Rio has sourced power for Oyu Tolgoi from nearby China through the first six years of mining at the site, but in 2018 the Mongolian government demanded Rio build a domestic power solution ahead of a multibillion-dollar expansion of the copper mine.
Rio copper boss Arnaud Soirat warned in November 2018 that a new power station for Oyu Tolgoi would take six years to build if the Mongolian government insisted it be built at the Tavan Tolgoi coalfields, which are about 150 kilometres from the copper mine.
Within seven weeks of Mr Soirat's warning, Rio and its subsidiaries had given up hopes of building a power station at the mine site, and pledged to build one at Tavan Tolgoi by June 30, 2023; a construction period of four-and-half years.
But the Rio subsidiary that owns the mine, Turquoise Hill Resources, indicated on Tuesday that the power station would be delivered about a year late.
''The current schedule targets two units ... to be operational by June 2024,'' the company said in a market filing that appeared to vindicate Mr Soirat's 2018 warning.
Turquoise Hill said several project milestones articulated in the December 2018 power agreement with the Mongolian government had been missed.
The missed milestones and apparent delays come after Rio conceded last July that expansion of the mine would be delivered between 16 months and 30 months later than planned when the expansion was approved in 2015.
That delay added to existing delays on the project, with Rio saying in 2012 that it expected the underground expansion to be delivered in 2015.
The underground expansion, considered one of the world's best copper projects, is now expected to begin producing copper and gold some time between May 2022 and June 2023.
While challenges with geology and project delivery have contributed to the delays and multibillion-dollar cost blowouts, frequent flare-ups in the relationship between Rio and the Mongolian government have been by far the biggest source of delay to the Oyu Tolgoi expansion.
The power station delays create yet another source of tension for that fractious relationship, with Turquoise Hill saying it would now enter negotiations with the government in the hope of finding ''mutually acceptable'' alternative sources of power.
In the meantime, power for the mine is expected to be imported from China.
Rio said in 2015 that expansion of Oyu Tolgoi would cost $US5.3 billion, but in 2019 it said the cost would be between $US6.5 billion and $US7.2 billion, and those sums do not include the cost of the power station.
Rio hopes that renewable energy can provide some of Oyu Tolgoi's power, and the company announced this week it would spend $US98 million building solar power generation and battery storage at its Koodaideri mine in Western Australia.
The Oyu Tolgoi power station is expected to have a generating capacity of 300 megawat context, EnergyAustralia's Yallourn coal-fired power station in Victoria has a generating capacity of 1480 megawatts, with that capacity provided by four units which each boast between 350 megawatts and 375 megawatts of generation capacity.
Source:https://www.afr.com/
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