legal action. Rio’s offer equires two thirds of shareholders, including Rio Tinto’s, to vote in favour. More than 50% of minority shareholders must approve it. Rio’s final bid represents a 67% premium from Turquoise Hill’s closing price of C$25.68 a share on March 11, the trading day prior to the initial proposal. Pentwater has said the proposed premium is unacceptable for a mine that it expects to be “the third largest copper and gold mine in the world with a mine life in excess of 90 years.” Some analysts believe that Rio Tinto will need to increase its offer to win over some minority shareholders and so hold a direct majority stake in massive Oyu Tolgoi copper-gold mine in Mongolia. The global miner, which has mined copper from Oyu Tolgoi’s open pit for a decade, will have the task to conclude building the underground section of the mine. Once finished, it will lift production from 125,000–150,000 tonnes in 2019 to 560,000 tonnes per year at peak output, which is now expected by 2025 at the earliest. This would make it the biggest new copper mine to come on stream in several years.
Oyu Tolgoi copper-gold mine. (Image courtesy of Erdenes Oyu Tolgoi LLC.)

Rio Tinto (ASX: RIO) is teaming up with China’s State Power Investment Corporation (SPIC) to test the use of battery swap electric haul truck technology at the Oyu Tolgoi copper mine in Mongolia.

Battery swapping allows an electric vehicle to quickly exchange a discharged battery pack for a fully charged one, instead of recharging the vehicle at a static charging station.

The technology is already applied on haul trucks in mining operations across China, and this collaboration will enable Rio Tinto to demonstrate a complete battery electric truck and charging ecosystem at one of its operations.

Rio Tinto in talks to prevent another strike at Oyu Tolgoi

The project will run for two years, comprising eight mining haul trucks (91-tonne payload), 13 batteries (800kWh), and a robotic battery swap and charging station in non-production activities in the aboveground operations at Oyu Tolgoi.

Technical experts from Rio Tinto and Oyu Tolgoi have worked closely with SPIC and truck manufacturer Tonly to adjust equipment design to align with Rio’s electrical and truck safety requirements. The trucks will perform tailings dam rehabilitation work and topsoil movement and be operated and maintained by Oyu Tolgoi personnel.

Each battery is expected to last up to eight hours, depending on the work performed, and the battery swap process takes around seven minutes, enabling increased use of the equipment through minimal charging downtime.

The first truck is ready to arrive at Oyu Tolgoi this year and the remaining seven trucks, along with the battery swap and charging infrastructure, will be in operation by mid-2025.

Rio Tinto said it is committed to reaching net-zero Scope 1 and 2 emissions by 2050 and believes Chinese innovation and technologies can play an important role in achieving this.

The Australian miner currently operates about 700 haul trucks across its global operations, of which 100 are classified as small or medium class (100- to 200-tonne payload).

“By partnering with the State Power Investment Corporation, we will be demonstrating the latest technology and innovation available in China and assessing its potential to help decarbonize our operations quickly and cost effectively,” Rio’s chief decarbonization officer Jonathon McCarthy said in a statement.

“This demonstration will allow us to explore applications for battery swap technology that deliver more flexibility and less downtime than current static charging technologies. This work will complement the electrification pilots of ultra-class mining haul trucks planned for the Pilbara.”

“We are proud the Oyu Tolgoi team is playing a pivotal role in advancing this innovative technology on behalf of Rio Tinto. This project represents a significant step in our ongoing decarbonization journey, aligning closely with Oyu Tolgoi’s strategic commitment to sustainable growth,” added Oyu Tolgoi CEO Deirdre Lingenfelder.

Oyu Tolgoi, in the Umnugovi province of Mongolia, is one of the largest known copper and gold deposits in the world, with annual production estimated at 168,000 tonnes of copper and 177,000 oz of gold. It is also one of the most modern safe, and sustainable operations in the world, Rio said.

Open pit mining at Oyu Tolgoi first started in 2011, and the copper concentrator, the largest industrial complex ever built in Mongolia, began processing mined ore into copper concentrate in 2013. Last spring, underground production also kicked off, which is expected to elevate Oyu Tolgoi into one of the world’s top copper producers by 2030.

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