The Mongolian government canceled the power sector cooperation agreement with Rio Tinto unit Turquoise Hill Resources Ltd. for the Oyu Tolgoi copper mine, and the company now has to deliver a domestic power source for the operation within four years, Rio Tinto said in a Feb. 16 statement.

This obligation is in line with the terms of the 2009 investment agreement with the government.

According to the company, the cancellation indicates that the government no longer views the Tavan Tolgoi power project as a viable option for the project.

Rio Tinto said it will evaluate all viable power options for the mine, including construction of an Oyu Tolgoi-based power plant, with the cost and means of financing to be finalized between shareholders.

The company noted that it has already earmarked US$250 million per year for the development of a power station in Mongolia in its 2019 and 2020 CapEx forecasts.

However, the cost of a power solution for Oyu Tolgoi is not included in US$5.3 billion expansion capital estimate for the development of Hugo North Lift 1, Turquoise Hill said in a separate statement.