The investment agreement concluded by Oyu Tolgoi in 2009 between the government and Rio Tinto indicates that the investor will insure all of its energy needs for the OT project from three sources in Mongolia within 4 years of the start of production. VANCOUVER, BC- (Marketwired – February 15, 2018) – Turquoise Hill today announced that Oyu Tolgoi has been informed that the Government of Mongolia (Government) has denounced the Energy Cooperation Agreement (PSCA) signed in 2014. The removal of the government in accordance with Section 1.3 of the PSCA indicates that the Tavan Tolgoi plant is no longer a viable option. The Government of Mongolia and Oyu Tolgoi signed the Southern Region`s Energy Cooperation Agreement (SRPSCA) in August 2014 and pledged to cooperate in obtaining electricity from Inner Mongolia. Oyu Tolgoi, Turquoise Hill and Rio Tinto are committed to meeting all the requirements of the investment agreement and continue to explore all viable energy options, including the construction of an Oyu Tolgoi-based power plant. A final decision on the outcome, costs or financing of a sustainable domestic electricity supply has not yet been finalised. The cost of an energy solution for Oyu Tolgoi is not included in the $5.3 billion expansion capital estimate for Hugo North Lift 1 development. The inner power for Oyu Tolgoi is dealt with in chapter seven (infrastructure) of the investment agreement. Oyu Tolgoi LLC today announced the signing of a new Power Purchase Agreement (PPA) with Mongolia`s National Power Transmission Grid (NPTG). In August 2014, the Mongolian government and Oyu Tolgoi signed the PSCA for the search for an independent electricity producer based in Tavan Tolgoi.
The agreement served as a framework for long-term strategic cooperation between the Mongolian government and Oyu Tolgoi to present a comprehensive energy plan for the South Gobi region. The participation in the PSCA was in line with Oyu Tolgoi`s commitment in the 2009 oyu Tolgoi investment agreement to establish a long-term electricity supply in Mongolia, four years after commercial production began. Following the government`s repeal, long-term power for Oyu Tolgoi must be obtained on the national territory effective February 15, 2018 within four years. In accordance with the commitments made by SRPSCA and Oyu Tolgoi in the investment agreement, Oyu Tolgoi maintains the source of electricity and is closely linked to the competent government authorities and investors selected by the government to advance the development of a domestic power plant. The new regime will come into effect on July 4, 2017 for a maximum of six years, with the possibility of early termination after the fourth year if a national power plant is commissioned earlier. “This agreement gives us access to reliable power to ensure the continued development of our operations, while we continue to work with the government to build a sustainable domestic electricity source.