Rio Tinto Group (RIO) Earnings Call Transcript

Good morning, everybody. I hope everybody had a good night sleep. I appreciate that not always easy that second time you're in a different time zone. So today is really the business end of the visit. We have a very exciting, I think, presentation -- set of presentations lined up for you today. We are going to do this in 2 parts. So in the morning, you'll hear from Bold about Copper and Copper Product Group. You hear from Deirdre, our CEO of OT and you'll hear from Amra, the Rio Tinto Country Manager, and so the top-down views of the business. Then there's a Q&A session and then we leave here at about 10:20. So we would look to finish at 10, maybe a bit earlier, then leave here at 10:20 to go to Naadam festival. Then we will be back here at about 01:30 and I'll kick off with the second session at 02:00. And in that second session, you'll hear from quite a few speakers: Andrew; Oggy; Damian; Steffan; Sukhi; Duka; and Phil. So we'll talk about rocks, dollars and our footprint. So rocks, dollars and our footprint. And I think, unfortunately, most of you are here for rocks, dollars and our environment and social footprint. So there'll be a lot of content this afternoon. As I said, there will be a Q&A session after each section. Please stick in the first Q&A session to the topics discussed in that first session. We are not going to go into rocks, dollars or our social footprint in the morning. We're keeping that for the afternoon and I'll be marshalling or policing that quite strictly. Now the good news is this is not broadcast. What we do is we are going to put the slides -- I have already put the slides on the web. We have e-mailed them earlier, a couple of -- 10 minutes ago to you as well. So you have them in your inbox. We will record the discussion here and put a transcript on the web for those who cannot be here today. And I will start with a safety share by Phil in a second but before we go there, I just want to quickly go to the speakers. So it's always good to have the technology issues straight away. Amar can you go to the next slide, please? Amar ? Can you go to the next slide? So these are the speakers this morning. You have them in your pack -- in the afternoon, sorry, these are the speakers. And then in the next slide, you'll have the -- so here are the people that are in the room that are not speaking and I would like to -- they're all very interesting people to speak to. I would like to highlight 1 person: Batsukh, the Chairman of OT, is in the back. He's setting up -- welcome, Mr. Sukh. And obviously, available -- everybody is available for Q&A if you wanted to. Great. With that, Phil, I'll hand over back to you for the Safety Share.

Thanks, Menno. Good morning, everyone. Happy Naadam. Welcome to Mongolia, an amazing day. So I'm sure everyone is aware that this time last week, there was a fair amount of rain in Mongolia and in UB. And over a few days after that, there was some significant flooding impacting over 138,000 people, 500 homes without power. So it was a quite an impactful event. The government obviously immediately responded and we supported where we could. The risk of flooding continued over the next few days and was -- even as of early morning yesterday, we were still determining was this the right and safe room to have this session in? So there's a lot of planning that went through on the weekend with contingency planning. And it all relies on -- we don't rely on luck. So as an organization, we don't rely on luck and go, we just hope it doesn't rain. If it doesn't rain, we'll be fine. And if it does rain, we'll panic at the time. So throughout the weekend, we built what we call a trigger action response plan. So we look at what are the conditions that would require us to change from a green condition to yellow, to an orange, to a red; red being, it's now kind of a full blown disaster. Probably someday, we were close to getting into an orange condition. We were relatively concerned. And as of yesterday morning, the rain -- predicted rains started to ease and the actual rain did ease as well. So I wanted to make sure everyone in the room is aware that you're not sitting here because we was hoping you weren't going to be in trouble. You're all sitting here because we're confident that through the planning that we did as an organization and the contingency planning, the engagement with the National Emergency Management Association, we're confident that as a saying going forward that we're in a safe situation. So I just wanted to share that with everyone, especially those that might be concerned, things -- there are some clouds around today. There is forecasted rain today. There is more rain coming. So it could be a damnit for some. I just want to make sure that everyone is confident that there is no pressing risk or issue to you, your safety and the events. If there's an emergency, so if the siren goes or one of the staff from the [indiscernible] are coming and tell us there's an emergency, everyone knows where the muster point is. Now I'm sure everyone on the way through the door read the signs, so you know where the muster point is. Not confident? Okay. You leave the building through the main front door, you turn left, keep heading to your left and directly behind us here is the muster point. So it's just a ramp over here on your left from my right, out of the front door and around here. So if there is an emergency, that's where we will head. Obviously, we will make sure no one's left behind. So thank you. And yes, let's have a great key performance.

Good morning, everyone. I love to be here and what an honor and privilege. I've joined Rio Tinto about 10 years ago and to this day, I feel like an important plant. And the problem is, I take credit for other people make that does credit for your job. That's what I feel like but I'm really honored to present and talk about on behalf of the whole Copper family, which is about 8,000 people and close to 20,000 contractors that work at our sites. And what an amazing job they do. So all the detailed questions are left for D in the afternoon. So don't ask me about the underground shaft even for performance yet. That's for the afternoon. So when I talk about where we are in terms of our global copper portfolio. When I joined Rio, I joined the copper team. And at that time, we're about the same volumes. Over the last 10 years, we haven't really grown. In fact, I was incharge of actually divesting North Parks and Palabora at the time. And of course, there were different reasons for those divestments due to various stages of this CapEx maturity. In terms of -- the other point I would make is, last time I spoke to you, you didn't believe me, that I was underground, 1,300 meters below the ground and you will see and pass that actually through draw bell tomorrow. And you'll see that actually, the Wi-Fi works and make sure that it's a really good real-time videos, but we've made a lot of progress and you'll see that the draw bell progress has been amazing and the team has done a wonderful absolute job. We've managed prudently the cave and I think we'll get into that in a bit of detail. The other thing I just want to highlight is that we have -- we have a significant supply challenge in the industry and I'm actually pleased to say that 25% of the new copper supply in the world that's in the models is coming from Rio Tinto. And we are about building mines. We're adding about copper volumes to the market that is in high demand and we're also very excited about a number of OT expansion options because OT is not ore body-bound or logistics-bound. So I think there's a significant opportunity for us to do more in that space. We are looking at -- just go back to the previous page. Sorry, not yet. We also have a number of very attractive growth options and as you know, the Kennecott underground is a gift that keeps giving and there is significant potential in the underground, and we're just scratching the surface around where could we go from there. So we're going to be doing much more in that space and actually, we are producing from that underground with over 3% copper from this [indiscernible] project. The other point I want to make is, look, I think we knew in the Paterson province, we are taking the time and working with the traditional owners. I'd like to acknowledge the younger market people were in Mongolia. They wished to decide yesterday and they really saw firsthand, our amazing partnership we have here locally with the communities and how we work in terms of making sure that we work very closely in getting our social license in order. And we have made some mistakes, but we try our best to learn from our mistakes. We also have a number of greenfield projects, as you know, in Resolution Arizona, but also La Granja and our joint venture that we are in process of setting up with First Quantum, try to advance that project into -- look, I think if I go to the next page, the one point I want to make here is, I spent quite a lot of time, 2 years in a row Dan Yergin going to Sarawak in Houston. And as a mining guy, I don't even go to oil and gas conferences, but I find the energy transition conversation in the U.S. really interesting. And obviously, we're seeing a massive demand and obviously, a supply deficit in the world. And Dan calls copper, obviously, the metal of electrification. And nobody argues about the demand side of the story and obviously driven by the energy transition, but we are all puzzled where the supply is going to come from. And when I look at the last 20 years, a significant supply shortage was always filled by existing mines and the brownfields. And there's still copper in our pits. It's just lower grade. And that means brownfield expansions will shift the cost curve up. The stripping, the OpEx will make the cost of that supply is going to be higher than historically. And that's going to be the norm of the future 10 years as we look at it but not all brownfield expansions can meet the demand. So obviously, we have to find a way to build new projects. We're also looking at a number of technology options and I will cover that in a bit of detail around Nuton. On the next page, this is the slide I spoke to you about and I think many companies talk about doubling volumes. Actually, we spend, as you know and you'll see it tomorrow, which is -- we're 87% CapEx behind. When I talk about doubling copper volumes, I'm talking about OT ramp up primarily and it's going to ramp up from a roughly run rate of 150,000 tonnes to 500,000 tonnes. And today, on an integrated basis with TRQ, I think based on the numbers you know, we're around 600,000 tonnes already. And with just OT, that will potentially get us close to over 1 million. And then obviously, Kennecott and a number of other options could get us to doubling copper volumes by 2030 with a significant amount of the CapEx behind us. 500,000 tonne copper mine is not a small task. And there's only 4 mines that ever have achieved the greenfield expansions of this scale in history. And obviously, there's one that's being built in DRC and it's doing very well. And obviously, it's more a rarity than more in the copper industry to build mines of this scale. In terms of the Oyu Tolgoi asset, D will get into a bit more detail, but I'm very proud. I'm very proud of the 20,000 Mongolians who worked there 24/7 in a 5-4 basis working 14 shifts. And as a number of them have built the mine through very difficult circumstances during COVID and despite the number of challenges, continued the progress. We have fully integrated TRQ. Now we may -- we always have control, so what's the big deal? The number of paperwork is reduced significantly. We dropped 50,000 hours of reporting, presentation, reconciliations and the amount of discussion we used to have has just significantly dropped. So I think from an efficiency standpoint, it helped our teams tremendously. When we look at the growth options, one of them is obviously the Resolution mine. And we work in -- I can go through it in the Q&A but in my mind, first of all, that ore body is a twin of OT, deep underground block cave, potentially with high grades. I also think of Resolution in a different way than OT because it is a brownfield expansion in my opinion because the shaft mine was built in the '80s and shaft 10 is a living sunk. So we already have ventilation. We already have existing infrastructure, power, water, railway. We have a tunnel called Never Sweat tunnel to the Resolution. We haven't been there. You should go take a look, but it's amazing. It is not building a copper mine in the Gobi Desert. It is building a copper mine in the Arizona Mining Triangle that already produces over 1 million tonnes of copper in the U.S., which, as you know, is copper short. And that means that the supplier base is already there, that many of the existing business infrastructure is there. There's absolutely no question. We have to work harder in working with the communities and wait for the land exchange and the permitting to take place. So very excited about Resolution. And when I look at our ore body endowment that the predecessor of this company has secured for us, it looks amazing. I think we have the technical talent. We have -- we're working our social license in the U.S., but our expansion on the copper side, from an organic standpoint, our very privileged position. The -- I just want to cover a couple of things on the U.S. side. So U.S. has about a 2 million tonnes copper consumption. And of that, 1 million tonne is imported and they produce 1 million tonne. With the energy transition, that 2 million tonnes supposed to grow to 4 million tonnes. But the U.S. copper supply potentially stays at 1, which means that the U.S. will become over 70% import-dependent unless new copper mines are built in the U.S. And as we look at our strategic position in Salt Lake as well as Arizona, we find there are ways to expand our business there. If you look back to the '80s, the U.S. had 87 mines and 16 smelters. And now, U.S. has operating 2 smelters, one of them, which is run by us, the other one by Freeport. I think the Kennecott life of mine has always been a question mark in terms of how long can they go and we're pretty confident we can extend it beyond 2050. And the Kennecott pushed that expansion and we have recently approved the $500 million underground project to progress with [indiscernible] . Now the one of the other interesting aspects around our U.S. presence is the downstream business. Our downstream business, such as Kennecott smelter, produces critical minerals like tellurium, which we supply to a company called First Solar, which is building solar panels around the U.S. and provides a significant opportunity for us to get exposure to IRA and the energy transition. We're also looking at expanding on a smaller scale and these are not big CapEx dollars on producing other critical minerals out of that over body, such as uranium and we had the uranium circle there that we're looking to revive. Now in terms of our greenfield exploration, our exploration teams are looking at projects in Arizona, New Mexico, Montana and Utah. And of course, this is the next chapter in our technology breakthrough, which is Nuton. We're very excited about Nuton because leaching is not something new, but it is new in primary sulfides. And I'm talking about recoveries that are achieving over 80%. And this grew out of necessity as we looked at the high asset of content of La Granja, and we were looking to deploy new technology in Peru. And we think that is a rate with technology that gives access to more volumes in beyond these, of the lower-grade primary sulfide ore bodies. And we're working very closely with McEwen on the Los Azules side, which is a 12 million tonne copper deposit. And obviously, we're working with that company, improving up our technology. We've also made some significant progress in column testing, a number of the other projects such as Regulus, which is the AntaKori project in Peru. We also did a bit of column testing on a number of the other areas and have signed a number of JVs that you may have seen with Lion Gold, which is an old mine that was closed in Yerington, Nevada. We're pretty excited about this because this is not for us in R&D project. It's not a startup. It's a necessity. And it's a necessity that our R&D teams in various parts of the world have grown to make La Granja work. And so we are very excited about this one and obviously, we can get into a bit more detail as we go in the next -- for the remainder of the year. I think we just have to do a few more test works before we can give you more information. But so far, our models versus our column testing had a really good correlation. And actually, we would be looking at a significant reduction in CO2 footprint. And in one particular area that I'm actually very excited about is, it avoids all this unnecessary processing and movement of waste. In order to extract copper, we have to process -- let's say, 1 tonne of copper gives you 4 -- sort of -- 1 tonne of ore body gives you 4 kilograms of copper. There's 996 tonnes of waste. Imagine that, what if you don't have to do that? What if you don't have to smelt it, what if you don't have to crush it to a fine powder, float it like a beer, like a bubble, skimmed from the top. And that's what the concentrate is. Imagine if you can just agglomerate and drop a bit of a copper-loving bacterium on top, and nature does it's work. So -- and you get 99% final cathode product. The SXTW capacity in the world is there. The oxide ore bodies are depleting. So the next phase is, how do you get access to the primary sulfides ore body and push it through the SXTW circuits that are in place today? Or you can always obviously build the next one. Now our ambition, doubling copper, is not real ambition. It's a step towards reality, out of which 80-some percent of that CapEx is behind us and you'll see that -- and thanks to our investors tomorrow on where we are with that project. We're being very measured and disciplined around how we manage the cave. And obviously, we are looking forward to the ramp-up in the years to come. Now I will hand over to Amra to talk about our license to operate indeed to talk about OT. Thank you.

