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Oyu Tolgoi Gets Power Agreement With China


Oyu Tolgoi owner Turquoise Hill - formerly Ivanhoe Mines and now owned by Rio - said on Monday it had signed a power purchase agreement with state-owned Inner Mongolia Power Corp, and also agreed to meet the project's power requirements from within Mongolia four years after production begins.

"This is a key positive for the project, with the power contract the only major ... item outstanding before the ramp-up can commence, laying to rest market concerns that failure to conclude negotiations quickly could delay the project," JP Morgan analysts said in a note.

This important if you are, as I am, a big advocate and investor in Mongolia. There was concern that Rio Tinto would be delayed with commissioning of the mine if they did not get this deal. Getting this mine up and running and getting revenue flowing will in my view begin to allay some of the nervousness that investors have recently been dealing with regarding Mongolia. The MSE has sold off over 20% in the last few months but in my view this news could potentially provide a bottom.