Mongolian Mining in Bid to Operate at Tavan Tolgoi Coal Deposit

Energy Resources LLC, a unit of Hong Kong-listed Mongolian Mining Corp. (975), has formed a consortium to bid to develop mines in the Tavan Tolgoi coal basin.
Tavan Tolgoi is Mongolia’s largest coking coal deposit with 7.4 billion metric tons. Fully developing the reserve has remained out of reach since a botched tender in 2011, which saw the Mongolian government rescind an agreement that would have allowed Peabody Energy Corp. (BTU:US), China Shenhua Energy Co. (1088) and OAO Russian Railways to operate the mine.
The new tender to develop the basin’s West and East Tsankhi blocks was announced in August, and a winner is expected to be declared by Dec. 15, according to a statement by Mongolian Mining to the Hong Kong Stock Exchange yesterday. The blocks are held by state-owned Erdenes Tavan Tolgoi JSC.
MMC, which already mines coal at another site in the basin, didn’t identify its partners.
Erdenes TT has found it difficult to develop the deposit and market the coal on its own. Suspensions have occurred due to disputes with Chinese coal buyers as well as Australia’s Macmahon Holdings Ltd. (MAH), the company’s main contractor for the site. Erdenes TT and Macmahon are currently in a standstill agreement as they negotiate over payments.
Former Cabinet Secretary Saikhanbileg Chimed, now the country’s prime minister after a political shake up last month, was in charge of overseeing the new tender.

Source:Bloomberg
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