Good morning, everybody. Happy Naadam. So just wonder, maybe people wondering about what is Naadam and what is Naadam celebration. So Naadam is a symbol of independence. It's also the part of Mongolian people pride of nation. So I would like to welcome you again to my beautiful country, Mongolia. You are here in Mongolia, very exciting time, with Mongolia is strengthening its position as an important destination for foreign direct investment once again. So I'll take you through a bit of overview of Mongolia, the country. So we move to next -- Mongolia is the second largest landlocked country and 18th largest country in the world. Mongolia's territory equals almost entire Western Europe. The country's northern border is longer than U.S. and Mexico border. In the south, Mongolia shares 4,600 kilometers border with China, which is China's longest border. Furthermore, nominal GDP of the country is now reaching to USD 17 billion and GDP per capita is currently about USD 5,000, first time in its history. The Global Freedom Score, which is world's most prominent index determining democratic freedom, Mongolia is consistently placing itself free category. Mongolia is the only country with this score in entire Eurasia from [indiscernible] North Korea all the way to Scandinavia. Mongolia has 3 large city. Ulaanbaatar is the capital city; Erdenet and Darkhan. Oyu Tolgoi mine is located approximately 550 kilometers south of Ulaanbaatar. So I'll talk you through the demographic of Mongolia. Mongolia has 3.5 million population. That makes Mongolia one of the world's most sparsely populated countries. Over 75% of the population is young, majority of them highly educated but we are very proud of that. With young Mongolian population becoming this, technology in social media, as you see that the number of smartphone users, the larger than population and also Mongolians spend about 2 to 3 hours on social media. So in regard to the belief Mongolia has built with diverse beliefs, even though majority of Mongolians are buddhist. Countries open to all religion and you will find churches, mosques and other places of worship in UB and the other parts of Mongolia. Mongolia is quite homogenous in terms of ethnicity. In 1990, Mongolia peacefully transitioned to parliamentary democracy and market economy. The structure of Mongolian state is unique in the region. There are strong democratic checks and balances, which ensures democratic governance. Mongolia has always had peacefully transitions of different powers. Two political parties have dominated government over the last 30 years. So they've been alternating peacefully through the electorate process. In the recent years, the third political party voice is becoming more strong. Prime Minister, through his cabinet, runs the country on a day-to-day basis. Harvard-educated Prime Minister of Oyun, I think most of you probably met with him yesterday. He pursues a strong PRO FDA policy and his relationship with Rio Tinto has been seen as an important achievement by Mongolian people. This enables mine to begin underground operations [indiscernible] commence underground production March this year. Cabinet has announced ambitious agenda called New Recovery Policy after the Prime Minister's -- the initiations of Vision 2050. This seems to solve 6 key economic constraints in Mongolia. First one is commercial part and second energy, then industrialization, then urban and rural development. And also green development. And lastly but not least, the efficiency in the government. Prime Minister Oyun's Mongolia's People Party has overwhelming majority in the parliament that holds about 60% seats. All political parties recognize the important Oyu Tolgoi project and also support its success. The next parliamentary election is scheduled June next year. Recently, you may have heard that the -- in May last year, parliament passed constitutional amendment, which now are expanding number of MPs from 76 to 126. And 40% of the seats will be elected by professional -- proportional party list and the rest will be voted by majority. According to the government, the constitutional reform will intend to decrease the politicalization of issues that are key to our country's development. All major parties' key economic priorities include capitalization on success of OT and also accelerating other big projects beyond Oyu Tolgoi. So I would like to talk you through the bit of Mongolian economy. Since the transition to free market economy in early 1990s, Mongolian economy has consistently grown, except 2 periods: in global financial crisis in 2009 and also COVID-19 pandemic. If you see rapid economic growth in 2011, Oyu Tolgoi played major growth in this economic growth. During this time, GDP growth reached all-time of 17.3%. So the whole world is actually wondering in the [indiscernible]. The last couple of years were important in terms of recovery from pandemic. Despite global financial tightening, high petrol and food prices and also border restrictions, Mongolian economy has shown a strong sign of recovery. Economic growth was driven largely by rapid recovery in exports and robust consumption as global labor market continues to improve. World Bank forecast the growth of Mongolian economy for this year is about 5%. It could be a bit over 5% if mining expands in the post-pandemic recovery and the service continues. FTI is an important driver of Mongolian economic growth. OT is the single largest contributor at the moment. In 2022, inflows of countries' FTI reached USD 3.5 billion, while outflow for loan repayments was about USD 1 billion. That result in net inflows of USD 2.5 billion. The mining sector accounted the largest share in the GDP, which is 28%. So being a landlocked country, Mongolia has limited trade rate, with China being the most important partner for both exports and imports. In 2022, mining industry made a plus majority of Mongolia's export with 93%, while non-mining sector only made up about 7%. Within the mining industry, coal was the largest export, amounting about 52% of total country's export. On the other hand, copper is the largest -- second largest export product, accounting for 22%. That's combined from Oyu Tolgoi in [indiscernible] Corporation their key contributor for Mongolia's copper exports. This Oyu Tolgoi underground mine is expected to ramp up in the coming years. Copper share in the Mongolia exports will set to expand now. Following the pandemic from 2022, increasing demand for imports together with higher import prices led to large external imbalance despite significant increase in exports. This year's trade balance pressures are expected to remain significant due to continuous rates in export consumption and sustained public investment. So Oyu Tolgoi plays major role in Mongolian economy, not only [indiscernible] contribution, also it has significantly indirect contribution to Mongolian economy. So Oyu Tolgoi -- since 2010, Oyu Tolgoi has paid USD 4 billion taxes, fees and other payments to the state budget. That also includes value-added taxes to Mongolian suppliers, which Oyu Tolgoi is not able to claim. Full economic impact of Oyu Tolgoi extends beyond direct impact. The multiplier effect in the Mongolian economy was estimated at 1.43% in 2019 through local procurement, tax spending, generating the local businesses. Taxes, fees and payments made by Oyu Tolgoi make up 2.5% of Mongolian GDP, 8.7% of Mongolian budget revenue, 16.7% of Mongolian export revenue. Oyu Tolgoi continues to have positive impact on its many local suppliers in their stack capability and also organizational capture. And also influencing to ability to collaborate with other businesses. OT was a key driver in overcoming some of challenges during and after COVID-19 pandemic. So as I mentioned, Mongolia is located between China and Russia. Due to its unique geographic position, Mongolia possesses stable relationship with both its neighbors, China and Russia. As a democratic nation, Mongolia also fosters very strong relationship with third neighbor countries that includes U.S., U.K., European Union, Japan and Australia. Since 2022, Mongolia has consistently upheld from working on U.N. resolutions on Ukraine and Russia. This allowed Mongolia has maintained its stable relationship. Russia, however, Mongolia carefully follow global sanctions on Russia. Mongolia also implementing active foreign policy by ensuring regular, high-level visits to China and U.S. and other third neighbor countries. Throughout its history, Mongolia has preserved its unique culture in the way of living by finding balance between these 2 global major powers. Throughout history, Mongolia has ensured its sovereignty through careful balancing of major powers, Mongolia's foreign policymakers that immersely adapted. So Bold has mentioned about the acquisition of TH in December last year. So Rio Tinto is now a direct shareholder in Oyu Tolgoi, together with the Government of Mongolia. So that has significantly simplified the governance process for Oyu Tolgoi. Our partnership is underpinned by 2 founding -- foundation agreement for Oyu Tolgoi. So first one is the investment agreement, which was signed in 2009, and as well as the shareholders agreement. Investment agreement established tax and regulated returns, and also sets out specific obligations for infrastructure development and also community in the environment in water. Shareholder agreement provides terms for company governance and management funding in the local content. Over the history of Oyu Tolgoi project, we had a number of extended discussions and negotiations with the government on many different issues. We continue to strengthen our relationship with our government and our stakeholders in moving Oyu Tolgoi project forward to deliver on the enormous potential. Last year, parliament issued Resolution 103, which enables our agreement with the government. The first 5 out of 6 measures have been fully implemented and now we have one issue still under discussion with the government. We celebrated very important milestone early this year. Oyu Tolgoi underground mine commenced production. It's now on the track to becoming one of the world's largest copper mine in the world. We did speed production expected between 2028 to 2032. However, Oyu Tolgoi's mine life can go many years beyond that, fueling its many potential expansion options. Rio Tinto has long-term commitment to Mongolia. So we are here to stay long-term partner with Mongolian Government and the people of Mongolia. So our presence in Mongolia beyond OT. So Rio Tinto's Mongolia Business Service Center is an integral part of our commitment to Mongolia. We have about 200 employees. So they are mostly young Mongolian people. So we provide IT in the business support services to over 1,000 projects Oyu Tolgoi -- Rio Tinto team is currently running. Rio Tinto Mongolia business support sales has big ambition for future to expand in the number in the different variety of services. And also, I would like to talk about a little bit of expression. So Rio Tinto Mongolia also looks after Rio Tinto's exploration activity in Mongolia. Mongolia is one of the 29 world's most researched pitch countries, so that's actually identified the IMF enhance significant potential for mineral exploration. White mineral gloves remain predominantly untouched by modern expression and the extraction methods. Currently, there are about 2,600 mineral licenses held by companies, so most of them local companies. Majority of known mineral targets are in actually in open ground. Only about 4% of Mongolia's land mass is now held on the exploration license. Positive measures taken by government in minerals sector, I think so promoting responsible mining and protecting interest of law-abiding local and foreign investors. So I would like to finish with my discussion, talk about what we're doing in terms of supporting the local community in the social investment. With our long-term commitment to Mongolia, we want to deliver our commitment to address and help the important issues in Mongolia's society. We run our own Rio Tinto social investment projects and partnerships, which is separate to what Oyu Tolgoi is currently doing. So our key focus is economic diversification and environment and climate change, education and cultural heritage. This plan shows specific projects, we are currently implementing our project as a whole side contributes to 9 out of 17 U.N. sustainable development goal. Also that's well aligned with government's long-term vision. Just this summer, we started very exciting project, that is the construction of the current park at its next site next to the Shangri-La hotel in the greening of the largest public space in heart of Ulaanbaatar City. So our vision is really that park is becoming important to Ulaanbaatar residents, same as Central Park in New York City. So thank you very much and I hope you enjoyed the Naadam celebration. You will have a bit of taste of Mongolia with culture and their heritage. And I'll give it to the...

