Mongolia May Unveil Winning Bids for Tavan Tolgoi Next Month

Mongolia may announce the winning bids to develop Tavan Tolgoi, one of the world’s biggest untapped coal deposits, next month, said an official at the Ministry of Mineral Resources and Energy.

“Negotiations are still ongoing,” Erdenepurev Amarkhuu, director-general of fuel policy at the ministry, told reporters in Beijing today. Mongolia will choose more than one of the six groups shortlisted for the project, he said.

Talks are underway on the contract for the central and western part of the site, Baterdene Ragchaa, a spokesman for Erdenes MGL LLC, the state-controlled owner of the deposit, said on March 31. The shortlist includes Peabody Energy Corp. (BTU), a Shenhua Group Corp.-Mitsui & Co. venture, Vale SA (VALE3), a Russia- Japan-South Korea group, ArcelorMittal (MT), and Xstrata Plc (XTA), Erdene Executive Director Baasangombo Enebish said on March 5.

“Definitely not one,” Amarkhuu said, when asked about the number of winners. “It’ll be a combination of the companies.”

The government is seeking mining expertise and infrastructure development, including railway construction, Amarkhuu said. Mongolia is also targeting “value-added production” including coal-to-liquid and coal-to-gas projects, he said.

The western and central part of Tavan Tolgoi holds more than 1 billion metric tons of coal, 68 percent of which can be used for steelmaking and the rest as fuel in power plants, Enebish said in March.
Local Staffing

The government hopes 90 percent of the employees at Tavan Tolgoi will be locals, Amarkhuu said.

“It’s difficult because it heavily depends on qualified personnel,” he said. “We should think of whether Mongolia has sufficient qualified personnel.”

Foreign companies can bring in their own staff while training locals “as fast as possible” and replacing the workforce with Mongolians after that, Amarkhuu said.

Coal production doubled to 25 million tons to become Mongolia’s top export last year, encouraging the government to speed up Tavan Tolgoi’s development.

--Chua Baizhen. Editors: Ryan Woo, John Chacko.

To contact the reporter on this story: Bloomberg News in Beijing at bchua14@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net.

Source:Bloomberg News Service