ULAN BATOR May 3 Mongolia's Erdenes Tavan
Tolgoi has launched a tender for a one-year contract to mine the
western Tsankhi block of the giant Tavan Tolgoi coal field, a
top executive of the state-owned company said on Friday.
Mongolia needs to kickstart the long-delayed project as it
is under pressure to boost mine production and revenue to plug a
budget gap and stave off a credit downgrade amid a sharp
downturn in commodity prices.
It is also trying to attract foreign investors who have been
scared away over the past year by regulatory changes and a
dispute over the agreement governing the massive Oyu Tolgoi
Bids for the western Tsankhi mining contract are due on May
31, Chief Financial Officer Batdorj Enkhbat told Reuters.
The development of the western block would add 888 million
tonnes of reserves to the Tavan Tolgoi mine, bringing the total
current exploitable reserves to 1.8 billion tonnes, he has
Rights to western Tsankhi have long been coveted by major
foreign mining companies, including U.S. coal miner Peabody
Energy and China's Shenhua Group, who were
part of a consortium that won a bid to invest in the block in
The Mongolian government backtracked on awarding those
rights after other bidders from Japan and South Korea branded
the decision unfair.
The current tender is only for a mining contract, similar to
Leighton Holdings' contract to run the Ukhaa Khudag
mine owned by Mongolian Mining Corp, next to Tavan
Peabody Energy has been in talks with the Mongolian
government about developing the mine, after being asked last
year to draw up logistic and infrastructure plans for the block.
Leighton declined to comment on whether it would bid for the
western Tsankhi contract.
The World Bank this week cut its forecast for Mongolia's GDP
growth in 2013 to 13 percent from 16.2 percent, reflecting what
it called "the recent trends of negative export growth, sharply
weakening FDI (foreign direct investment) inflow and (the)
slower pace of Chinese economic recovery in the first quarter".
Standard & Poor's revised its rating outlook on Mongolia to
negative from stable in April, saying there was more than a
one-in-three chance it would cut its BB- long term and B
short-term sovereign credit ratings within six to 18 months.