Good morning. So [foreign language], happy Naadam. I'm very happy to welcome you to both Mongolia and Oyu Tolgoi. My name is Deirdre, I was appointed as the Oyu Tolgoi CEO in May of last year. And what an incredible privilege to lead this amazing business. I have been associated in working with Oyu Tolgoi for about 6 years in different capacities, also in Rio Tinto. I was born in Johannesburg, if the accent didn't give me away. And I've been working in mining, heavy industries and smelting for about 25 years. I've worked across South America, North America, Africa, Europe and Australia and now this incredible country. I've been very, very fortunate that's my jobs have taken me to far-flung places in interesting corners of the world. But I have to say, without a shadow of a doubt, that what Mongolia has to offer far surpasses any of those experiences. It has been a very eventful first year and what is a stand-out moment for me as a leader of this business was the start of underground production in March of this year. Like Bold, I feel like I'm standing on the shoulders of giants. Many are real good -- many people came in front of me and my team over the past 20 years to craft the past by for any credible business and project, and what we'll do today is share a little bit about that with you. In addition to this proud milestone, my team from -- many are here today. They are very close to my heart. They're an incredible bunch of human beings. We'll take you through the following or what is on this slide in a bit more detail. But I'd like for them to stand up so you can just see them where they're dotted around the room. So I'd like to start with the speakers, if I can. So Andrew, Damian, Duka, Phil, Siggi, Oggy and Steffan, who will join my team a bit later today. So these individuals are going to take you through, as Menno said, everything around money, rocks and footprint. So I've got the easy job, hopefully, to paint the picture and set the context, and this team will take you through the detail. Also my extended team, so the rest of the team, if you could just stand up quickly. Don't be shy. So yes, we've got Claire, Lkhagva, Amar, Sukh, Melissa. I think Sinead, yes, we've got Sinead in the room. And they are a support team and they will be working in support of the presenting team. So just to sketch out what we'll be going through. I'll set the scene and then every single one of these areas, my team will take you through in more detail. Firstly, we are on a solid pathway to becoming a world-leading, modern, safe sustainable and profitable copper business. And to do this for us, safety is firstly and foremost, the most important, and we will not compromise on the safety of our team as we progress on this journey. We are on a journey, moving from a surface operation and underground project to an integrated business definitely presents an evolving risk profile. I will go through a bit more of the statistics a bit later. I hope when you go to the site tomorrow, you'll be able to engage with the teams and understand what we're dealing with. It is at a mammoth scale. I also would like to say that whilst many of you, and I think many of us, they're focused on the underground project. To date, we shouldn't forget that we at Tolgoi have been a world-class operation with a proven track record for the last 10 years. We have been running a business, not just developing and delivering on our project. We're now shifting, as I said, from a surface mine and an underground project to an integrated copper business. This takes a lot of planning, a lot of forward thinking to make sure that all the pieces are pulled together. For us, it's an incredibly exciting phase. I'm sure for you, as well, as we ramp up and deliver the necessary infrastructure to support this. Andrew and Damian that stood up a bit earlier will provide you with an update on how the underground ramp-up is going. Then whilst the ramp-up is a top priority, we're also very fortunate, as Bold alluded to in his opening presentation, that we have a very strong pipeline of options to grow, to sustain and to improve the business. This is an incredibly fortunate position to be in. And a number of the team members will touch today on our incredible ore body. It is mammoth. It's the size of Manhattan. I think, as Dominic Barton mentioned yesterday, the various studies and opportunities that lie ahead of us, but also the risks we need to navigate. We are not naive to the fact that ramping up to be the fourth largest player globally does not just happen by chance. It does take forward thinking and derisking. I know many people define me as a person that is very caring. I do care about people. I also care about us delivering the profit to our shareholders. That's very important. I care about the planet, and I care about strong partnerships. So when I talk about care, it is the full scope of why Oyu Tolgoi exists. But close to my heart is our people and culture, and that is a key driver in our ramp-up to being in the first quartile of cost performance. And as we triple our production to an average of 500,000 tonnes per annum between 2028 and 2036 and to a peak of 610,000 tonnes per annum. We are making progress. We referred to the drill wells a bit earlier. We're at 54 drill wells as at 30 June. At the moment, we just keep going through those drill wells. We are well ahead of the 25 drill wells in plan. Now this does not happen by chance. It impacts is not just a stroke of good fortune that brings us ahead of plan. This is based on a continuous improvement mindset that we have inculcated in our teams. We always strive to be better. And many bright minds -- as Amar said, we have incredible team members come together to make this happen. And this learning culture, in addition to ensuring that we have the leadership and technical skills to deliver on the business, is setting a really strong foundation for our future growth. Steffan and Oggy will talk through how we use this to drive and to optimize the designs of panels 1 and 2 and how we use data and technology to make decisions in real time. Based on the evolution of our business and considering the present and future of scenarios, it also became timely for us to rethink heavy. We have a solid 10 years behind us but now as we define an integrated business, we need to think ahead. The strategy was approved by the Oyu Tolgoi Board and the copper and Rio Tinto leadership teams last month. And this is a really big stepping stone for us. And through this process, we identified 3 competitive advantages. I will go through it in more detail, but just to outline what those are. Firstly, and as I mentioned, our incredibly talented, proud, dedicated team members; our impressive ore bodies and the power of very strong partnerships. Our strategy -- and this is a very important point because I'm sure we're going to touch on it a bit later -- align directly to the Rio Tinto but equally, it completely supports Vision 2050 of the government of Mongolia. Dominic referred to Vision 2050 ratings. If you haven't read it, please get it and go through it. Drastic seen for the feet and chose the role that sectors and companies like Rio Tinto and specifically Oyu Tolgoi will play in the future success of Mongolia. A couple of examples of how we're building on our competitive advantages and align to our shareholder strategy. And please, this is not [Technical Difficulty]. We have noted the ESG achievements. We also have challenges. We will go through that a bit later in the agenda. We have first quartile OT efficiency performance and recycling rates of around 85%. And we are very proud of this and myself working in OT quality and quantity management many, many years ago but we do believe that we can do a lot more, and we can do a lot more outside the gates of Oyu Tolgoi before will take us through that later today. We believe that partnerships provide strong and mutually beneficial platforms for us to deliver and we have identified partnerships as one of our competitive advantages. Sugi is going to share more about that and examples of what we're doing in the local and regional communities. And I believe and data shows that engaged employees and contractors are safe and productive. Our engagement efforts around safety, while being inclusion and diversity, recognition, which my team knows is very close to my heart as well, to name as a few, has resulted in Oyu Tolgoi consistently being top of the ranks in the Rio Tinto engagement survey results. And it would be remiss of me if I didn't pay tribute and thank the thousands of hard-working men and women, some of which you will meet at the site tomorrow. So by building on these competitive advantages, actively managing our risks, my team knows what I expect of us is to always think 5 steps ahead and anticipate what is coming down and what the opportunities and risks could potentially be and seeing these many opportunities. And ultimately contributing to achieving our overarching purpose of being a partner in Mongolia's prosperity by being a world-leading, safe, sustainable and profitable business. So moving on to the next slide. Let's take a closer look at our ramp-up and cost position. Duka will provide more color on this topic in the second half of the presentation, so please hold any questions for her. She's far better at answering them than I am. What is noteworthy on this slide is we expect average production from the open pits and underground to triple and reach an average of 500,000 tonnes per annum of copper and concentrate from 2028 to 2036, as I mentioned, and around 610,000 tonnes per annum at peak. The gold average production will reach an average of 350,000 ounces per annum and 450,000 ounces per annum at peak. And what is a good story for us, and this is what makes us underground ore body so impressive is that the copper head grade will increase from 0.5% to 1.24% in 2028. When fully ramped up, Oyu Tolgoi will be well positioned in the first quarter on the cost curve as production drives a cost competitive position. So these shifts in our production and cost position demonstrates that Oyu Tolgoi is entering an incredibly exciting phase in our short history, a very young business, but also including incoming cash flow positive in 2025 as we prepare for a successful long-term future. And as I said, [ Duka, ] our CFO, will provide a bit more color. On the next slide, I'd like to talk about the pipeline of options that Bold alluded to earlier. Whilst obviously, we need to make sure we ramp up Oyu Tolgoi be a safe, profitable business, and that is our ultimate aim. We are fortunate to have a strong pipeline of options to grow and to sustain the business. So I'm going to highlight quite a few, and these options are different study phases. So whilst these are listed, I need to flag that we do need to do more work to really understand these options in more detail. So at concept and order of magnitude level, we are looking at longer-term options to continue to deliver 500,000 tonnes per annum beyond the current Hugo North Lift 1 and continued optimization of Panel 1 and 2. We are therefore in the process of studying Hugo North Lift 2 and future phases of the Oyut ore body as well as Hugo South. And whilst we are focusing on growth, that is absolutely key and it's aligned with the copper strategy that Bold shared with you a bit earlier, our priorities are not only focused on copper growth. We will continue to study ways to improve our water consumption and reduce our waste, and we are formally committed in the refreshed strategy I referred to, to a 50% reduction in nonmineral waste by 2030. And we are targeting net-Zero carbon emissions by 2050, and we are studying options in renewables in very close discussion and collaboration with the Ministry of Energy and with support from Rio Tinto. We are also looking at opportunities to grow our business and Rio has signed a Memorandum of Understanding, and Amara alluded to this, with the government of Mongolia relating to investigating the production of final copper products. So beneficiation in front of mind for us, and this includes heap leaching. So the bottom line for me is whilst we're in a really good position. The best is yet to come. I'd like to now provide you with a very brief overview of our competitive advantages. So as acknowledged earlier and highlighted in our Chairman, the Rio Tinto Chairman, Dominic Barton's speech yesterday, people's talent, passion and commitment over multiple decades have contributed to the many Oyu Tolgoi successes. Safety remains our top priority, and we are continuously focusing on making sure that we improve. Over the last decade, the all injury frequency rate has reduced by a half despite the fact that we are dealing with more risks now that we have a surface operation and an underground business operation. Our all injury frequency rate is at 0.2. This is one of the lowest in the Rio Tinto group, but also I think globally, anything below 0.3 is a pretty impressive safety outcome. We take the safety and health of our teams very seriously and therefore, we stop work if it's not safe to continue. We believe that this is an anchoring point to the performance that we have achieved so far and will remain an anchoring point in making sure we sustain that performance going into the future. Beyond all-injury frequency rate, we are also focused on health and well-being of our workforce. This covers physical as well as means of well-being. And for example, this year, we have had campaigns focusing on heart health, blood pressure and lung health in addition to mental health. These are very real and relevant challenges within the Mongolian context. Our 97% Mongolian workforce as well as the 3% expats are energized by the fact that the efforts are contributing to the prosperity of their families and the nation. It is a job that really anchors you into something that's tangible and real, not just today but into the long run. It is a super block-cave. Steffan will take you through that a bit later today, booked largely by a Mongolian workforce and it's the first of its kind in Mongolia. And as I said, Steffan will share with you some mind-blowing statistics. We have developed very strong technical expertise with the support of Rio Tinto and in partnership with institutions like the Mongolian University of Science and Technology. We have the skills to develop and deliver mega projects, and we have shown this. We have geotechnical and block-caving expertise, and you will see a couple of people this afternoon showing you that, that exists. And this is to name but our few to run our mines and deliver on our projects and we will continue to create the in-country expertise to support this ambition. We have a long-term commitment to have a more diverse workforce, just looking at this room, I think we can all do with a bit more diversity. And we have set an ambitious target to have 50% female participation in the long run. This ambitious target was recently formally included in our strategy performance measures. To me, that signals a big shift and a big change of where we wanted to Oyu Tolgoi. So where are we today? We currently have 23% female employees across our business. Importantly, we have 180 female operators out of the 996. These women are working across our value chain, operating drills, operating heavy equipment, operating the concentrator, hoist operators and other key underground equipment -- underground owned surface equipment. We also have a strong pool of underground trainees who are keen to learn and to work underground. Considering females were only approved to work underground in 2016, this is a big step forward. But clearly, there's a lot more for us to do. So how does this look like at the leadership level? Leadership positions, and this came up yesterday, I don't know who attended the panel discussion by Jennifer Nason, where she said she was proud to be associated with an organization with strong female representation and you'll see some of the most incredible women on presenting to you a bit later today. And in terms of statistics, females make up 40% of Oyu Tolgoi's senior management. And our Board is now 53% female as well. We have a lot of work to do in terms of few months and supervisory role, but we are doing very well in terms of women in management roles. I think the Rio Tinto Group has an average of about 28% of women in the leadership roles. So how do we make this change? We are actively working on partnering with academic institutions and rethinking our graduated programs, our recruitment programs to support our ambitious targets. As highlighted yesterday, over 3,800 students have enrolled in our education program since 2011. And we are working on creating an environment that doesn't only attract female talent but also retains it. We have a lot to learn, and we are learning from the publicly released Everyday Respect Report that Rio Tinto commissioned and very bravely published. We are committed to creating and maintaining an inclusive and psychologically safe environment. We have worked very closely and directly with Eliz Broderick, the author of that report and we have taken decisive measures to address the findings of the report. Some examples are improving our facilities, improving reporting channels. We have seen a vast increase in the reported incidents coming through, which in my mind is a really good thing. It means our employees and contractors feel that it's safe to speak up, firstly, and foremostly, but also that these channels are available and known to our workforce. We have done a lot of training. We started with leaders. I think the change needed and the culture shift needed starts at the top of the organization. also work with our Board, [indiscernible] directly with the Oyu Tolgoi Board. And this year, we are training our entire workforce and also extended the training to contractors. There's a lot more to do where I think foundationally, having the right culture in place, it is what's going to drive this incredible business forward very strongly. So then moving to the next slide. And I just love this. This is the most impressive slide, I think, if you look at that ore body. And we have 4 key ore bodies that make up our high-quality, long-life assets. And in the diagram, you see the grades and resource figures of these ore bodies. And we're going to go through a little bit later today, but just to paint the picture for you. Oyut, which is the source of our open pit operation, has been operating for over a decade, as I said. We are now tapping into Hugo North as part of Hugo North Lift 1. And this ore body has a significantly higher grade at around 1.55% compared to the Oyut open pit at around 0.44%. And then if you look beyond Hugo North, we also have Hugo South. And to the top left of the picture, the more distant Heruga, which forms our life of mine plan. Andrew and Oggy will expand on the ore bodies. We are currently mining and our continued efforts to improve our understanding of the ore body and to convert a vast resource into reserves. So moving on, whilst we are ramping up to be the fourth largest copper player globally, I often say it's not only about being the biggest, it is about making the biggest positive impact. Nothing makes me prouder to see the on-the-ground tangible examples of the positive impact that Oyu Tolgoi has had and will continue to have, not only for being a profitable business, that does remain our aim, but also through contributing to the Mongolian economy, providing value to our shareholders and our stakeholders and also through our local development efforts. So some examples of partnerships. The Gobi Oyu Development Support Fund invests around $5 million annually in local development efforts. And one of the first things I was involved in with the broader team with the establishment of the Oyu Tolgoi Khanbogd Catalyst Fund, which have started investing $50 million over the next 5 years in Khanbogd in town transformation and sustainable development programs. Our long-life asset gives us the opportunity to make sure the decisions we made today and the efforts we are involved in as of today will have a long-term positive impact. Sugar will share more. We're also partnering with governments and the President's office to contribute to the national movement of planting 1 billion trees and securing water access for the nation. Phil will share more about the statistics around that. We are partnering with leading national universities to build capabilities as well as mental health programs. One that is -- which is very impressive for me is the metal health programs in the ger districts of Ulaanbaatar. $320,000 was spent to provide counseling for girls in this underprivileged area benefiting over 50,000 young children and their families as well as teachers. And Sugar and my team shared with me at dinner a couple of nights ago how she had spoken to 2 young girls that came through this program as students and they are now teachers. And I think that's just an incredible example of how this effort plays forward. We have made good progress on our partnership with the government of Mongolia, as Amara referred to earlier, initiated by the relationship resets in January of last year. And I'm often asked, how do you know that this partnership is actually being strengthened and moving forward? And for me, a key anchoring fact and data point to support this is the approval of our strategy. that was recently presented to the Oyu Tolgoi Board. As I said, this strategy aligns our shareholders on some of our long-term ambitions, including short, medium and long-term measures of success and profit and production targets, objectives supporting the development of our people, objectives around partnership, including ongoing transparency and targets around caring for our planet. And this strategy, as I said, is aligned to Vision 2050 and the Rio Tinto strategies. And for us and especially for me and our management team, this is a very important vehicle to ensure alignment with both our shareholders and to support ongoing strategic level conversations. And this doesn't mean that those conversations will not be difficult. Ramping up the fourth largest copper business is not easy business. We expect both our shareholders and I expect both of the shareholders to give me and my management team on our toes. So for me, a robust conversation is exactly what is needed to make a success of this incredible business. We believe that working in an open and transparent manner with our shareholders and our stakeholders and working together to make decisions that ultimately provides the best outcome for Oyu Tolgoi is how we will be able to deliver on these promises. So on the next slide, whilst we have growth ahead of us with ramp-up and as I mentioned earlier, we are also well aware that we need to navigate risks, and we need to use our competitive advantages to navigate these risks. First in, I'm sure front of mind for everyone is ensuring the ramp-up of underground production. The updates I've provided so far and the more detail you'll get from Damian and the team later today should build the confidence that we are well placed to deliver on our operational performance as well as the underground project. And secondly, while people are a competitive advantage for us, we are aware that the skills we are developing in country is in global demand. We will continue to invest in technical skills development and draw on Rio Tinto expertise. Our ambition is to establish a technical center of excellence in Mongolia by building on our existing partnerships. And thirdly, power and decarbonization. Power is critical for our business and we have committed to net Zero carbon emissions by 2050, in line with the Rio Tinto strategy. Duka will take you through the power agreement in more detail, but I would like to highlight that we have secured a reliable power source until 2030. And lastly, and as highlighted by Amara, Mongolia is a location that can bring numerous challenges due to its geographic location, one of them being supply chain challenges. The one thing I know and I've experienced in my 14 months in this role is that our teams are depth to forward thinking. We have a proven track record in navigating multiple challenges, some of them all at the same time. And I'm also proud of the efforts, the Made in Mongolia efforts that's underway which is driving the purchasing and manufacturing of the goods in procuring the services we need right here in Mongolia and very specifically in the South Gobi. It's also worth noting that to date Oyu Tolgoi has spent around $5 billion in national procurement directly supporting Mongolian companies. And of that, around $1.2 billion was spent in the South Gobi. On the next slide, I don't want to leave you on risks. We have some fantastic opportunities, and I've touched on some of these throughout the presentation today. And my team will explore these in more detail with you this afternoon. In addition to the growth plans and becoming a profitable business, we're also investing in local and provincial development, focusing on minimizing our impact on the environment and ensuring that our care for the planet and people extend beyond our gates. As I said, my intention today was not to take you through the detail, but rather to paint a picture, and to set a scene from my very capable team to you to take you through the detail later today and to show you why Oyu Tolgoi is such an incredible asset and investment. I'm humbled and privileged to have been given the opportunity to lead this incredible business. And I'm driven to set the foundations in place to ensure that continuous success is insured through our expertise, our orebody and our partnerships. I often quote Nelson Mandela, the late former President of South Africa, and I was just elated last night when the Prime Minister also quoted Nelson Mandela. And he famously said, "Everything seems impossible until it's done." I've tweaked that quote slightly to say that, "Everything is possible if it is done in true partnership," and Oyu Tolgoi shows how much can be done in strong partnership. So I would like to thank the investor community and leaders once again for trusting Oyu Tolgoi and for investing in us. But before we go into the Q&A session, I would like to share a video with you. This video moves me greatly. And during this video, you will experience a sound of a piece of music by Morin Khuur Ensemble and is called Khanbogd Melody. Khanbogd is the town closest to our operation. You will see the beautiful and vast Gobi landscape and our operation, both on surface and underground. And I hope it gives you an appreciation of the size and scale of our business. But importantly, you can see the proud display of Mongolian culture, talent and creativity. And this is present in our business as well. So hopefully, this provides a prelude to what you will experience on site tomorrow. Thank you. [Foreign Language] [Presentation]

Great. There's a roving mic in the back. And before I say and we go there, that was pretty impressive, clearly video. So we now had Bold present from 1,300 meters down below. And we had a symphony orchestra from down below, 1,300 meters. And I had a request from a few of you to be able to do some face timing home tomorrow. And I've put that with Andrew, the site manager and see if we can make that work to prove to you that it really works 1,300 meters on the ground. Right. So please keep your questions to the session this morning. Speakers up here, who wants to have the first question?

Bold, I think you made a bit of a passing sort of simple comment that you're not resource constrained nor are you logistics constrained. Can you just sort of finish that so that sells a your concentrator constraint? Is that right?

We're always concentrated I'm saying because I want more copper. But reality is, I think we're looking at an expansion of what, 120,000 tonnes per day and a the more another expansion that's been over deplored when we set up the concentrator. So I don't think the concentrate expansion stops at 120,000. I really hope the team ramps up the underground safely, but I do think there's a potential in other 30,000, 40,000-tonne expansion that can be added within the existing concentrated footprint. So at the moment, we're not at this stage of any studies, but the original SAG mills when they were installed, there was one line that's been only poured for the foundation to install another line. So once that takes to 160,000, then we're concentrator constrained.

Just a question for the government or your JV partners, do they prefer further direct investments or they prefer earlier shareholder dividend, which one is the preference?

All shareholders want earlier dividends.

And for this one, like the country is a JV partner, right?

I think the government is very clear when they're negotiating that they're very sensitive about the timing of dividends and so are we. So we're absolutely focused not to delay the timing of dividends as much as possible. However, we do have to repay the shareholder loans. And this is a commitment we made to project finance lenders and the maturity. So I think as the underground ramps up and if we're in a privileged position to generate free cash flow in a good positive copper demand cycle, I do think it potentially helps everyone. But the government obviously benefits from taxes to receive about say about $200 million to $300 million in total taxes per year, but the future dividends of this business are going to contribute even more, so absolutely.

Thanks for the presentation. Just a quick one from me on the tax dispute. So can you provide a general overlay but then specifically, what is the point of intention that's being debated over the tax dispute? And then what is the current status of that progress there?

So as I mentioned, we pay about $200 million to $300 million in annual taxes in various forms for OT. And the dispute is about $25 million to $30 million premium amount. It's not on the $200 million to $300 million. And on the $25 million to $30 million, it's about withholding tax on the management fee. And some of the other provisions, but by and large, it's about withholding tax that Mongolia has, which is about 20% for distributions outside the country. But with 26 countries, there's double tax treaty. Of those 26, 24 have a withholding tax of 10%. So we're in a pretty good position in terms of Canada, U.K. jurisdictions in Mongolia have a very positive environment for about a 10% withholding tax, but we're in progress process of discussions around how we settle that in the future and of course, making sure that the physical stability per investment agreement and the regime is protected. So at the moment, we are working with the government, working group. It is an amount of about, I think, $350 million. I think the move the number may have moved around, that is covering 6 years of the tax calculation. So that's roughly the details. I don't know, does that answer your question?

[indiscernible]

How to calculate the...

[indiscernible]

Yes, how to calculate the withholding tax amount, yes.

Well, we actually said [indiscernible]

Bob Brackett at Bernstein. I had a question on the pipeline of opportunity slide, a minor one and then kind of a bigger one. The minor one, I didn't see Heruga on that slide explicitly the major one, talk about the MOU and talk about perhaps you mentioned leaching, -- how do you think about downstream opportunities, how do you value or think about that? I'll leave it at that.

So Heruga is definitely included, as I mentioned. So it might have not been explicit on this slide, but absolutely Heruga is part of the life of mine plan. In terms of future opportunities, all of those opportunities need to go through as we would do with any investment opportunity, the decision-making process according to our investment decision criteria. And these opportunities then go through the different approval processes both from a Rio Tinto perspective and at the Oyu Tolgoi Board. So we're at early stages on itching, which you referenced -- we are currently in order of magnitude but progressing that quite quickly. We will have a copper deficit as we all know, within the next decade. So it's in everyone's interest to firm up on those growth opportunities.

