Oyu Tolgoi seeks out local energy supplier

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Oyu Tolgoi LLC and Newcom Group’s joint venture Clean Energy Asia LLC have signed into an energy supply deal.

The joint venture, founded in 2012 between Newcom LLC and Japan’s SB Energy Corporation, put into operation a 25-megawatt wind farm in Tsogttsetsii soum in Umnugovi Province in 2017. The company told investors that it’s possible to expand the wind farm’s capacity by another 250 megawatts.

Clean Energy Asia has proposed to supply a kilowatt per hour for eight cents to Oyu Tolgoi. If the mining company accepts the offer, Clean Energy Asia plans to draw in investment to expand the wind farm.

Oyu Tolgoi currently buys a kilowatt per hour for around 11 cents from Inner Mongolia. The company buys energy worth approximately 200 million USD a year. Clean Energy Asia isn’t the only company that tried to dig its claws into this prospective client. In the past, Japan’s Marubeni Corporation initiated a project to build a high-capacity power station adjacent to the Tavan Tolgoi coal mine and supply energy to Oyu Tolgoi. The Japanese side was willing to sell electricity for 14 cents per kilowatt/ hour, according to an inside source. However, the high price made it easy for the mining company to reject the deal.

Under its investment agreement, Oyu Tolgoi is obligated to procure energy from Mongolia. Minister of Energy Ts.Davaasuren revoked Oyu Tolgoi’s cooperation agreement with the energy sector in the southern region, which had temporarily relieved the company from the said obligation in 2018. The miner is faced with the need to find a local energy supplier by 2022.

Dulguun Bayarsaikhan