Rio to build power plant at Oyu Tolgoi copper-gold mine in Mongolia

Mining giant Rio Tinto (LON, ASX:RIO) will seek approval to build a power plant at its giant Oyu Tolgoi copper and gold mine in Mongolia and so comply with a 2009 investment agreement that calls for local energy suppliers to power the operation.

The move, however, would add further costs to an ongoing $5.3 billion underground expansion of the mine, said Oyu Tolgoi LLC, Mongolia's largest copper and gold mining company, which is a strategic partnership between the country’s government (34%) and Turquoise Hill (66%), of which Rio Tinto owns 51%.

Last week, Rio Tinto said it was working with its partners to find a solution after the government reinstated a decade-old agreement ordering the miner to source power for its Oyu Tolgoi mine domestically.

The company was told that it had four years to either find a domestic supplier or build a power plant, which could come with a bill as high as $1 billion. Such plant would allow Rio to secure power for the mine from domestic rather than Chinese sources within the next four years, as stipulated in an investment deal signed nine years ago.

More to come…

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