Just to be clear, it's a low-grade oxide leaching and potentially secondary sulfide. It's not a primary sulfide. So it's a proven leaching technology on an existing low-grade stockpile that's been already moved to the side. So it's not a pit. So I think I hope that's helpful. So I think I'm pretty excited on that one. It's not enough, though. But I think on your downstream question, as for the investment agreement, we had signed. We looked at economic viability of the smelter and whether the actual returns work. In the past, they didn't. And I think as we're looking at the future phase of a different price environment, but also the -- currently, as we sell concentrate, we don't get the VAT refund. When we sell cathode get a VAT refund. So you automatically get about an 8% benefit from that. And in addition, you may have heard that the French company called Orano is looking to build a uranium business here, and they will need sulfuric acid. And if we can have an integrated market for sulfuric acid as well as potentially the VAT potentially changes the economics, but we haven't done the full calculation on that. So that's what's -- I mean, of course, all countries want a bit of downstream in terms of their copper and the one benefit we have, which is, of course, we do have a smelting expertise at Kennecott. And we are in the downstream business in aluminum. So we have a lot of inside knowledge around smelting.

Paul McTaggart from Citi. So you mentioned bioleaching not necessarily to do with but the talk is of bioleaching, sulfur leaching or primary ores at very large scale. And I know historically, this technology has been around for a while, and it's been difficult to get the bugs to work in the right temperature zones, et cetera. So what are the developments that now will enable this to be efficient at much greater scale? I mean what has been the sort of the things that have moved forward in the technology?

I think, Paul, what's driven this more is the demand side of the story, to be honest, I think the copper demand has not been as clear in the past in terms of doubling of potential demand volumes. So everybody is looking at how to add supply that's creating urgency of looking at these technologies. I mean, as you said, this technology has been around. Now economically, it was always made sense to go the concentrator route because you had a higher grade and of course, it made sense to get credit for the by-products, which you don't get with the bioleaching is the byproduct credit. And so as we're looking at the options, it tends to work at low grade, high arsenic, no byproduct orebodies. And when you look at that, there's a very limit universe and some of them are actually in tailings of the existing old mines and the waste. And I think Nevada is a case in point. So that's kind of how we think about it as an opportunity. But it is at the scale-up study phase. So we just have to prove up the works.

Lachlan Shaw, UBS. So just on the power agreement, can you maybe give us a little more detail there? And then just to expand -- how do you think about the carbonization, Obviously, the President -- Prime Minister's presentation yesterday, fantastic renewable assets here at Mongolia. So just interested in if you can give us some more detail there.

I will give you a brief answer now, Lachlan, and we've got a specific section this afternoon on biopower and we will talk about decarb. So it'll be covered in more detail this afternoon. But in short, on the power side, we have signed fairly recently with the Inner Mongolia Power Company, a power purchase agreement that started until 2030. So that extends the current contract. So it builds out of what we are currently doing in any event. That agreement takes into consideration our commitment to source power from Mongolia. So disregarding the fact that once power is available for Mongolia, we are committed to source the power locally. What is front of mind for us is making sure we have uninterrupted power supply. So we have de-risked the situation. and it's pretty good in terms of contract that was settled. But Duka has got that in her section this afternoon. So I won't take the thunder out of her presentation for this afternoon. On decarbonization, we have pathways to cover neutrality. As I said, our ambition is to be carbon neutral by 2050, that is anchoring that ambition back into what Rio Tinto committed to publicly as well. there are different pathways to take to get to Zero, and that depends on whether the Mongolia Power Supply is coal based or not. There's a lot of work being done from the Rio Tinto side in engaging with government around large-scale renewables. It is work in progress. I don't think we've quite landed as yet. If we don't take that pathway, we do have other options around how do we offset but ultimately, we're in the business of copper that's needed to electrify the world. And for us to make that claim, we have to be absolutely certain that our own house is in order. So for that reason, we have multiple pathways. We also have [indiscernible] in the room. [indiscernible] where are you? He's an expert. So I think this afternoon, let's get stuck into the technical details, do you want to do it now? Okay.

One thing I would just add is that we see a good looking fellow in a hat. That's Mukhsukh. Mukhsukh is our Managing Director of Growth and Development is based in Brisbane. He's in charge of number of our growth options at OT, but also Winu. And Mukhsukh has built one of the first wind power generation project in Mongolia more than 10 years ago, and we do have is 50 megawatts. He's done some recent reviews of the inter Mongolian Power Grids renewable percentage, it's about 35% to 40%. So our -- that is the existing renewable component of our existing OT power supply. I think that's one thing that people forget actually, China is the leader in renewables, and particularly in Mongolia, in particular around wind. And that's we already have a certain exposure to renewable in our existing power contracts.

It's [ Kodees ] from BMO. So a couple of questions. On CapEx, so the CapEx was lost CapEx was $7.1 billion. There are -- there's 2 things on that. One is yet to be ratified by the OT Board. And then also, you highlighted that the CapEx is subject to COVID-19 impact that has not been taken into account. So whether you have any update on the total CapEx numbers now and whether that has been approved by the OT Board? And then second on the taxes again. So $356 million that was quoted at the end of December 2022. So you mentioned that most of the dispute is on the management fee. So since the structure is changed now, is it going to accrue now? Or is it's not going to happen that is going to be like a history?

Yes. So starting -- I'll leave the second part to you, Bold. So starting on the CapEx. Sorry. Yes. Duka is covering that both through the project lens as well as the financial end. Can we hold that until this afternoon? Otherwise, we're just going to get into divergent conversations.

And I think on the tax, the key question there is it's the calculation methodology on the withholding tax and there's other things that are in that. There is management fees as interest rates, et cetera. So this breakdown that you provide detailed. I think as far as obviously looking at how we look at the potential situation, there is things like Pillar 2, right, coming and then that is applicable to us as well. So it's a quite complex subject. We're in the midst of government negotiations as we settle it down. we'll have to probably give you a bit more detail after that process is complete.

Tyler Broda from RBC. So, Bold, yesterday, I mean quite clear that there's a lot of growth potential in Mongolia as a whole. But I guess just with the numbers on OT and going up to the sort of revenue levels, the amount of GDP growth that's going to cause Mongolia is going to be quite high. I guess it sort of puts Mongolia at risk potentially the sort of Dutch disease, where you have one sector really moving ahead of the rest usually come to the strong currency and high rates of labor inflation. I guess in your sort of assessing of the situation, how do you see that potential impact playing through?

Yes. One story that Mongolia is not appreciated for is coal. When you look at the coal revenues, you saw the historical increase in the last few years, in particular, because of price environment. So when you're thinking about 20 million, 30 million-tonne coal exports price ran up to $200 to $300, that suddenly became the $46 billion revenue line that came in suddenly. So when you see that kind of historical pattern as we're looking all copper, it's not dissimilar. And in that space, we have not seen a significant appreciation of the 2 rigs. And that's because the government obviously is spending a lot of capital on infrastructure. So roads still need to be built. Housing still needs to be dissolved, still a lot of power question. So I look at that kind of benefit that we have that one-off potentially in coal and how that potentially translates. And the other thing to keep in mind is not all exports are GDP growth because GDP when you calculate it is dependent on net exports. So the question is, what is the import component of that. And I think the government is spending quite a lot of time of capital on building certain things such as an oil and gas refinery. So there's a lot of equipment that they're bringing in with those it's not going to be a country that is going to be short of capital or investment needs that will drive the import needs as the exports ramp up and the net export is the contribution to GDP but the economy is sort of downside.

[ Man Lam ] from Investbank. The government mentioned yesterday about increasing rail capacity in the country. And I know that the project is looking at potentially railing its concentrate to the border. Can you just give us an update on that particular option?

Yes. Thanks for the question. I'll take that. The government recently completed railway projects. So one is now about to be connected to the China side. So I as you might have heard that recently Prime Minister visited China had an extensive discussion with the Chinese government and the connection for the question so hard trailed road. So that's about a bit or 200 kilometers a load has been built from Tavan Tolgoi coal mine to Gashuun Sukhait border crossings. So that railroad can be connected to Oyu Tolgoi site. So team is now currently seeing some assessments on this.

I think just the other thing to keep in mind is what's our distance to the border 80 kilometers? We're 80 kilometers from the customer, right? So we have historically sent it by truck, and we actually have a paved road that we've built, and we completed it last year. So I think the railway capacity, of course, is potentially interesting we're sending concentrate at the moment that does not require the rail capacity for logistics.

Paul Young from Goldman Sachs. A question again on the government agreement. And the other one you signed in 2022, we have had you completed 5 of the 6 measures. Well, can you just step through just high level what those 5 measures that have been implied what they are? And then secondly, just on the management fee, can you just remind us, does it step up from 3% to 6% as the underground comes into commercial production?

Yes. So Parliament Resolution 103 has been passed end of 2021. we have been working very closely with the government working group and also is [indiscernible] is the government shareholder of Oyu Tolgoi project. So the resolution quality has measures. So from the government side, the Ministry of Justice, who is the lead of the government working group and the implementation of this resolution. So as I mentioned, the 5 out of the 6 has been jointly successfully completed. So first one is the writing of the $2.3 billion shareholder loan interest. Then second is the termination of UDP, so-called agreement. And also the audit independent audit on the project finance expenditure. And fourth is to improving the environmental protection commitment to Oyu Tolgoi and the monitoring in the improving of the governance at OT, and also the commitment to the social is basically the improvement of the ESG and long-term power supply and the water monitoring. So those have been -- the extensive work has been on this space by Oyu Tolgoi and Rio Tinto and Erdenes Oyu Tolgoi. Can you repeat the question on the management fees?

That management fee [indiscernible]?

So and the -- the Management fee was actually the part of the UDP agreement. So it's been reduced from 6% to 3% for the underground development.

So just to be clear, I don't think there's a step up to 6%. Is that correct? Yes. And I think the other part about the 5 points is that the UDP agreement was about project financing, and that's largely complete. So that was most of it. So the termination of the UDP from a materiality standpoint, of course, it's sent a very strong message in terms of our agreement with the government, but that was all about getting the project financing in place, and that's what is called the Underground Development Plan. So just to be clear.

[ Jim Xu ] so from Barrenjoey. Just a question on broader Mongolian politics. So last year, there was the coal corruption scandal, which obviously saw some social unrest. What's the latest update on that scandal? Have any members of parliament been involved in that?

Yes. That's actually a very good question. So corruption index in Mongolia is not very good at the moment. And government has been taking -- currently taking many measures to fight with the corruption, especially with this Prime Minister this cabinet not only the coal standdown, it's also the current government working on the different issues to resolve the especially related to the corruption matters. And I'm pleased to mention here that Rio Tinto. We are working together with the transparency intention also a chamber of commerce contributing to this important initiative to Mongolia fighting against corruption. So established business in safety center. So that's supported by transparency international that's established in the tender of camera. This is actually the private sector contribution we are we are actually supporting the government, this initiative.

And I can't really comment on whether any politicians were implicated because that investigation still underway. But obviously, there's a massive effort to improve transparency. And I think the digital effort, the digital Mongolia effort is going to be a significant improvement, making sure all the contracts are actually very transparent and posted on the website. So I think that's a clear step. And as a vibrant democracy, I find that actually quite healthy. And I think the social unrest that has happened in December was actually supporting the government to progress the cleanup of the potentially corrupt individuals.

Jason Fairclough with Bank of America. Just can you remind us of the current balance on the shareholder loans and where do those things rank in terms of repayment?

[indiscernible]

And one cultural tip. So without the whole show, it will not complete item. So hopefully, we will have a whole sale tomorrow, tonight. That's most important thing. Okay. My name is Sugar. So it looks like as sugar, but it's not sugar. It's actually Sugar and it means Friday and winds. And then here, I have -- I'm a General Manager of Communities. I have been working at Oyu Tolgoi for 18 years, all within Communities. And then yes, so I have -- I was appointed to a General Manager of Communities 2 years ago. And we have Tom, please. Yes. Next one, please? Yes. We have a strong environment and social performance supported by integrated agency management system, and that complies with the international national standard requirement, IFC, EBRD of Rio Tinto. And we also built a strong technical capability team pipeline in community social performance. So our priority is to start with the social management or cost risk and impact proactively. So the meaningful dialogue with the community. And the second one, Umnugovi, is our province that we operate and then contributing to the stent development of home once through our strong partnership and deliver our commitment. And the next topic is supporting Umnugovi Khanbogd development. That's our Khanbogd development is all the core of our business strategy. Then lastly, we nurture our partnership with our community in Khanbogd and herders and stakeholders in the region. So last 20 years, we conducted a comprehensive first business baseline study on Umnugovi environment, community in the economy in 2008 and then comprehensive social impact assessment on the Umnugovi. So social impact assessment wasn't required by Mongolian law. So the international standard, Rio Tinto standard, we conducted social impact assessment is in national level first time 2008 through the consultative process. And then since then, we've been updating our baseline and impact assessment every 5 years, including environment and community, we work together. So key themes, you can see the cultural heritage, resettlement, water, the biodiversity, human rights, and community participation. So those are the key themes. And probably you wondering about your herders' livelihood. In 2004, we fiscally displaced the 10 herder households. And in 2011, during our first phase construction, we economically displaced 89 herder household, and we made the account compensation agreement with them and then delivered our compensation. Now this compensation agreement is closed. Now we are working on -- working with our community and herders to support the sustainable livelihood. Currently, 65 herder households involved with -- in 6 sustainable livelihood project, agricultural project, we call it. They initiate it. And so now with -- through that process, we are trying to work with the herders to shift from entitlement mindset towards more long-term sustainable livelihood. And then -- so we partnered with our community and stakeholder to deliver enduring social benefit and outcome maximizing positive impact and development potential. In 2015, we established a cooperation agreement with Umnugovi aimag and Khanbogd soum and soon after established a Gobi Oyu Development Support Fund, where we invest $5 million per annum. And this is -- we are together with Umnugovi contributing to sustainable livelihood intangibly. In that process, as soon as we made the cooperation agreement, our relationship is boosted. And then before that one, it's more the impact mitigation. And then as soon as we signed a cooperation agreement, this has actually given a confidence to the community that we are here together for the long term, and then it gives a certainty for the community, and then also they're participating in the decision-making process. And then in Umnugovi, since 2015, we implemented more than 300 development projects and programs, created 500 jobs in the community, that's not a mining industry related. And then under that, Gobi Oyu Development Support Fund, we created strategic partnership with the UNFPA, UNICEF to support the Umnugovi education and health. That's actually the -- in 2018, when we conducted, updated our baseline study, that actually details a really good story that the first time since in 2008, the maternal mortality, which is 0. Infant mortality reduced significantly, increased the school and kindergarten enrollment for the kids in the Umnogovi. And then also the Umnogovi's unemployment, poverty rate in Umnogovi is the lowest at international level. So this is indicated that how we contribute and how we are supporting Umnogovi's development advancement. And another one I just wanted to highlight and then -- that we have developed a few partnership platforms at AMEC level, local employment working group, local procurement working group, because our community wanted to participate in [indiscernible] project through the procurement process [indiscernible] the better job. And then so -- we're here to -- we have a multiple commitment to increase the local employment at Oyu Tolgoi. We have a joint target to reach, and we have a joint planning. Melissa and HR team and our team work closely, and now the performance is actually 21% of our local employment and 24% local procurement. And now 4,000 people working at Oyu Tolgoi from Umnogovi and 1,700 people working from [ Khanbogd ] where we operate. And then about more than 50 or almost 60 Khanbogd business supply the goods and service to Oyu Tolgoi. Here, we are on our mutual long journey to make a positive enduring changes and sustainable development based on the robust strategic partnership. As [ Dee ] said that without the proper partnerships, we cannot achieve anyway, so we will achieve together. Khanbogd development has been, as I said before, center of our attention business strategy. The last 10 years, more than 10 years -- 20 years, we have invested in Khanbogd soum social engineering infrastructure that enables their growth and expansion in the future. So I do remember in 2013 and '14, though we supported -- in 2010, Khanbogd was the main power supplier of the diesel generator. So we supported, we donated diesel fuel to the Khanbogd. And then as soon as we built the power line to Khanbogd and helped them to connect with the central grid, and then it was expansion. And so there was the 10 business and 1 or 2 shops were there. It's now several times increased, maybe hundreds and hundreds business already established in Khanbogd. So I just wanted to tell that one. And then so we believe Khanbogd may start -- Khanbogd prosperity begins with a good planning and strong partnership. That -- since 2014, we partnered with Ministry for Urban Development and Construction Umnugovi and Khanbogd to develop the proper master plan. So the last one was approved in 2019, almost 2020. And soon after the sustainable production commencement in March 2022, the Oyu Tolgoi Board approved our strategy to support Khanbogd master plan. And then established Oyu Tolgoi Catalyst Fund. It will be -- operate independently, and we're going to make a $50 million next 5 years. Sorry, so I'm a bit nervous and [indiscernible] telling different words. And then so we are -- our joint aspiration is to make Khanbogd a sustainable town by 2040, where our employees and community live in a decent quality of life. That's our aspiration. So we endeavor now enduring positive relationship with our community, herders and local stakeholder where we operate. And as I mentioned before, we established several partnership platforms. I just wanted to highlight that Tripartite council. In 2012 and '13, after we consulted with the community, identified the impact that herder households and the [ decided ] who is entitled, who is not, and then what kind of package will help the herders to improve their livelihood. And then we went through this almost 2 years nonstop consultation. And then we still take compensation agreement. All of a sudden, one of my -- our herders didn't satisfy. He wasn't satisfied and linked with Oyu Tolgoi watch and then lodged 2 complaints at the International [ ISA ] Ombudsman Office. And then the -- one is the compensation and livelihood, another one is on the river. And then -- so we had 2 choice I found. One is go through the compliance, another one is the dispute resolution. And then Oyu Tolgoi deliberately didn't choose the shortcut as compliance, and so we went through the dispute resolution process. First, we wanted to understand, we wanted to learn from the mistakes. And we wanted to restore our relationship and wanted to have an established long-term partnership. And we are here together forever until where we go. And the Tripartite Council is actually the best practice, where the mining company and the community have a sit down and have an honest dialogue. And then if there is any issue or complaint they receive and can resolve it before it makes the grievance or conflict. And now the Tripartite Council is still effective and then so key focus is the product compliance resolution agreement implementation, and then they herders livelihood and water environment and tailings storage facility. And Phil and I and obviously all of us work on that one. And so that's the one of the topics we discussed. And then towards the end of July, we're going to have an extended community workshop on the tailings storage facility. This is where again that we trying to create a venue, expand, we are here together. Is there is -- yes, things are not perfect, but we work here together, at least alone and the work have long-term journey and learn and support each other. Okay. So any -- our business is expanding. Our relationship is evolving. And then as many other mining companies, we face challenges to maintain our positive relationship. So there is no silver bullet or the secret recipe to stabilize the new relationships. So the key thing is we are committed, we are agile, we learn it from our mistakes, and we wanted to work together. And then -- so our Oyu Tolgoi, the way we -- our community that we work is empowered, well connected, well informed. And then so the any small thing can easily escalated to the international level. So that means Oyu Tolgoi operates under the increasing scrutiny. And then our herders are [indiscernible]. So of course, they're worried about the sustainable livelihood, water, [ pasture ], climate change and cultural heritage. What's going to happen? And then importantly, we can do it. Most important thing is what we do is nurturing our relationship with the community. And then so improve the transparency and good governance of our partnership platform. Nonetheless, we are the -- together with our community, we keep finding better ways to resolve any emerging challenges and then unlocking potential for future sustainable growth. Thank you very much for your attention. And then I would like to invite my colleague, Phil, to give you update on the environment. Thank you.

