Mongolia Raises Electricity Prices for Miners by as Much as 30%

Electricity prices for mining companies that tap into Mongolia’s central grid will rise by as much as 30 percent in August, the country’s Energy Regulatory Commission said today.

“The mining companies are using most of the energy in the country, around 40 percent of the total,” Sainbuyan Otgonbayar, chairman of the commission, said at a briefing today. “So instead of increasing the price for citizens, we have decided to pass the biggest part of the cost increase to the mining companies.”

The cost of electricity at peak times will rise 30 percent from current rates, with the average price increase at 24.86 percent, said Sereejav Tsetsgee, the head of the ERC’s regulation department.

The new rates will go into effect on August 5, Tsetsgee said. The rates would not apply to mining companies that source electricity from outside the central grid. The Oyu Tolgoi copper-gold-silver mine is one such example as the mine -- 66 percent owned by Canada’s Turquoise Hill Resources Ltd. (TRQ) and 34 percent owned by the Mongolian government -- receives its electricity from China.

In addition to the rate increase on mining companies, businesses across the country will see their electricity rates rise by an average of 18.32 percent, Tsetsgee said.

Residential rates for apartments will remain at the current 79 tugrik ($0.0537 cents) per kilowatt hour up to 150kw of usage. If the usage exceeds 150kw the rate will increase to 96 tugrik, which could be an increase of up to 15 percent, Tsetsgee said.

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

To contact the editor responsible for this story: John Liu at jliu42@bloomberg.net

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