Rio Tinto has expressed its commitment to seeking a new power delivery solution for its part-owned Oyu Tolgoi copper-gold mine following the Mongolian Government’s cancellation of 2014’s Power Sector Cooperation Agreement (PSCA).
The PCSA was formed as an agreement between the Mongolian Government and Oyu Tolgoi’s operator Turquoise Hill (51 per cent-owned by Rio Tinto) to create the Tavan Tolgoi power project, delivering energy across the South Gobi region, but the government’s cancellation of the PSCA now means Oyu Tolgoi will need to find a new power source for operations within four years (in keeping with the terms of a 2009 investor agreement).
It is the latest setback in the long-running development of Oyu Tolgoi; the country’s largest ever financial undertaking, it is estimated to be worth one-third of Mongolia’s overall economy by completion.
The project is a joint operation between the Mongolian Government (34 per cent) and Turquoise Hill (64), which counts Rio Tinto as a majority shareholder.
According to a statement from Rio Tinto, the company has already set aside $250 million a year for power station development in its 2019 and 2020 forecasts.