The Mongolian Government has notified Rio Tinto that it will develop a state-owned coal-fired power plant to fuel the Oyu Tolgoi copper-gold mine.
This scraps the company’s planned spending of $US924 million ($1.4 billion) to construct a 300 megawatt coal-fired power plant at Oyu Tolgoi, with a feasibility study submitted to the Mongolian Government in February.
In 2018, Rio Tinto set aside $US250 million a year for Oyu Tolgoi power station development during 2019 and 2020.
Rio Tinto stated that it welcomed the government’s proposition, adding that this was subject to certain conditions being met and clarifications being provided.
This involved the commercial terms of power supply, development process, proposed sources of financing and expected timing of completion.
Oyu Tolgoi stated that it would select its own power option if an agreement couldn’t be reached by both parties.
Rio Tinto owns 50.8 per cent of Turquoise Hill Resources, which owns 66 per cent of Oyu Tolgoi, with the remaining stake held by the Mongolian Government.
The company currently sources power for the copper-gold mine from China’s inner Mongolian western grid, with power purchase arrangements inked with state-owned National Power Transmission Grid and Inner Mongolia Power International Cooperation.
Rio Tinto produced 35,200 tonnes of copper, 26,200 ounces of gold and 214,000 ounces of silver at the Oyu Tolgoi mine in the first quarter of this year.