Turquoise Hill Resources has announced the signing of a Power Source Framework Agreement (PSFA) between Oyu Tolgoi and the Government of Mongolia.
The PSFA provides a binding framework and pathway forward for the construction of a Tavan Tolgoi-based power project, as well as the basis for a long-term domestic power solution for the copper-gold mine, Turquoise Hill said.
Ulf Quellmann, Chief Executive Officer of Turquoise Hill, said: “We are encouraged by the pivotal decision to proceed with the power project at Tavan Tolgoi. Resolving Oyu Tolgoi’s long-term power requirements is critically important to the mine’s long-term development and today’s signing of the PSFA is a positive milestone toward that goal.
“We will continue to work closely and collaboratively with our partners to finalise the details of the power project, which will allow this truly great world-class asset to achieve its full potential for the benefit of all stakeholders.”
The PSFA formalises the role of each party and sets out an amended timetable for Oyu Tolgoi to source power domestically, according to the company. Construction is expected to start in 2020 following further studies and commissioning of the power plant is scheduled for mid-2023.
Oyu Tolgoi will now move forward to confirm the technical design of the project and finalise the commercial arrangements, including financing, underpinning the PSFA, the company said.
The 300 MW plant will be majority owned by Oyu Tolgoi LLC, 51%-owned by Turquoise Hill, and will be situated close to the Tavan Tolgoi coalfields.
Turquoise Hill Resources is 51%-owned by Rio Tinto.