My name is Phil Abraham, I probably should have introduced myself this morning when I first got up and spoke, General Manager, Health, Safety, Environment and Security for Oyu Tolgoi, been in Mongolia for 3 years, probably the best job I've ever had, by far. I am in Rio Tinto for 8 years and the resource industry for a little over 15 years. So as you said today, I want to talk through a few of our -- the aspects of E in ESG, mainly water, biodiversity and decarbonization. So mining in the South Gobi, obviously, water is not abundant, so we're cognizant and I'm acutely aware of the fact that how important is to be responsible and efficient user of water. So come back -- Oyu Tolgoi is in the first quartile or the 25% of water-efficient copper concentrate producers. So we use around 0.55 cubic meters per tonne of ore process, and we recycle 85% on average, sometimes more of all of the water in the system. We are essentially from the process circuit a 0 discharge, so we don't have discharge from the system. What isn't recycled is locked up in tails or lost in evaporation. Our water is sourced from Gunii Hooloi. It's about 60 kilometers away from the site. It's a deep aquifer. It's about 400 minutes deep. It's separated from the surface by an impermeable clay layer. So it has no connectivity with surface water flows, alluvial water flows, and it's hypersaline. So it's not suitable for animal or human consumption. We use it in the processing plant. But to use it for human consumption, it takes a lot of treatment and filtration. I think really important thing to say about water, the use of water at Oyu Tolgoi does not impact the water availability to local herders and the local community. Our water is a separate source. There is no connectivity. So all of the water used at Oyu Tolgoi has had no impact on water availability by the local community or the herds. That said, we don't just sort of rest on the fact that technically, we're great. Our water doesn't impact you, and your water scarcity is not our problem. So we have worked with the local community over the -- since the start of Oyu Tolgoi. We have put in 50% more wells for herders than existed prior to us starting operations. We've redesigned wells for herders to make them safer, and they perform better for the -- through all seasons due to their design. And we've also installed a water treatment facility in Khanbogd to ensure that the town has clean, safe drinking water. So that's our operational use of water and the impact to community. But are we perfect? No. We've not always got it right. So we did have some seepage from TSF 1. Most would probably be aware of that. It was reported within our lenders and formally to the government. All tailings dams seep. They're designed to seep, you collect the seepage, the seepage goes to a collection pond and pumped back to the tails facility. What happened in this case is, at the collection pond, there is a dam wall that stops it from migrating further from that. It's had some seepage in the pond, it's got out, and it's got about 50 meters beyond the boundary of the lease. It is identified through our own monitoring. So we have monitoring bores. You always put in monitoring bores to check the performance of all of these facilities. The monitoring bores identified an elevated [ TDS ], and we investigated, identified the seepage, put in immediate mitigation measures to pump all the water back out. And we're now just doing some further drilling studies to understand the size at the extent of the seepage and we'll reclaim pump there. All monitoring in downstream, again, this water has had no impact to the availability or the quality of water used by local herders and local communities. Okay. Next slide. Biodiversity. So Oyu Tolgoi operates in a region with some priority high-value biodiversity, including endangered species, such as khulan or the wild Asiatic ass and others. And it is the stronghold of that animal. So we're committed to reaching net positive gain in biodiversity. So it's not just about offsetting our impacts and saying, we impacted this, we've offset that, we're actually trying to achieve net positive gain in biodiversity. There's multiple programs we have running to do this. They include modifying railway fences across Mongolia to extend the rangelands of the khulan, modifying power line design to protect the Saker falcon, a priority species in Mongolia. And we've supported community-based antipoaching programs to help protect the animals along in the rangelands. And we've done saxaul tree planting to increase the range of the saxaul tree forest, which are quite endangered within the Gobi region as well. And we rehabilitate the impacts of our mining. So yes, closure might be 100 years away or 80 years away or a long way in the future. That doesn't mean we don't operate with closure in mind. What we do now is all focused on how do we operate to ensure that as we get towards closure, we're in a good state. So to date, we've rehabilitated 1,771 hectares of land that we've impacted or modified [indiscernible] that, of course, because it's the right thing to do. Where do our native species come from? Our native plant propagation center. So we've established a tree nursery in Khanbogd. It's community run. That's where we purchase our plants from. And so we helped to establish it, and now that's where our plants come from. And to date, that's produced over 1 million native species, many of them priority species, and the team there have perfected the propagation of some pretty rare species of plants as well. There's some really good work in the rehabilitation. It's not just focused on the South Gobi. So the work we do is spread across Mongolia, the impact to the Saker falcon and the khulan is not just in the local area. It's across broader regions in Mongolia. Next slide. On biodiversity, the President of Mongolia, in 2020, decided that it would be a great idea to plant 1 billion trees, and we wholeheartedly support that idea. So we're committed to planning 100 million of those 1 billion trees. It's a bit hard when you don't have all the seedlings to plant 100 million trees or 1 billion tree. So it's not just about planting trees for Oyu Tolgoi. We really want to make sure we help establish the foundation for a successful reforestation. So we're working on activities such as education and training for people to become forestry ranges and plant experts. We're building seed banks, more nurseries. So really looking at building the foundational elements that will sustain a longer-term reforestation as well as planting plants. We're planning plants within the Gobi, but we're also planting right across other areas of Mongolia. We're doing them in UB. We've done them in multiple regions. We've also done significant work in an area to the north of Mongolia, in the Selenge province. These are artisanal gold mines that were mined in special protective zones. This is an area of high biodiversity value. So illegal artisanal gold mines that were basically, people came in, mined the gold, destroyed the rivers and probably left. So on the left-hand side there, you can see what it looked like, it's a pock-marked landscape, the river doesn't flow as it should, there's waste and spoil piles. To the right, my right, that's what it will look like after the technical rehabilitation was done. So the river is restored back to natural flow, and we're starting the biological rehabilitation. In this area, we're trialing a first Mongolia. So drone seeding is not new, but creating the seed balls that will actually propagate and grow in this environment with the plants we have is new. So we're doing the research and development with partners to build those seed balls, and we'll be using -- doing drone trials. Drones are amazing because you can seed massive areas quickly, and you can get into areas that people can't easily reach. And so if we can perfect that, it's going to really help, again, enhance the reforestation in Mongolia. And last slide. So Decarb -- as Dee said earlier, we've committed to reaching net 0 by 2050 and a 50% reduction by 2030. The biggest consumer of our power is the concentrator. And so everything -- it's electricity is where our emissions come from. So 80% of our emissions are scope 2, so it's our power inputs, with 13% being diesel and coal for the coal-fired power stations on site. So it's our scope 2 emissions, and then our scope 1 and 2 are in 2 areas on the side. Renewable energy is the obvious choice, but it's not obviously available to us right now. So we have a pathway over a period of time, which starts with renewable energy certificates and small-scale renewable programs, isolated, islanded on site. And over time, as it becomes available as we work with our partners and government and others, to start tapping into renewable energy. It will ramp up within the confines of our power agreement and working with the Ministry of Energy, also electrification of our heavy earthmoving equipment. So it's a technology that's developing rapidly. It's a technology that we're very keen to take on as soon as possible. We already have some battery electric vehicles operating in the underground mine. And as they expand and become more readily available and more usable, we'll take that across the entire fleet. So for us, the ultimate aim is to end up with a mix that is a large percentage of our energy is renewable energy. Our vehicles are basically all battery electric vehicles. And in the mix, if there's -- what we can't make up due to being connected to a grid that is likely to still have some coal input into that grid will be through renewable energy certificates. And that's me. I'll hand over to Andrew and Otgonbayar for the operations. Thank you.

Good afternoon, everyone. Absolutely privileged to be here this afternoon to give you some insights into OT. A bit about myself, 20 years just turned over with Oyu Tolgoi -- Rio Tinto, 2 years with Oyu Tolgoi. Prior to that, I was at Argyle diamond mines as prior to closure and some time in salt mining, which is always a good business to be with, and then many years in iron ore, supporting the iron ore business. Now I have the privilege to having Oggy here with me today to support, so I'll get him to introduce himself before we get started.

Yes, my name is Oggy, [indiscernible] rather longer. Yes, I've have been working with OT for 20 years. I started with OT as an exploration geologist and work through all of the different stages of the Oyu Tolgoi. And I was working in Australia for 3 years, that's how I understand the Australian a little bit better. Yes. Thank you very much.

No worries. Now I've heard the impacts of Jet Lag about 3x today since I started. And I hear the 2 worst times of 3:00 in the morning and 3:00 in the afternoon. And I'm just checking the clock, who got it. So I'll do my darn best to keep you awake. Now before I get into it, I'm going to ask you 2 questions because I know you're going to ask us a lot of questions. Who's has been to Oyu Tolgoi before? Oh, yes, that's about 10% to 15%. Now who's been into an underground mine before? Wow, this is going to be a really good experience. So I think the opportunity to take yourselves underground tomorrow is an absolute privilege for us to be able to show you what Oyu Tolgoi has done and where we've got to in the last 5 to 10 years is a real is a great opportunity. So, Oyu Tolgoi has -- we had the opportunity to operate a world-class mine with a very diverse business. We are very proud of the culture we're creating at Oyu Tolgoi to ensure our people go home safe every day. And there's a lot of work that we do to ensure that we can achieve that. We have a clear pathway to exceeding the 500 kilotons of copper by 2028 through a commitment to continuous improvement, which is foundation expanding our operations as well. Our operation efficiency, especially our haul truck fleet, is comparable to haul truck automated business unit as well. So that's just as an intro. So if we talk to the ore body on the next slide, this one covers our reserves and resources across the site. Now our mineral deposits lie across the site over about a corridor of about 26 kilometers, which you've seen in the slides in various versions over the day, it's important. Four deposits still sit in our resource case, Oyu, which is the bottom of the open pit. We have been mining the open pit in reserves over the last 10 years. Hugo Dummett, which is north and south, which is where you're going to be going down to tomorrow, down to the south deposit and on Lift 1, also Heruga, which is up on the other side there, which is a copper porphyry deposit as well, and we'll continue to do exploration and development of those reserves over the coming years. Oyu, which is the pit, which we're mining at the moment, is conventional drill, blast, load, haul operation, been operating for 10 years and has built a strong foundation for our business to be able to support where it is right now. The Hugo North deposit, which is the one we're developing in the underground at the moment, which is a block cave, it's on a staged approach, so Hugo Lift 1 and then 2. So we're doing the feasibilities, and Steffan and Oggy going to tell you a little bit more about that one. But Hugo Lift 1 is divided into 3 panels, so Panel 0, Panel 1 and Panel 2, under development at the moment, and we will see some of the extraction drives tomorrows from Panel 0, which is our first point of workings. So what have we got on the next slide, in regards to supporting our business and some of the key supporting infrastructure. We now have 2 supporting sources of feed that come into our concentrator, so including the underground and the surface. Underground is around 10% of the feed at the moment, -- and there's in a slow progress to increase over the next few years. We have a heating plan, which is absolutely critical for support of our facilities during the winter months. If you know anything about the Gobi, it does get a little bit colder than what it is at the moment. We are transitioning from TSF 1 to TSF 2 over the next 6 months. So TSF 1 has been in operation for 10 years and support us. It's now getting close to capacity, and we've just finished the construction of TSF 2, and we'll be transitioning over in the next couple of months. We have one surface crusher. We have 2 underground crushers. One will be in construction over the next couple of years as well. Once the material has gone through -- the copper has gone through the concentrator, it goes through into a bagging plant. We're running at around 120 trucks on a rig -- daily just about to across the border to support the [ 80 kilometer ] drive into China to support the smelters, important part of our business, and it has been managed very well, especially through that COVID period, where our border restrictions had caused us a lot of challenges. We have 13.1 kilometers of conveyor belt, which includes the surface, as well as the underground built, which is the conveyor to surface, which is still in construction. And we managing around 21,000 employees at the moment. About 4,000 are OT employees, which are part of their business, or everyone is a part of their business, but that 17,000 -- just under 17,000 contractors, which are supporting the project, the development of the underground and also a key component to our site services, cooking meals and looking after our combination as well. So we -- open pit has been a consistent feed over the last 10 years. And you can see from this graph, the 100 to 200 kilotonnes a year has supported us and has been a foundation for our business to be able to commence the underground mine. The open pit is in phase 5. We are mining phases. And we started that about 6 to 8 months ago. Oggy will talk a little bit about it. Phase 4 was completed in 2021. And you can see the spikes in the gold on the bottom graph are generally related to when we get to the bottom of the open pit, and we see the higher pockets of gold that we're mining. In 2022 to 2026, our annual copper production jumps up, and that is really driven by the grade in the underground being 3x higher than the grade in the open pit. So that's a key piece of driver for increasing that copper over that period of time. [ Grade ] achievements in the operations, just before we go to the next slide. [ Grade ] achievements in the operations in 2022 to achieve sustainable operations, back in March this year, and we'll continue -- Steffan and Oggy will continue to support that. We did achieve 10 years' anniversary in the concentrator this year, so that was a great celebration for our employees as well, which we managed to celebrate as the Mongolians know how to celebrate very well. From 2028 to 2036, we are on that journey up to the 500 kilotonnes. On the next graph, just really is just covering off on the increase of underground material on the blue section of the graph. It really refers to the amount of growth that's occurring in the underground over the coming years. From 2024 to 2025, the concentrator conversion is commencing, and that is critical for the underground ramp-up, and that includes an additional ball mill, a [indiscernible] and a series of new equipment to be able to support the higher grade that is coming from the underground, mainly from Panel 0 to start with. The conversion work has already started, may not get to see that. You might see it from a distance tomorrow. But that will be occurring over the next couple of years as the underground feed increases. Just really important to note the concentrator conversion not necessarily increases the head grade in which we put -- not the head grade, the capacity of the concentrator. The conversion just supports the higher grade of the material. We are looking at other options over the years to increase the plant capacity, but this conversion really is just supporting the converge at -- the high-grade material from the underground. I'll just ask Oggy to jump in now to talk through a couple of the other slides.

