Article re-post:
Mongolia gives Prophecy green light to build new coal power station
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By:
Matthew Hill
21st November 2011
Updated 7 hours ago
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TORONTO (miningweekly.com) – Prophecy Coal, the junior that graduated to the TSX main board last month, received the green light from the Mongolian government to build its 600 MW Chandgana coal-fired power plant in the east of the country, the company said on Monday.
The licence was the first the government had issued for that size power plant, and sets the project up to become the first new privately owned coal-fired plant in the country when it starts sending out electricity in early 2016.
Mongolia is seen as vulnerable when it comes to fuel and power, as it is heavily reliant on neighbours China and Russia.
A dramatic rise in its mining sector is the main driver of the country's rapidly increasing power consumption, with Energy International forecasting demand will be nearly double the country’s electricity supplies by 2015.
The International Monetary Fund predicted a 600 MW-plus shortfall in supply by 2016.
“There is an understanding among all stakeholders that Mongolia, being one of world's fastest growing economies, needs additional power,” Prophecy chairperson and CEO
John Lee said in a statement.
The next steps for the company before it can bring the project into production include completing a feasibility study, which it anticipates by the end of the year, to be followed by a power purchase agreement in the first quarter of 2012.
Prophecy then hopes to conclude project financing negotiations in the third quarter of next year and start building the Chandgana power plant and the mine that will feed it in the first quarter of 2013.
The first 150 MW unit is planned to start producing power by January 2016.
Prophecy’s Chandgana Tal and Chandgana Khavtgai coal deposits will supply coal for the plant.
Chris Ackerman, a spokesperson for the company, said the capital costs for the power project were anticipated to be between $600-million and $800-million, though the feasibility study would provide firm estimates.
“There has been a lot of interest from some of the State-owned companies in China and investment banks in the US” to provide funding for Chandgana, he said.
Last week, Ivanhoe Mines, which owns the giant Oyu Tolgoi copper-gold deposit in Mongolia said it hoped the Chinese and Mongolian governments would strike a deal for the former Soviet State to import power soon, so that it could connect the mine to Chinese power by the third quarter of next year.
The company has ordered more diesel generators to supply power while building Oyu Tolgoi, it said.
Ultimately, Prophecy aims to take advantage of surging power demand in the region, and build a second phase at Chandgana that will produce a further 3 600 MW.
In addition to the Chandgana project, Prophecy also owns the Ulaan Ovoo coal mine in the north of the country, where it plans to strike a deal to sell the coal to Russian customers.
Shares in the company were up nearly 2% on the TSX at C
.54 each, making it one of the few counters in the green while the broader market had fallen 1.4% by 15:04.
Edited by:
Creamer Media Reporter