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Economy / Featured News / Mining / Mongolia News / December 4, 2014

Mongolia restarts international bidding for giant coal project as economy flags

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Mongolia has relaunched an international tender to develop its giant Tavan Tolgoi coal project as it tries to boost a flagging economy hit by falling commodity prices and a decline in foreign investment.

The latest attempt has drawn interest from Hong Kong-listed Mongolia Mining Corp (MMC), US-based Peabody Energy Corp and Japan’s Itochu Corp, despite weak global coal prices.

Tavan Tolgoi holds around 7.5 billion tons of coking coal, but Mongolia’s cash-strapped government has struggled to finance its development, and little progress has been made since an international bidding process collapsed in 2011.

MMC said on Monday that it has formed a consortium with “certain independent parties” to submit a bid for the project, which is located at a site around 300 kilometers from the Chinese border.

Interested firms had to notify the Mongolian government of their intention to bid for the block before Monday deadline, with a shortlist expected to be released by December 15, MMC said.

The firm declined to give further details of its bid, when contacted by Reuters.

Erdenes Tavan Tolgoi, the State-owned entity in charge of the project, could not be reached for comment by press time.

In 2011, the western block of the project was awarded to a consortium consisting of Peabody, a team of Russian and Mongolian firms, and the Shenhua Group, China’s biggest coal producer, but the result was annulled after rival bidders from Japan and South Korea branded the decision unfair.

Peabody spokesman Chris Curran said the firm would be “an active participant” in the current tender.

Itochu, which submitted a joint bid with Sumitomo, Marubeni and Sojitz in 2011, said it had also notified Mongolia that it was interested in getting involved.

South Korea’s Daewoo International and LG International, both part of a consortium bid in 2011, said they would not join.

China’s Shenhua was not available for comment.

Along with the Oyu Tolgoi copper mine, run by Rio Tinto, Tavan Tolgoi is seen as crucial to Mongolia’s efforts to convert its mineral wealth into economic gains, but both have been caught up in a debate about the role of foreign firms in the country’s development.

Mongolia’s new prime minister Chimed Saikhanbileg has identified Tavan Tolgoi as a priority to energize the country’s flagging economy.

SOURCE: Global Time




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