Rio Tinto continues to work with its partners to develop the best solution for a domestic power supply for the Oyu Tolgoi operation, following the Government of Mongolia’s cancellation of the Southern Region Power Sector Cooperation Agreement (PSCA).
The decision to terminate the PSCA indicates that the Government of Mongolia no longer views the Tavan Tolgoi Power Project (TTPP) as a viable option for Oyu Tolgoi. As a result, and in line with the terms of the 2009 Investment Agreement, Oyu Tolgoi is now obliged to deliver a domestic power source for the operation within four years from mid Q1 2018.
Oyu Tolgoi, Rio Tinto and Turquoise Hill Resources have expressed commitment to fulfilling all of the commitments under the Investment Agreement and are continuing to evaluate all viable power options, including the construction of an Oyu Tolgoi site-based power plant.
Rio Tinto will continue to review its capex forecasts for the project but has already earmarked US$250 million a year for the development of a power station in Mongolia in its 2019 and 2020 capex forecasts.
The PSCA laid out a framework for cooperation between the Government of Mongolia and Oyu Tolgoi to deliver a comprehensive energy plan for the South Gobi region. The Government of Mongolia’s primary intention was to develop a new independent power plant at the Tavan Tolgoi coalfields with Oyu Tolgoi as off-taker rather than owner.
Located in Mongolia’s South Gobi Desert, Oyu Tolgoi is one of the world’s largest copper-gold developments. Since 2012, operations have been mining ore from the Oyu Tolgoi open pit and producing copper-gold concentrate at a facility located adjacent to the mine site.
Open-pit operations produced 157 thousand tonnes of copper, 114 thousand ounces of mined gold and 974 thousand ounces of silver (100 per cent basis) during 2017.