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Wärtsilä signs ten-year service agreement for 170 MW power plant at PNG mine

Technology group Wärtsilä has signed a ten-year tailored guaranteed asset performance agreement covering power plant maintenance and operations advisory services for Newcrest Mining’s Lihir gold mine.

The mine is located on Lihir Island in Papua New Guinea.

The agreement has shared business case incentives, based on key performance indicators (KPIs), which reduce operational cost and enhance power availability, supporting the mine’s production targets.

The ten-year agreement, worth over €150-million, was signed in October and it is targeted to take effect from the end of the first quarter this year.

The expected revenues for 24 months, about €20-million, have been included in Wärtsilä’s order book for the fourth quarter of 2020.

The 170 MW power plant provides a critical electricity supply to run the operations of the mine, Wärtsilä noted.

The incentivised KPIs are slated to lead to an increase in revenue and a reduction in operational cost.

Moreover, the partnership enables Newcrest to focus on gold production at Lihir, while Wärtsilä takes care of optimising the power plant performance. The agreement will also provide the customer with maintenance and parts cost predictability, including a reduction in working capital.

The agreement includes full technical support, real-time monitoring of the equipment from Wärtsilä’s Expertise Centres, condition-based maintenance and asset diagnostic reporting, operational advisory support, as well as all planned and unplanned maintenance of the generator sets and auxiliaries.

The agreement KPIs with shared incentives are based on fuel and oil consumption and power availability. The KPIs can be adjusted by mutual agreement during the agreement period, should the market change.

The total installed base of Wärtsilä’s power generating equipment in a number of projects in Papua New Guinea is 381 MW, of which 170 MW has been supplying power to Lihir Gold.

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