Tag Archives: Tavan Tolgoi

Rio, Turquoise Hill and Mongolia government find power solution for Oyu Tolgoi

Rio Tinto, Turquoise Hill Resources and the Government of Mongolia have reached an agreement on the preferred domestic power solution for the Oyu Tolgoi copper-gold mine, in Mongolia, that, Rio says, paves the way for the government to fund and construct a state-owned power plant at Tavan Tolgoi.

The agreement, which is a revision of the Power Source Framework Agreement (PSFA) signed in 2018, states that the parties will work towards finalising a Power Purchase Agreement by the end of March 2021.

In addition, the amended PSFA sets a proposed timetable for development, with construction of the coal-fired power plant set to begin no later than July 1, 2021, and commissioning within four years thereafter.

Oyu Tolgoi is currently sourcing power from China’s Inner Mongolian Western Grid via overhead power lines, via a back-to-back power purchase agreement with National Power Transmission Grid JSC, the power importing entity, and the Inner Mongolian Power Company, according to Turquoise Hill.

Both the Government of Mongolia and Oyu Tolgoi have committed to extending the current arrangement to ensure continued stable power is supplied to the mine and underground project until the state-owned power plant is commissioned and is able to supply stable, reliable and continuous power, Rio said.

Back in February, Rio, which has a majority stake in Turquoise Hill, said it was continuing to progress options to secure domestically-sourced power for Oyu Tolgoi as part of an obligation to source power by June 30, 2023, under the 2009 Investment Agreement between Turquoise Hill (which owns 66% of Oyu Tolgoi), the Government of Mongolia and Rio, and the subsequent PSFA signed in 2018.

Arnaud Soirat, Rio Tinto Copper & Diamonds Chief Executive, said: “This agreement provides a potential pathway to securing a domestic power supply for the Oyu Tolgoi mine and underground project for the benefit of all shareholders and the wider community. We look forward to working with the Government of Mongolia to progress the solution.”

Oyu Tolgoi produced 146,346 t of copper and 241,840 oz of gold in 2019, with mill throughput running at 40.78 Mt for the year.

Rio, Turquoise Hill put forward coal power plant option for Oyu Tolgoi

Rio Tinto says it is continuing to progress options to secure domestically sourced power for its majority-owned Oyu Tolgoi copper mine in Mongolia.

The mining major’s domestic search for energy is part of an obligation to source power by June 30, 2023 under the 2009 Investment Agreement between Turquoise Hill Resources (which owns 66% of Oyu Tolgoi), the Government of Mongolia and Rio Tinto, and the subsequent Power Sector Framework Agreement signed in 2018.

In compliance with these agreements, Oyu Tolgoi LLC has submitted to the Government of Mongolia a feasibility study for the Tavan Tolgoi Power Plant (TTPP) project, which involves building a 300 MW coal power plant. This plant, to be located in Tsogttsetsii soum of Umnugovi province, comes with a total project cost estimate of up to $924 million, pending consideration of certain amounts yet to be finalised, Turquoise Hill said. Rio says this amount is already included in the group capital expenditure guidance of $7 billion in 2020 and $6.5 billion each in 2021 and 2022.

In parallel with the TTPP project, and in consultation with the Government of Mongolia, Rio Tinto is also progressing alternative options to source domestic power, including a renewable power component, Rio said.

Oyu Tolgoi is currently sourcing power from China’s Inner Mongolian Western Grid via overhead power lines, via a back-to-back power purchase agreement with National Power Transmission Grid JSC, the power importing entity, and the Inner Mongolian Power Company, according to Turquoise Hill.

Rio Tinto Copper & Diamonds Chief Executive, Arnaud Soirat, said: “Rio Tinto, Turquoise Hill and the Government of Mongolia are all committed to securing a reliable and long-term domestic power source for the Oyu Tolgoi mine and are working together to achieve this.”