As Andrew mentioned, our concentrator is celebrating our 10 year anniversary this year, as we started by 2013, our mill, rates were around 20 million. And over the last 10 years, we achieved it to making it an average of 40 million tonnes, which is providing to the number of different initiatives, improvements that we are implementing. The first one is of the technology one that we started with this tech, mill discharge [ great ] improvement and magnet removal for the scrap metals, and all those are introducing the new technologies, and helping us to, unconstrain our bottlenecks and then constraints in the mill. Next part is, we're working with our partners, vendors and consultants more closely in order to improve like the example of the grinding media quality improvement and a lot more in our flotation performance improvements. And the other one I would like to mention here is the internal teams working together with the value chain in order to improve it, like a high-intensity blasting that our team initiated the high-intensity blasting in a pit, which helps us to increase our fragmentation in the mill. That is put -- those improvements put us in our operation -- our milling operation best-in-class in the world. I'm going to talk some more initiatives in my next slides. Yes. In here, the mill throughput is information given underground ore coming, it's going to be bottleneck by design. However, our milling effective utilization is always remaining about 94%, which is beating the industry benchmark. The ore hardness is always gets harder as we have our open pit mines get deeper and underground ore increases, which is showing in this top right corner graph, that is how the hardness is becoming harder. But as a result of the continuous improvement, we are -- I showed in the previous slide, in this slide, we are maintaining our milling rate at the constantly 40 million-tonne per annum. And in the next slide, I'm going to talk a bit more about the open-pit operation. Our open pit operation started by 2012, one year before the concentrator started, and we celebrated 10 years in 2021 as we -- our key [indiscernible], it remains 100 million in ore for last 10 years, and this you can see this continues over next coming years, even underground ramps up. During the last 10 years, as you can see the phases here, ore is stored at the cutbacks. We completed 6 different cutbacks named phase 1, 2, 3 and 4A, 4B with [indiscernible] names. And we come up with the pit depth, that reached 450 meters. You guys will see it in coming days. As underground operation ramps up and the cave has demonstrated, obviously, we're going to have more material coming from underground. However, the open pit team continue focusing to access through the high-grade core -- high-grade ore from the bottom of the pit and also open pit continue supplying the material to reduce our future tailings storage facilities. Our open pit mine technical and operations have been established well, and we use a number of latest international mining technology and systems. I hand over back to Andrew.

So just to wrap up, maybe on the next slide...

Sorry. One more slide there. This is just we try to demonstrate how we are operating in our ore, across all of the fleets in [indiscernible] comparable to the other operations. The haul truck effective utilization, it's top on the world, and we are fitting with autonomous sort of the mines in terms of haul tracking. And as our pit gets deeper, that is challenged, but cycle time is getting longer. However, our performance is still high. And as you can see, the effective utilization is a lot higher compared to the previous years. And in the other outstanding sort of demonstration, I would like to say here is our payload is based on our improvement initiatives we always improve it. We're modifying our [ truck rate ] including a number of other initiatives. We started with our haul track payload at 285 and now it's 202 -- [ 305 ]. And in all those, it's ranking us in the top quarter of the open pit mine comparable to the other mines in Rio Tinto. There's no more slides...

Just to close out a couple of thoughts is, we'll continue to focus on improvements in our surface and underground operations and processing. There's still more opportunities we can do. Close partnerships with vendors, R&D will help lever -- and also help lever technologies across the operations, and collision avoidance and some of the geotech work that we're doing is a leader in that. Significant potential also exists in the mine -- and things like pit optimization, sequencing is very important. Some of the geotech work around managing our pit walls is critical that we keep focusing on that one. Mill intensity -- mining intensity is also a key component to make sure we're digging for the right areas at the right intensity. And cut off grades, we have now had the opportunity sort of now that we're getting underground and open pit, we can really understand what levers we can pull in the concentrate to support additional material into the plant. The underground has still many opportunities as we phase and the start-up of Panel 1 and Panel 2. The long-term planning for Lift 2 has commenced as we'll talk about that in a little while. And some of the work that we're doing around acceleration in Panel 0 and Panel 1 and 2 is paying some dividends to supporting the business, getting additional copper. Fixed plant, materials handling systems, foundation to the next steps forward. We've got another crusher coming on board. We've got a conveyor to the surface. We've got concentrator conversion occurring, which are all key components to optimization of the underground feed over the coming months. And processing is also a key opportunity and the reliability of our concentrator that's 10 years old, we need to keep supporting that with additional technology. So just on closing, our strategy is clear. On our investment pathway to the future, we are building the fourth biggest operating copper mines in the world. This is a long game and long-term reward. We will deliver our best to optimize the strategic plan and investing in our ore body. We'll continue to lever technology, learning continuously and fully integrate the operations to improve resilience and stability to the supply chain across the product. Maintaining our strong focus on safety is fundamental to what we do every day. Thank you. Now I've got Damian coming up, and he's going to go through the project. Have we got a problem with the mic? Is it cutting in and out? Thank you.

Thanks, Andrew. Thanks, Oggy. [indiscernible]. How is everyone going after that Naadam Festival, amazing? Yes. Good. All right. Hi, everyone. I am Damian Rogers, the Project Director of the Underground Project. My background is in engineering and construction of capital projects. I've been with Rio Tinto for 15 years and before that with major engineering and construction companies in Australia. In the past, I've led the Resolution Project in Arizona, the construction phase of that, the construction work there. And various lithium, uranium, copper and gold projects in Europe, Canada and Australia. I also previously spent 4 amazing years here in Mongolia, on the then greenfield Oyu Tolgoi project, from the ground-breaking all the way through to the commissioning of that open-pit crusher that Oggy just mentioned. So since the commencement of the underground project in 2016 and despite the challenges caused by COVID and the sheer scale and complexity of the project works that we have at hand, the project. has maintained a very strong safety record, as mentioned by the earlier, across our 81 million hours of project work to date. We currently have 6,000 people engaged on the project on rotation. And we're actually at our resource peak now for the project. We don't need to ramp up anymore, we're at the peak. And we completed about 1 million hours of project work per month. So by all measures, that's the super mega project territory. Look, just back on to safety, where incidents have occurred, the project team and our contractors have responded immediately and effectively. In Q4 2022, we did have a number of dropped object near-miss in incidents in our shaft projects. They happened in quite close succession, resulting in us stopping the works there for several days. A thorough review was undertaken of all levels of the safety controls there, jointly between the project team, our contractor, of course, Rio Tinto experts from the Underground Center of Excellence and a couple of independent shaft-sinking specialists came in. And all the recommendations from that period have been implemented. It's through that type of rigorous approach to safety that the project will continue to safely deliver on the remaining infrastructure in line with the operational ramp-up requirements. The project forecast at completion remains at $7.06 billion and we only have about $560 million worth of commitments remaining to be awarded. We've delivered on many significant milestones today. And our overall progress is against plan is 86%. Just want to talk [indiscernible]. The project continues to actively support the OT people and partnership strategies. And we've significantly exceeded our agreed targets for Mongolian employment in the project and contracting. Actually, this point of the project is pretty well advanced point of the project. We're seeing our skills being exported to other Rio Tinto projects, like Kennecott underground, Bold mentioned earlier, Resolution Project. And certainly, some of our top people have moved across to Simandou project. And look, they'll continue to do that as we ramp down or continue the project to its completion. So some great talent here, really good experience on the OT project we're sharing broadly. So overall, on this slide, we're really well placed to deliver the remaining infrastructure for the mine, in line with the mine's ramp-up requirements, and I'll talk a little bit more about that. So look, despite the challenges the imposed by COVID and the restriction through 2020 and pretty much most of 2021, in Q1 2022, the project completed all the critical path infrastructure that we needed to, for the commencement of production from Panel 0. As you heard, that occurred in March this year, a really big milestone, sort of landmark for Oyu Tolgoi. So in addition to the Shaft 1, and you'll get to see all these tomorrow, which will be great, we now have in place Shaft 5 for ventilation. We have Shaft 2, which is one of the largest mine production, people, material and hoisting systems in the world. And we have a full material handling system called MHS 1, Material Handling System 1 in place. So we have all of the infrastructure in place to support the required ramp-up from Panel 0. It's a good position to be in. There are now 3 key infrastructure areas remaining on the project to support the ramp-up from Panel 1 and Panel 2. And these are the ventilation Shaft 3 and 4 and their associated mine air heaters and ventilation fans. These ventilation shafts, they enable us to make, firstly, the step change in the lateral development required for Panel 1 and Panel 2 and of course, they'll ventilate the mine all the way through to full production. The second one is the concentrator conversion, which you heard about from Oggy and Andrew a little bit earlier. As you could imagine, for this type of brownfields work, it requires really a significant amount of detailed planning and integrating with the operating concentrated team. It's a reasonably specialist type of work, for example, installing a [ fix ball mill ], it's is not something you do with an asset every day. So we have the right capability in place to do that. And thirdly, I've sort of grouped these 2 at the bottom together, the conveyor to surface material handling system, and the second underground primary crusher called PC-2. So PC-1 is up and running. We're using it today. So PC-2 is the second one we're building now. These key elements of the project essentially enable all of the panels at the mine to ramp up to full production. Right on to shafting, my favorite topic. Shaft 3 and 4 are the largest vent shafts currently being constructed in the world. And once commissioned, Shaft will exhaust 1,800 cubic meters of air from the mine per second. I've been around a lot of shaft construction. It's often hard to comprehend the scale of an 11-meter diameter shaft, like Shaft 4. When we completed the 8.5 meter diameter Shaft 10 at Resolution, it was one of the largest and deepest completed in North America at the time. Then we quickly followed that up with the 6.7 meter diameter Shaft 9 there and connected them in Arizona. So in Shaft volume terms or in cross-sectional area terms, both of those shafts would fit inside Shaft #4 at OT. Same thing for both the Woodsmith Mine shafts getting constructed in the U.K. now or any of the 4 shafts getting constructed in Australia. So the scale here is phenomenal. Well, these shafts haven't been without their challenges to construct for sure, and I'll just talk about that a little bit now. We are using first of a kind [indiscernible]. We are using a first-of-a-kind sinking system here. It uses 4 VSM in one shaft. Now we really like this system. It's a good system. The main reason why we like it is because we can advance the sink without having people on the shaft bench during mucking operations. I know a lot of you have been to underground mines and you know why that's important and why we like that. Really, as an industry, we've been working towards that for some time because this is the part of the sinking cycle that really presents historically a very high risk to people in the shafting around that marking equipment. So our system, there's nobody on the shaft bench while we're mucking. It eliminates that risk. But it was a totally new setup and the first time it was used, and we did have some equipment reliability issues in the earlier parts of the shaft. And we did -- I think I just mentioned a little bit earlier, we did have some high potential near-miss events in terms of safety in the shaft too. So that really required us to stop, reassess what we were doing and challenge every aspect of it, and then set some foundations really deep for the sustained improvement in our safety and equipment reliability, which flows through to shaft sinking productivity at the end of the day. Now doing that, that slowed us down at the time, and we have shifted the shaft breakthrough dates by 3 months. On the next slide -- but on the next slide, I'll talk about how we've emerged pretty positively from that period. And we're really seeing -- definitely seeing the safety performance that we've been chasing and the productivity as well. Steffan will -- who is talking after me will just talk a little bit about how the change in those dates, the shaft breakthrough have been mitigated by some really smart mine ventilation planning and development planning by those teams. So we've changed the date, but we've mitigated the impact of that to any of our plans. Just on the right-hand side -- left-hand side of the slide here, the construction of the surface facilities, so the exhaust fans and the mine air heaters, they're pretty significant infrastructure. Both of these continue to advance ahead of the plan with the cumulative progress of over 70%. So really no concern for these facilities. They'll be sitting there ready for when the shaft breakthrough, we'll connect them and turn them on. So overall commissioning of the full vent system from Shaft 3 and 4 will be half to 2024. And those -- like I said, those timings support the development needs and the production ramp-up from P1 and P2. I can talk fast when I get excited. So maybe I talked pretty fast there. Look, if we go into the next slide, you can see here that our shaft sinking rates have been showing sustainable improvements throughout 2023 as all of those initiatives I talked about have been embedded. A few of the key areas that we focus on, I mean, how do we do this, how do we fix this and set this up right? We moved this contractor to an integrated team structure. So that really enabled us to work with the sinking contract on improvements in a much more integrated way. Particularly, we're able to really invest in the frontline leadership and the frontline teams and how they best manage and coordinate their sinking activities and manage their critical safety risks. So we listed -- also enlisted some Rio Tinto and external productivity specialists, and we deeply analyze every aspect of the sinking cycle, and we focused on the real high-value areas such as the shaft lining and the mucking part of the cycles. And we delivered multiple targeted improvements in those areas. They're repeatable tasks. So any benefit there really adds to or improve the shaft sinking rate. And final focus area that really saw us embed the improvement was the introduction of an upgraded maintenance and equipment reliability program, and that saw us reduce our top 10 equipment sort of delay events significantly, which also really made quite a positive impact on these rates. So I don't want to half on it. But just remember, these are really large cross-section shafts. And our last quarter advance is something that you might hope to see on much smaller shafts. So they're really moving along in quite a stable and predictable way now. In terms of progress, at the end of June, Shaft 3 had advanced to 639 meters in depth against our latest forecast of 624 meters, and Shaft 4 is the deeper of the 2 shafts. So that's down to 752 meters depth now against the forecast of 740 meters. So if I move on to the conveyor to surface. As you already know, I'm sure, the twin decline development for the conveyor to surface broke through to the main mine in Q4 of 2021. So getting that 14 kilometers of large access drives to connect the surface to the underground mine was a real critical milestone for the project. And it basically lowered the risk profile for the rest of the underground project. So that achievement, you can see on the slide there, the layout. That achievement enabled many things such as mine ventilation, of course, the drive in and out access, including transport of our large components for the conveyor transport, first stations and the second crusher. So the first crusher was built all going through the shafts, piece by piece. Now we can just transport heavy components down a decline. And even just more recently, just to be able to drive our brand new road train from the surface down to the haulage level where it's running round today. So that's just a real huge enabler for the project. So the C to S system itself, the conveyor to surface system consists of a hung 2.4-meter-wide conveyor in the underground. And this moves through 5 transfer stations and will enable the ramp-up of production from P1 and P2 caves. As far as construction progress goes, we're now over 50% complete. And you can see an example of one of the main conveyer drives in that middle photo there at Transfer Station 22, which is coming along nicely. The major civil works are all done for this work. Now it's really a program of structural, mechanical, electrical installations and then full system commissioning, which we have really good capability on the project now because we commissioned MHS-1. So we've got all the resources we need. There's over 6 months float between the construction and completion of this system and the required by date for production. So the forecast is for half 2 2024 turnover to operation. And as I mentioned, this system, combined with the second primary crusher, allows the mine to ramp up to its full production. Just in relation to the second primary crusher, PC2, the early work for that construction has commenced in the tipple area or the top part of the crusher. And this will include the installation of a heavy crane. We did a detailed lesson learnt review of the PC1 construction and found that an early works design is a great opportunity to derisk the main construction works, particularly getting the power in there early and getting a 90-tonne heavy crane in there. It really simplifies the main crusher build. In terms of status for that, our mining teams are performing the mass excavation of the PC2 chamber now. The completion of the PC2 scope is also a milestone for the project completion, and this is forecast at the end of 2025. With PC2 itself having an operation required by date of 2027, so a bit of float in that program. But we are actually evaluating opportunities for early access into the PC2 main chamber. And this pretty simple case of earlier access would enable earlier completion of PC2 scope, which essentially just provides some more operational flexibility for the underground mine through having 2 large major primary crushers. All right. As you've heard that the concentrated conversion will enable the processing of our higher-grade underground ore. Our early works part of this program is now complete. Our civil works, which you may see from a distance at least, is proceeding as planned. And the main construction works actually have commenced and commenced in Q2. So we've got a main contractor on board and it started in the concentrator. I think Andrew has already said this, but it adds a fifth ball mill, a process circuit, including additional filtration columns, rougher filtration, a thickener and filters. As I mentioned, this is quite specialist work, which we're executing inside the operating concentrator facility. So the key here, like all major brownfield work is to fine knit detailed planning and the real discipline execution of this, particularly when it comes to tying in the new equipment into the existing plant. We also know from our experience that an often underestimated success factor in this type of work is a really clear governance structure and decision-making process for any works inside that operating plant. So for us, between Andrew and I, we have a really good structure and a good program in place. And it's been functioning really well between the project and operating teams. And I guess that's probably the key here. The last point I have on this is the close integration that we do have between the project and the operating teams for the concentrator conversion. We're really working tightly together on this. We've been seeing this run really well to date on site. And we effectively just had one team delivering this work at the concentrator and that's really critical for success. So thank you. I hope I didn't rush through too quick. I know I threw a lot of facts and figures at you. From here, I'd like to welcome Steffan Herselman and also welcome back, Oggy -- Otgonbayar. Thanks, guys.

