Prophecy Coal Corp expects to raise $800 million in debt and equity financing by September to build a coal-fired 600-megawatt power plant in Mongolia, and expects to conclude a power purchase agreement with the Mongolian government by May.The price is expected to be slightly less than what the Government currently pays for importing electricity from Russia, said Joseph Li, a director and chief operating officer of Toronto-listed Prophecy Coal.The agreement is expected to last at least 25 years.
The power will be initially sold to Mongolia. “Electricity demand in Mongolia is expected to grow very quickly,” said Li in an interview in Singapore.The power plant will be built next to and fuelled by Coal Prophecy’s Changdana coal deposit, which has an estimated 140 million tonnes of coal.An engineering, procurement and construction (EPC) contractor will be selected from a group of six bidders by May.
The contractor will be responsible for building and operating the plant, and will also make an equity investment that will result in a 50 or 51 percent stake in the project.Construction is expected to start in early 2013, with the first 150 MW of the plant due to start operations in September 2015.Another 150 MW will be added every 6 months thereafter in three phases until the 600 MW of full capacity is reached.