Rio Tinto to establish Oyu Tolgoi coal power plant

2020-02-19

Feb. 19, 2020 - Rio Tinto has progressed an option of constructing a coal power plant to fuel the Oyu Tolgoi copper mine in Mongolia’s Gobi Desert.

Oyu Tolgoi limited liability company (LLC) submitted a feasibility study (FS) for the Tavan Tolgoi power plant project, which involves building a 300 megawatt coal power plant at the site.

Rio Tinto is also considering options to source domestic power, including a renewable power component.

“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,” Rio Tinto copper and diamonds chief executive Arnaud Soirat said.

The Tavan Tolgoi power plant FS is based on a project cost of about $US924 million ($1.38 billion), which is already included in the group capital expenditure guidance of $US7 billion in 2020 and $US6.5 billion in each 2021 and 2022.

In 2018, Rio Tinto set aside $US250 million a year for power station development for 2019 and 2020.

Under an investment agreement signed between Rio Tinto, its subsidiary Turquoise Hill and the Government of Mongolia in 2009, the company is obliged to contract a domestic power provider for the copper and gold project by June 2023.

The parties also signed a subsequent power sector framework agreement in 2018, which further solidified this obligation.

Oyu Tolgoi is a joint venture between Rio Tinto via its majority shareholding in Turquoise Hill Resources and the Mongolian Government.

Rio Tinto has a 64 per cent interest in the project, with the Mongolian Government holding the other 34 per cent, making it the country’s largest ever financial undertaking.

Once completed, Oyu Tolgoi will be the third largest copper mine in the world with an expected mine life of more than 50 years.