Good afternoon. So my name is Steffan Herselman, I'm the Chief Underground Engineer for Rio Tinto. And I've been with the company for 5.5 years. So -- and most of that time I've spent on OT through the redesign of Panel 0, mold optimization of Panel 1 and Panel 2. Whether I was leading the work or I was supporting the work, I was there or thereabouts. And before that, I come out of South Africa, the cave mines in South Africa. And Oggy and I will take you through the presentation. So what we're going to cover is I'll run through the redesign and optimization of Hugo North Lift 1, and I'll explain the impacts. It's really the impacts of what happened during the COVID window on our Panel 1 and Panel 2 and subsequent impact on the ramp-up. We'll then also discuss some of the exceptional performance at site. So Panel 0 is just working like an absolute dream at the moment, and the team is really shooting the lights out there, and then we'll cover some of our cave monitoring systems just to show you what the cave looks like and how the cave is presently performing. So what everyone knows about OT is that it's a world-class ore body. So everyone has seen the 450 million tonnes, 1.8% copper equivalent. And everyone's seen the size of it. We really only started to tackle Hugo North Lift 1. It's perfect for caving the ore body. We've got the Hugo North Lift 1 and Lift 2, we've got Hugo South, all serviced by the same common infrastructure. What people -- and I've got a bunch of statistics up here, but that's not what's really important. What's really important is how we've been able to deliver this. This is the first modern mechanized western style mine in Mongolia. So it's an absolute fit. It's also the first block cave built in Mongolia. And so the team have really just delivered exceptional performance in getting the cave up and running and constructing it. And if we sort of step back, why were we this good? Well, we took a real mix of expatriates. This is not an Australian mine copy-pasted into Mongolia or an North American or an African mine. We took the best the world had to offer, and we incorporated it into this one mine site. And then we had this exceptional group of Mongolian people, who just stepped up. And I'll go through a few examples of just exceptional performance from our teams. I'm going to work from the back to the front. This will be the most advanced, most instrumented, most managed cave ever built. We've got more technology in this one cave than all of the others combined. It is something to behold. Every single pillar has got an [ Exco ]. Every single drive is monitored and measured in real time, all the time. Our cave is measured, monitored. We've got micro-seismics, we've got [ Exco ] -- we've got smart markers, we've got everything. And eventually, when it does break through to surface late 2026 plus/minus a year, we've got the best technology available for surface subsidence measurement. What this does is it sets us up to become world leaders in caving because if you've got the information and you've got the understanding and you know what's going on, you can then start to design these caves so that they work as you expect them to work. And so I don't believe it will be long before our Mongolian engineers become sought after throughout the world to design and run and operate caves as they're currently being poached to go and construct other mines around the world. So -- and it's really just testimony to the quality of the people. When it comes to cave construction, our team, when we did the redesign of Panel 0, we effectively doubled the amount of development they needed to do in order for us to be able to start production. And the team rose to the challenge and they absolutely smashed it to the point that they were on the critical path, and they took themselves off the critical path. They did all of this with exceptional safety performance, exceptional quality assurance, quality control. Our under brake is less than 10%. Our support compliance is 100%. No one installs as much support as what we install. It is exceptional performance. You'll see it when you're down there. If you can find anywhere to install any more support, we'll stick it in for you. It is -- and where they then really topped it up? So they had a bit of practice with development during the initial construction. So when we saw that performance, we thought okay. Then we asked them to build the cave. And we started a little late. So we told them you need to build it in a hurry so you can get us back on schedule. And just what exceptional performance. Industry average is 4 to 5 drawbells a month, and the team are busy smashing it out at 6 a month. It's almost unbelievable when you sort of see what the team is doing there. The only aspect of caving we still need to dive into is the production ramp-up, and we're seeing green shoots of what the team can start to do there when we look at their run rate, when we unleash the loaders. But it's too soon to say. We've only really just started production in March. And the production ramp-up is very much driven by the cave in the early years. Only once the cave breaks through are we really truly unconstrained. So why did I run us through all of this? Because we've completed 230 equivalent meters of development -- sorry, the 230 kilometers of development to do, of which we've completed 100 -- just over 100 kilometers. But that 100 kilometers is predominantly the infrastructure in Panel 0. So the rest of the work to go is the construction of Panel 1, Panel 2 and the remainder of Panel 0. And what we've got is a crew that have really shown us demonstrated performance and how well they can execute that work package moving forward. And that puts us in a good position looking forward. And the last sort of comment that I'll make on there is they make us mine planners look a little silly at times. So we plan 4 to 5 drawbells, they smash out 6. We plan 1,500 meters a month, they smash out 1,800. During this period, where we've got a development constraint because of the ventilation, which is always there. We again said, "well, they'll only give us about 1,150, 1,200, again they're smashing it out and they're giving us 1,300. So -- and that's really just the team on the ground. It's our management operating center. It's our people in the field, just seeing opportunities to improve and just get the job done. So we're going to take you through a video. This is the video that we pulled together for the sustainable production in March. So three things to note. The first is we have 54 drawbells, not the 21. Secondly, we were using conventional mine trucks for tonnage hauling. We are now going to use the truck and trailer, 280-tonne trailers, you'll see it tomorrow. So you're not going to see it yet, but you will see it tomorrow. They've got a set up underneath the truck chute for you. And the third thing is we weren't ready to show the new 2023 mine designs. So this is still the 2016 mine design, and the team can hit play. [Presentation]

And everything you saw in the video, you'll get to see in real life tomorrow. So it's all there. If I just sum up where we are, on the right-hand side, we've got a layout of the ventilation system; on the left-hand side, the ground handling system. So where are we? We've got 1,000 cubes of air with the infrastructure we have. When Shaft 3 and 4 come online next year, we'll have 2,000 cubes of air. 2,000 is all we need to ramp up to full production. From a ground-handing system perspective, we currently have 30,000 tonne a day through the two-shaft hoisting system. Next year, C2S will come online. We'll get 45,000 tonne a day. The constraint will then become our PC1, our primary crusher. And that then allows us to unleash any excess capacity we can see in Panel 0. The following year, we will get the C2 -- the PC2. So the second crusher that then completely de-constrains our ground handling system, and we will commence Panel 2 cave. And then in 2026, we will commence Panel 1 cave. Once Panel 0, 1 and 2 are up and running and the ground handling and the ventilation system are in place, there's nothing stopping us ramping up to full production. And as I said, if one just extrapolates the performance in Panel 0, it should be looking good. So I'll now run to the redesign process. So first and foremost, our philosophy is we don't want to be fixing broken caves. So when we design the mine, we design it to work. We want it to be resilient. We want it to be robust. The reason we install so much support model analysis is because we only want to do it once. The reason we install so much monitoring and tracking of the cave is so that we can react the minute we see things starting to not behave as we expect. By getting that early warning, we can make the adjustments upfront, we can make the adjustments quickly. We don't have to wait for things to crack [indiscernible] in pillars. I know the minute the pillars starting to take loads. I don't need to wait like everybody else a month to see a crack in the wall when it's actually too late. You've already yielded the pillar. So it's a lot of money being spent upfront, but the return is we should have a resilient mine that performs as planned as expected. So if you look at Panel 0 and what really happened there, whilst we're doing the detailed design of the ground handling system in Panel 0, the geotech engineers were updating the fault structures and they're updating the rock mass strengths. And we started to pick up a more extensive faulting pattern in between the lower fault play and -- the lower fault and the lower fault play. Now you can see there in Panel 0, the picture in the middle shows you, you see all the blue running through the center of Panel 0. That's fundamentally the difference between what the team was looking at in 2016 and what the team is looking at in roughly 2018, 2019. And that extensive zone of weak rock mass material, that was a concern to us that the ground handling system wouldn't be stable inside of that really weak rock mass area. And so we needed to move the ground handling system somewhere where it could be stable. We couldn't apply a band-aid, we couldn't apply more support, we couldn't move it slightly up or slightly down because of the pervasive nature of that faulting. So we had to move it right outside the footprint. Hence, you can see the red dot sitting on the southern and the northern side of Panel 0. We had to get it completely out the way because the only way to look after the footprint. Our -- a couple of other things we did, we increased the pillar spacing. So we went from 15 x 28 to 18 x 31 to make the pillars stronger, especially where they've got faults running through them. We removed the mid-access drive on the extraction and on the undercut level, that effectively doubled the amount of development the team had to do, but it meant that we protected those pillars in those areas. And one of the benefits of moving the ground handling system out of the way is we reduce the size of the excavations and the amount of holes you're putting in the ground underneath the cave. The other advantage of moving into the side is if something did go wrong, we have allowed ourselves enough space underneath Panel 0 that in a worst-case scenario, we could come in underneath and reestablish the cave. So the other benefit of not having any access infrastructure there. This then delivered a far more robust Panel 0, and our performance to date has demonstrated this. So make no mistake with building a cave in the schism. So there are some cracks down there. It does talk to us every now and then, but it has behaved as expected. Exactly the way we planned it, is exactly what we're seeing down there. It moved where we thought we would move, we fixed the way we needed to fix it. In general, we're really happy with the way things are going and we're starting to get kind of optimistic. We're halfway through, and we've had no real significant problems to worry about. A little bit of preventative support. The guys had to throw in a few anchors here and there. Occasionally, we had to move the undercut a little bit faster. But outside of that is looking really good and the cave is starting to cave as expected, and we're starting to manage the cave and fatten it up so that we can get it to go through to surface. So the question would be, did we overreact to Panel 0? The answer is no. We've seen enough to know we make good decisions. We made the right decision. It was a tough decision, but it was the right decision. And Panel 0 is performing as expected. If we then go to the next slide. So essentially, the mine design was originally a long continuous panel cave. So the entire footprint was locked in so that it would fit together. When Panel 0 was broken out as a separate stand-alone cave, it presented us an opportunity to look at Panel 1 and Panel 2 and optimize it. They were now stand-alone independent caves and so you had an opportunity to look at them and see could we do better. And really, what we did is, if you take Panel 0 and you simply rotate it, you'll see that Panel 1 and Panel 2 are a carbon copy of Panel 0. So we just took all the good stuff out of Panel 0. We applied it to Panel 1 and Panel 2. This time around, we had time. So we put the ground handling system in the country rock, which is barren. And so we didn't have to leave the pillars that you see in Panel 0 in the ore body in the north and in the south. We didn't have to leave those pillars. So those pillars carry value, and it is our intention to mine them. We just aren't quite in a position yet with the knowledge we have to put them in the mine plan. So we're either going to take them out on the Hugo North Lift 1 level horizon. We just need to see how it performs. I need the pillars to yield. If the pillars yield, I can climb in there and get them. If the pillars retain stress and don't yield, we'll have to fetch them from the bottom. We're only really going to know this once we've ramped up all the caves, and we've had a chance to de-stress that pillar. Just some of the statistics I put it on the slide, the sort of -- Panel 0 is our baby cave. So that's only 30,000 tonne a day, which still makes it one of the biggest in the world. And then Panel 1 will be 35,000 tonne a day. Panel 2, north and south is a very big cave. So you're looking at 45,000 tonne a day coming out of those 2. We need 3 of them running at any point in time to deliver our full ramp up. And really, what we've done is we put ourselves in the best possible position to deliver Hugo North Lift 1. We've got 4 separate caves. We can construct them separately. We can run them separately. We can operate them separately, and it gives us a tremendous amount of flexibility. If I've got a problem somewhere, I can simply move to somewhere else. If we then have a look at the schedule. So we've took that mine design, and we've now scheduled it. And so the blue line on the left-hand side over there, that's a capital development program. And the black line is the susex development program. So Panel 1, Panel 2 is susex, Panel 0 and all the footprint infrastructure is Panel 0 and the blue line is Panel 0 and all footprint infrastructure. What you can see is that COVID impacted our susex development. It pushed our Panel 1 and Panel 2. The team had already broken the back of Panel 0. They had already brought it forward. So Panel 0 wasn't impacted by COVID, but Panel 1 and Panel 2 were impacted by COVID. In addition, the critical enabling infrastructure for Panel 1 and 2 being the ground handling system, the material handling system, being the ventilation system, were equally pushed out. So literally, our susex were lifted and shifted by a year because of COVID. That's as simple as it is. The dip that you see in our plan development rates, that was always there. Shaft 3 and 4 were always going to come in after we've been running Panel 0 for roughly a year. So we're always going to do the different development than we're always going to step back up in the development. And the dark black that you see above the gray, that's where the team have really performed very well. It's quite difficult in a vent-constrained environment to truly plan exactly what optimal looks like because you're trying to balance the air going to Panel 0 and the air going to the development section. And the team have just been able to really perform well there, and Oggy will take you through some of the detail. What does this all really mean? If you look at the Panel 0, Panel 1, 2, you see there's a slight kink in the production ramp up. That's really our COVID kink. So we still ramp up to full production, we still achieve nameplates as planned at the time we can, but it now just ends up having this funny little kink and then it shoots up to steady state. So what next? So we've now completed the panel, the Hugo North Lift 1 redesign optimization. And so the team is shifting their attention -- the study team is shifting their attention to the design of Hugo North Lift 2. We've already commenced the study. We've already commenced the drilling program for Lift 2. And we're about to commence the program for Hugo South. Hugo North Lift 2 is the natural successor because of the grade for Lift 1. So as soon as we close out Panel 0, we'd like to start Panel 0 obviously in Lift 2. That's a bit fast, but that's the general idea. As you're dropping out panels in Lift 1, you want to be opening Panels in Lift 2. Hugo South could be an extension or it could be a top-up, and the team is looking at that. And then there's also some low-grade extensions around it. I deliberately left Heruga off the slide just simply because of time. So there's enough tonnage here for another. So we already have a life of mine to 2035. If I add what's on the screen, that's already another 20 years. So Heruga then sits outside of that. Alternatively, we bring it forward as an expansion opportunity. But there's lots of ore bodies. They're all suited to block caving. They're all suited to massive mining big tonnages. And I'll hand over to Oggy. He'll take you through the detail of Panel 0's performance.

