29th Jun 2020 08:55
(Alliance News) - Rio Tinto PLC said Monday it has reached an agreement with the government of Mongolia on a new source of domestic power for its Oyu Tolgoi copper and gold mine.
The Anglo-Australian miner said the agreement paves the way for the government to fund and construct a state-owned power plant at Tavan Tolgoi. The miner also said the two sides would work towards finalising a power purchase agreement by the end of March 2021.
Construction of the coal-fired power plant will begin no later than July 2021, with commissioning within four years thereafter.
Oyu Tolgoi currently uses imported power and both the Mongolian government 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.
Arnaud Soirat, chief executive of Rio's copper & diamonds unit, 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, located in the South Gobi region of Mongolia, is one of the largest-known copper and gold deposits in the world. It is 550 kilometres south of the capital Ulaanbaatar and is not far from the Chinese border.
The government of Mongolia has a 34% stake in the mine, which Rio Tinto has managed since 2010.
Rio Tinto has run into several problems at the mine. In July last year, first production was delayed for between 16 to 30 months after "stability risks" were discovered in the original approved mining plan. A new one is set to be completed in the first half of 2020.
Rio Tinto shares were down 0.9% early Monday in London at 4,490.50 pence each.
By Tapan Panchal; [email protected]
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