Mongolia's cabinet decided to build a 450MW power plant at its southern coal base Tavan Tolgoi to supply power for Oyu Tolgoi copper-gold mine. The project will be funded by its government rather than simply seeking for foreign investment, Mongolia's state media Montsame reported on April 8.
The project, named Tavan Tolgoi Power Plant (TTPP), set to be commissioned in 2024, is estimated with a total investment of $560-600 million based on a ready-made feasibility study of 2013, according to Minister of Energy Ts.Davaasuren to the press after a cabinet meeting.
Montsame quoted the minister as saying that the government is responsible for funding the TTPP project, which will be made available from every possible financial sources, including foreign loans.
In February, an international mining company Turquoise Hill Resources, which owns 66% of Oyu Tolgoi mine in Mongolia, proposed to build a 300MW coal-fired power plant about 150 km far away from Oyu Tolgoi with a total cost up to $924 million.
The minister said the proposal of Turquoise Hill Resources is financially impossible as the cost is 2-3 times higher than world market prices.
Montsame said the current TTPP budget will cost 30% less than the 300MW alternative, and the cost of power generation is estimated to be halved.
Oyu Tolgoi spends about $170-200 million a year on power purchases from China. Based on this, the TTPP project can recover the cost in five years, the minister said.
The TTPP will be established at the Erdenes Tavan Tolgoi JSC, one government-owned coal mining company, the cabinet said.
(Writing by Alex Guo Editing by Tammy Yang)
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