All right. Hello again. I worked 1 hour longer and might be 1 hour wiser. I try not to skip the slides this time. Yes, that's -- I'm going to talk about more operational than the execution stage performances. In this graph, you can see there is two things. One is the construction progress in your left-hand side and our undercutting in the right-hand side. As you can see last 4 quarters in row that our undercutting rate is increasing and is becoming a steady state. So far, we blasted -- 722 drawbells fired. And also our drawbelling rate is increased from 2 per month from 2022, after we have first drawbell, and increased it to up to 6. As Steffan mentioned that is the section of execution team performance that is beating with the industry average, which is 4 to 5 drawbells per month. The acceleration of the drawbells obviously giving us the chance to deliver the ore to the mid area. That's why celebrated our sustainable production milestone in March of this year. And as you can see so far, by end of June, we blasted 54 drawbells. You can see this is the exceptional performance demonstrated by our operations team. And next slide, please. In this slide, I'm going to talk about the two things. The development of the Panel 1 and 2 on the left-hand side and on the right-hand side, there is a production. The development delivers 4,000 to 5,000 per tonne materials every day. And as you can see from Q1, which is increased its hosting tonnage, that would increase over the more drawbells opened and production will be sustained. In the left hand side, there is production development rates. As you can see, the first drawbell blasted last year. That 1,150 red line indicates we plan to reduce our development rate down to 1,150 because of the -- most of the ventilation has to be allocated to Panel 0 development in production. However, we have clever and opportunistic short-term plan in place that we enabled our operations team to retain our development rate as the previous rate. The extraction level stability, cave growth and propagation, including fragmentation are expected in this early stage. In the next slide, yes, there is two things in an underground operation. Underground mining, you will see tomorrow. There's 2 main levels, the undercut level and extraction level. So far in underground -- undercut level, we completed 100% of all the developments. And also we 100% completed 9 plots that is in the Panel 0 mine. In extraction level, 56% of the drawbells development completed, and the 50% of the 222 draw points that we plan to construct is completed. And now we are in the stage of the 45% of the 120 drawbells blasted. Yes, it's -- what -- in the previous slide, what we can see here is the almost the halfway of the mining construction is completed. And next slide, please. In this slide, I'm going to talk about our monitoring. The OT -- as Steffan mentioned, OT is the more sensors and equipment installed mine to measure our cave performances compared to any other block cave mine we have. We have the monitoring of our pillars, panels and in extraction levels to measure the footprint stability. And we have monitoring for our cave, to measure the cave growth, and we have monitoring to measure our seismic monitoring. And I'm going to show you a video in the next slide. But before the video, the last graph showing the -- this is our drawbell cave grow compliance graph. As you can see from the south and north, from yellow to green, that is the very uniform drawing rate. You can see that we are keeping up based on our monitoring and performances. Next slide, please. This is the video which play, as you can see that those development tenants, the bottom of the mine there, and also you can see our cave draw back in. Those couple of red and gray lines are indicating the fault stones of the mine, that's lower fault and lower fault supplies represented by red color. And the gray color is the contact of our 2 main ore body of QMD and NVA. And those dots are -- the green dots are the micro-seismic events that we registered throughout May and blue is indicating the micro-seismic events in June. This is indicating that we know where is our cave draw back location based on all our monitoring and technology we have and where is the propagation zone growing based on our micro-seismic event. The next slide, please. Yes, our cave mine, we are -- have near digital twin of underground mine to monitor the real time enough being to make a good cave management decisions and manage underground risk. In this picture, the fourth picture is showing that our team working in underground is, it will create the being or being recreated based on the live type hazard management system giving them alarm. And the second picture is showing one of our geotechnical engineer -- is looking at the -- our integrated asset management tools, which has enabled all of data sources we have live and which helps them to making the right decision on the right time. And this is our overall monitoring of the underground in the third picture. And I would like to conclude here that I am showing a great performance of Panel 0 through the great performance of our team and using the best technology available. Yes. Thank you very much. And I would like to invite Duka on the stage.

Okay. Today, at the opening ceremony, we saw camel caravan come into the stadium. And in Mongolia, we have saying that the last camel in the caravan carries the heaviest load. That's certainly how I feel. Before I start, I'd like to welcome you yet again to Mongolia and to Oyu Tolgoi. And please accept our sincere appreciation for making such a long trip to come and get to know us to understand the country and to understand the project. My name is Dulamsuren Begzjav or Duka for short. I'm the CFO of OT, been in the role for the last 1 year. I've been with OT for the past 11 years, mostly previously in the business analysis, strategy and business development roles. Prior to that, I was the CFO at the largest telco in Mongolia. And before that, I was a banker with BNP Paribas for 6 years in New York. So as you can see from the presentations made up to now, this is really exciting times for OT. We've put in place solid foundations to triple production in the next 5 to 10 years, as presented by Andrew and his operations team. This allows OT to rapidly move towards positive free cash flow. We are offering high-grade premium product to the largest copper market in the world, located just 80 kilometers from our mine. And I wanted to emphasize that the increase in the production, OT will be moving into the first quartile position in the cost curve, which further strengthens our competitive advantage. Lastly, as Deirdre already mentioned, our supply is -- our power supply is secured until 2030, and we're actively managing our funding profile until we reach positive free cash flow. Is my microphone okay? Okay. So we've commenced our underground production in March this year, which we delivered ahead of our plan. With the achievement of the underground sustainable production, OT has truly become now an integrated operation, integrating both open pits and underground mines here. In the years ahead, as we ramp up the underground production, we will maintain a relatively consistent mill feed to the concentrator. But as I mentioned before, we will be feeding high-grade underground ore, triple the copper grade versus the open pit. Accordingly, our concentrate volume will increase 3x. And our production will ramp up to average 500,000 tonnes from 2028 to 2036. Gold continues to remain valuable by-product for OT. This is our current mine plan that underpins the financial forecast that we will cover in the next slide. As Damian mentioned, the construction of infrastructure to support the ramp up to full production is well on track. 2016 to date highlighted the critical period of our investment in the underground mine. We spent $5.7 billion to date of the $7.1 billion required capital. We have $1.4 billion of capital to go, reflecting how close we are to the finish line of completing our remaining scope of the underground mine. We continue to look after our assets, equipment, facilities and we'll invest in average annual sustaining capital of $300 million to $400 million over the next decade. There's also a portfolio of other growth projects, including heap leaching, railway renewables that are at various stages of studies, as Deirdre highlighted, which may require capital investments in the future. Given the early stages of these studies, we will provide update as appropriate. On the cost side, we are maximizing impact in Mongolia while optimizing costs. We're doing so by shifting international spend to Mongolia, promoting value-adding domestic activities and creating new skills and expertise. For example, our concentrate bags that we used to transport concentrate to our customers that are produced in Mongolia, cast iron balls used as the milling process and now being made in Dalanzadgad, the capital of South Gobi province. Previously, we used to import this from Thailand. We're actively managing escalating input costs by substituting products where possible. We were also working closely with the operations and project teams to reprioritize and aggregate demand where possible. We continue to apply discipline across discretionary spend and headcount. Whilst we're moving on from COVID, the supply chain challenges we encountered during COVID still persist. I think we see that throughout the world. Collective agreement between OT and OT Trade Union was renewed in April last year for a period of 3 years from 2022 to 2025. This agreement incorporated the changes due to the new labor law that was implemented in the country at the beginning of last year. It also expanded employee benefits, including life insurance and retirement savings fund to secure our employees and their family's future in the long term. Implementation of the revised labor law, legislation of long roster, which we refer to 2 week on, 1 week off to even time roster 1 week on, 1 week off, in 2022 has impacted our costs. A total of 500 new roles were created for the fourth panel. We are required fourth panel additionally in order to just to adjust the even time roster. 610 employees' fixed term contracts were converted to permanent contracts and 210 contract employees, who also worked on the labor supply agreement, were converted to permanent contract. These were all the implications of the changes in the labor law. On the power side, OT sources power from the Inner Mongolian power company in China. Just about 2 months ago, OT successfully completed power import negotiations with our Chinese supplier. And with the new extension, as we've already announced, we've secured the power supply for OT until 2030. Under the new extension, OT adopted a new pricing term with a floating component as opposed to the fixed tariff in the past. This was primarily to reflect the changes in the regulatory environment in the energy sector in China. Despite this change, OT's price tariff remains relatively stable. In January 2022, which -- shortly before we did the underground -- undercut, OT signed the Electricity Sales and Purchase Agreements with the Government of Mongolia. Under this agreement, we will source the majority of future demands from the Mongolian grid. However, Mongolia is currently unable to supply this power to OT, and the electricity supply agreement will only become effective once the local grid has sufficient capacity. Under the local grid -- until the local grid is fully developed, OT will continue to source power from the Inner Mongolian supplier as it has done since 2012. Now power will play a significant role in OT's future decarbonization initiatives as it accounts for over 80% of our -- of OT's total emission as Scope 2. As Bold mentioned this morning, 34% to 40% of Inner Mongolian power companies' power generation is already composed of renewables. But once the Mongolian grid comes in, since Mongolia is heavily dependent on coal, switching to local grid is challenging from decarbonization point of view. So in the short and long term, OT will focus on two main strategic initiatives for reducing Scope 2 emissions. In the short term, we will collaborate with the Government of Mongolia, Ministry of Energy to develop the local renewable energy certificates and possible acquisition of locally sourced green energy certificates. So that's in our plans in the immediate term. In the long term, we will continue our efforts to develop dedicated large-scale renewable energy generation for OT with the aim to fully evade OT Scope 2 emissions. Now as we ramp up our underground production, we continue to focus on our operations for the long term. We do so through continued focus on costs and ongoing optimization of our operations. As an example, we run business full potential programs that identify improvement opportunities. BFP that ran last year for Panel 0 identified significant opportunities to accelerate the development of Panel 0. And we were able to deliver an underground sustainable production ahead of schedule. We just completed another business full potential program for underground operations in June. The program involved over 70 of our team members from underground operations, business improvement, business analysis, finance areas that were identified over 70 improvement initiatives and programs. Coupled with the increased production, OT is well placed to move into the first quartile position in the cost curve by 2030. So this is on the logistics and marketing. Since the OT's open pit operation has been operational for the last 10 years' time, we've successfully established commercial relationships with key Chinese smelters with no concentrated exposure to any one operation. We sell a majority of our concentrate under a multiyear long-term sales agreements. Our customer base is diverse with core smelters located in northern and northeastern China. We see significant expansion in smelting capacity in China, including many of our customers aligned with expansion of OT. We're well placed to supply this increased demand from China. Our high-quality concentrate will be in demand as our customers seek to blend our concentrate with that of -- that's coming from Latin America. On the logistics front, we transport concentrate on trucks via the Ganqimaodu border. We have about 100 to 120 trucks crossing the border every day. We are looking at other options such as shipping via international border crossing Erlian as well as rail options tapping into the rail developments undertaken by the government. As the underground ramps up, we just need to increase our truck flows from about 100 to -- 100 trucks to triple that, and we believe that we're comfortable in expanding that operations. But however, we are looking at other alternatives, particularly tapping into rail. On the funding side, OT is a super mega project, as Damian said, yes. To build this project, our shareholders invested $12 billion through equity and shareholder loans, and we were able to secure $4.3 billion through project finance, which was signed in 2016, involving a large lending group, including 2 policy lenders, IFC, EBRD, export credit agencies and about 20 commercial banks, many of whom are here in the room today. As of today, we have an outstanding project finance facility of $3.9 billion, which we will start repaying from '26, and $12 billion of shareholders' investment, which is also expected to start seeing returns from late 2020's as our underground mine continues to ramp up, and our cash flows and financial position strengthens in line with this. We will be securing further debt of $1.6 billion to $1.7 billion to fund the remaining development of our underground construction for the remainder of '23 and 2024. I would like to note that, as I mentioned before, that 80% of the capital spend is already incurred, and we are almost there at the finish line to complete our underground mine construction. Oyu Tolgoi's long-term forecast is founded on executing the underground development, continued optimization of our operations, both for open pit and underground, and effective management of costs. Commencement of the Panel 0 production in March this year was a critical milestone in the development of the Hugo North Lift 1. The performance of the underground continues to be strong and as we continue to ramp up, we expect to be a cash flow positive business in 2025. The period of 2025 plus, we'll focus on ramping up the underground by bringing production online for Panels 1 and 2, as a result of which we anticipate very strong revenue growth. Our gross revenue will increase from an annual $1.5 billion to the range of $4 billion to $5 billion in the next decade, while our annual costs will range between $1 billion to $1.2 billion. The 2025 plus period marks completion of the Phase 2 underground construction expenditure. This is shown as a development CapEx in the slide. While the CapEx numbers to exclude the expenditure for the future ore bodies, we are investing in our drilling and studies programs. For example, drilling is still ongoing for Hugo North Lift 2 to improve our ore body knowledge and understand the future growth value. Now I'd like to close off with the statement I started at the beginning. We are at an exciting time for OT. With the relationship reset between our shareholders in December 2021. Oyu Tolgo is charging ahead with our underground development. All of us at OT working hard to make OT one of the largest copper businesses in the world and deliver on our commitments made to our shareholders and to our stakeholders. I joined OT because I know OT is a nation-building project. It is a catalyst for the growth, development and prosperity of Mongolia. I want to ensure OT's success, so that I leave a better place for my three boys and their children. After 11 years with the company, my purpose still stands strong. And I will not be amiss to say that our 21,100 workforce, all feel the same as I do. We're in it not just for a [indiscernible] law, but for our shareholders, for the country and the generations ahead. I would like to thank you for being with us on this incredible journey. Thank you.

Great. That ends the second part of the presentations. And I'd like now to go to Q&A. So can I please have the speakers here up front. And maybe Deirdre, you can come up as well again and Bold, just if there is a question for you, still. If you can sit here on the front row, if you don't mind. Please. All right. So let's focus on operations obviously and finance. Alain, do you want to kick it off? And please introduce yourself and your firm.

Alain Gabriel at Morgan Stanley. I have three questions, hopefully, a quick one. For the remaining funding for OT, would it be in the form of a shareholder loan? And will it therefore need to be paid back before the OT starts to pay the dividend?

Yes. So the remaining funding would be senior loan from the Rio Tinto, and that has been already been secured...

And will it be subject to the same terms...

At the project finance lending...

Okay. Second question is on the budget. So you've recommitted to the $7.06 billion. Where do you see the biggest risks to this budget from here until completion of the Underground?

I think it's a Damian question.

Yes. I guess that's me. Look, we've seen a lot of risk orepasses in terms of supply -- supply chains really eased up. We're getting everything we need. We monitor it every day. The COVID risk is well behind us. We're fully ramped up in terms of resources. So it really turns to a risk of construction productivity how quickly can we install the seal cables and commission our equipment. So it's probably the best position I've been in, in terms of a project director to deliver a project with a lot of the major risks behind us and our major contracts that are all committed to. So the spend to go is either to existing contracts or sort of indirect costs like flights and camp, things like that. So it's probably around the construction productivity. Can we deliver it in the time that we've got and probably looks reasonably good with the shaft, as you heard, I think we've really ironed out a lot of the bugs there, and they're performing strong. I mean that was -- that took a lot of energy from the project for sure.

And third question is on the remaining. So basically on the capital budget, are there any beget items you would expect in the next 5 to 10 years that is not in the $7 billion neither in the maintenance CapEx, for example, a TSF expansion, TSF3, any major refurbishment of the concentrator or any fleet replacement.

Well, I think for the question around $7.06, Damian just answered, yes. He does not see any blow out on that one. On the TSF3, 4, Andrew, any comments there?

No, look, that's built into our annual capital program, and we'll be consistent moving forward. And I think any other projects will just go through a normal approval process and visibility through that.

None of the growth projects. Paul McTaggart, Sir?

Paul McTaggart. Citi. It's a question of ESG, and I just wanted to ask whether when native heard of people get relocated. Do you see some of the same social issues with those indigenous communities that we see in other regions where communities get relocated. And I'm just thinking [indiscernible], et cetera, that comes from social displacement. Is that an issue here? Or is it not an issue? I just wanted to know the effect really.

So maybe I will start with that. The Mongolians, we don't consider it indigenous since we're Mongolians. And then I just want to start with that. We're Mongolians and living in a Mongolian country. And then the -- yes, we have our communities challenges in terms of relationship. And then there's underground and subsidies, and there will be definitely impact but not a resettlement or any physical resettlement. As I said before, so we will keep focusing on the sustainable livelihood in the communal. If you wanted to call it, compensation -- community compensation. And that's actually the community, they sustain their livelihood and then they diversify the income. Do you understand?

In the beginning, you mentioned stock [indiscernible] ...

Yes. So in 2004, so where it is physically resettled tenure of the household. And so we will not -- our yesterday -- IFC, [ EBRD ] avoid any physical displacement.