PERTH (miningweekly.com) – The government of Mongolia and copper miner Turquoise Hill have reached an agreement on the preferred domestic power solution for the Oyu Tolgoi copper project, paving the way for the government to fund and construct a State-owned power plant at Tavan Tolgoi.

The agreement, which is a revision of the power source framework agreement (PSFA) signed in 2018, states that the parties would work towards finalising a power purchase agreement by the end of March 2021, major Rio Tinto said over the weekend.

In addition, the amended PSFA sets a proposed timetable for development, with construction of the coal-fired power plant set to begin no later than July 2021, and commissioning within four years thereafter.

“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,” said Rio’s copper and diamond CEO Arnaud Soirat.

Oyu Tolgoi currently uses imported power and both the government of Mongolia 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.

Turquoise Hill CEO Ulf Quellmann said that the amendments to the PSFA provided Oyu Tolgoi and the government the additional framework and time required to solidify a power solution and finalise the commercial arrangements in the best interest of all stakeholders.

“This agreement is a testament to the continued collaboration and commitment of the government, Turquoise Hill and Rio Tinto to the long-term success of Oyu Tolgoi,” he added.

Oyu Tolgoi production is expected to average more than 550 000 t of copper and over 450 000 oz a year of gold from 2025 to 2030, with the mine having the potential to operate for some 100 years from five known mineralised deposits.