Tengrinews TV Радио Tengri FM Радио Жұлдыз FM Laws of Kazakhstan
Write us +7 (727) 388 8020 +7 (717) 254 2710
искать через Tengrinews.kz
искать через Google
искать через Yandex
USD / KZT - 331.42
EUR / KZT - 355.75
CNY / KZT - 48.35
RUB / KZT - 5.58

Foreign firms aim to win big on Mongolia coal mine

14 april 2011, 23:36
Mongolia is pushing forward with plans to develop a massive coal deposit in the Gobi desert, narrowing the field of foreign miners hoping to get a piece of the potentially lucrative action, AFP reports.

Ulan Bator has shortlisted several major foreign firms to develop part of the Tavan Tolgoi mine, one of the world's largest coal fields with 6.4 billion tonnes of reserves located 270 kilometres (165 miles) from the China border.

Authorities are hoping the nascent mining industry -- and the deep-pocketed foreign firms interested in it -- can help pull thousands of people out of poverty in the mineral-rich but still undeveloped Asian country.

"It’s an exciting time. It’s like being in the beginning of the gold rush in the Yukon in Canada," industry analyst Gerard McCloskey told AFP last week on the sidelines of a coal conference in the capital.

The government will announce the results of the bidding on the mine "as soon as possible, certainly this year", Tsogt Tsenguun, head of investment at state-run Erdenes MGL LCC, the parent of Erdenes Tavan Tolgoi (ETT), told AFP.

ETT owns the rights to mine the Tsenkhi block of Tavan Tolgoi, which contains 2.2 billion tonnes of coal. It will be developed by a number of companies working in conjunction with the government.

US coal miner Peabody Energy, Brazil's Vale and steel giant ArcelorMittal are among six preferred bidders to develop the western portion of Tsenkhi, which contains mostly coking coal -- a key ingredient for steel production.

The others in contention are Anglo-Swiss group Xstrata, a joint venture between China's Shenhua and Japan's Mitsui, and a consortium of Russian, South Korean and Japanese companies.

Damjin Damba, president of the Mongolian National Mining Association, said it was "possible that more than one of the mining companies would be selected".

"Choosing more than one is the best at the moment," he told AFP.

ETT will retain full ownership of the eastern portion of Tsenkhi and will hire a contract miner to get the coal out of the ground.

An initial public offering of ETT slated for early next year is expected to raise up to $2 billion and includes a plan to distribute shares to every Mongolian.

"The distribution of shares is a good idea for Mongolia," Bold Baatar, chief executive of investment firm Newcom Group, told the coal conference.

"Mongolians like to share and we intend to share the wealth among all Mongolians. From an economic point of view, it makes sense when you have thousands of shareholders standing behind you."

The IPO is a landmark deal for the impoverished country. Money raised will be used to develop the mine, coal washing plants, power stations and rail links to take the minerals to overseas markets -- creating huge job opportunities.

The government of landlocked Mongolia is currently considering proposals to build a 1,000-kilometre rail line to shuttle Tavan Tolgoi coal to the Russian rail system and its ports in the far east of the country.

That could open up access to markets in Japan, South Korea and Taiwan, leaving Ulan Bator less dependent on resource-hungry China.

Add comment
Most Read
Most Discussed