Rio Tinto's majority owned Turquoise Hill Resources Ltd. reported signing a power source framework agreement between the Oyu Tolgoi copper-gold mine and the government of Mongolia for construction of a Tavan Tolgoi-based power project.
An industry source told Reuters in September that Oyu Tolgoi pays about US$100 million each year to buy electricity from China.
"Resolving Oyu Tolgoi’s long-term power requirements is critically important to the mine's long-term development," Turquoise Hill CEO Ulf Quellman said, adding that the framework agreement was a milestone towards that objective.
The 300-megawatt plant will be majority owned by Oyu Tolgoi LLC and will be near the Tavan Tolgoi coalfields, according to the Dec. 30 release.
Construction is expected to start in 2020, and commissioning of the power plant is scheduled for mid-2023.
Oyu Tolgoi's management will now move forward to confirm the project's technical design and finalize commercial arrangements, including financing.
In mid-February, the Mongolian government canceled the power sector cooperation agreement with Turquoise Hill, indicating at the time that the government no longer viewed a shared power plant at Tavan Tolgoi as a viable option for Oyu Tolgoi.