Turquoise Hill announced that Oyu Tolgoi has received notification the Government of Mongolia (Government) has
canceled the Power Sector Cooperation Agreement (PSCA), which was signed in 2014. The Government’s cancellation,
under Section 1.3 of the PSCA, indicates that the Tavan Tolgoi power project is no longer a viable option.
In August 2014, the Government of Mongolia and Oyu Tolgoi signed the PSCA for the exploration of a Tavan Tolgoibased
independent power producer. The agreement provided a framework for long-term strategic cooperation between
the Mongolian Government and Oyu Tolgoi to deliver a comprehensive energy plan for the South Gobi region.
Participation in the PSCA met Oyu Tolgoi’s obligation in the 2009 Oyu Tolgoi Investment Agreement (Investment
Agreement) to establish a long-term power supply within Mongolia four years from the commencement of commercial
production. As a result of the Government’s cancellation, effective February 15, 2018 long-term power for Oyu Tolgoi
must be domestically sourced within four years.
Oyu Tolgoi, Turquoise Hill and Rio Tinto are committed to fulfilling all requirements under the Investment Agreement and
are continuing to evaluate all viable power options, including construction of an Oyu Tolgoi based power plant. A final
decision on the outcome, cost or financing of a permanent domestic power supply has not been concluded at this time.
The cost of a power solution for Oyu Tolgoi is not included in the Company’s $5.3 billion expansion capital project
estimate for the development of Hugo North Lift 1.
Domestically-sourced power for Oyu Tolgoi is addressed in Chapter Seven (Infrastructure) of the Investment Agreement.
Source: Turquoise Hill Resources