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Mongolia to Expand Capacity at Thermal Plant to Power Oyu Tolgoi

Mongolia will increase the size of a planned thermal power plant in the Gobi Desert by 50 percent to meet the needs of its biggest project, the Oyu Tolgoi copper and gold mine.

The Tavan Tolgoi power station will generate 450 megawatts, compared with an earlier capacity of 300 megawatts, Minister of Energy Mishig Sonompil said in a phone interview today. The plan was approved by the government at a meeting on March 30. The generator will run on fuel from the Tavan Tolgoi coking coal deposit, which has 6.4 billion metric tons of reserves.

Mongolia will fund 30 percent of the power station through its $1.5 billion Chinggis Bond fund. The rest will come from private investors and loans. Mongolia will own at least 34 percent of the plant, according to a March 30 statement.

Former Prime Minister Mendsaikhan Enkhsaikhan was appointed head of the power plant, according to a March 19 report from Mongolia’s state-run news agency Montsame.

The Oyu Tolgoi mine, which is at the center of a dispute between Rio Tinto Group (RIO) and the government, is the primary driver of Mongolia’s $10 billion economy and by 2020 is expected to make up one-third of Mongolia’s gross domestic product. Rio controls 66 percent of the $6.6 billion project, located 130 kilometers (81 miles) southeast of Tavan Tolgoi.

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To contact the reporter on this story: Michael Kohn in Ulaanbaatar at mkohn5@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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