ULAN BATOR, July 19 Mongolia has lined up three
local firms to mine the West Tsankhi block of the giant Tavan
Tolgoi coal mine for a year, an executive at the state-owned
mining company said on Friday, as the country aims to boost coal
Mongolia is racing to start producing coal from the
long-delayed project as it is under pressure to plug a budget
gap and help pay down debt to Aluminium Corp of China (Chalco)
amid a sharp downturn in coal prices.
Delgersaikhan Tsagaan-Uvgun, head of mine planning and
technical coordination of state-owned Erdenes Tavan Tolgoi,
said the company has finalized a one-year contract for mining at
the 888 million-tonne West Tsankhi block to a consortium of
three local companies.
The Mongolian firms Khishig Arvin Industrial, Mera, and
Mongolian National Miner make up the Mongol Uurkhaichid group,
which means Mongolian Miners in English, and will together begin
work at the deposit this weekend.
The deposit is owned by Erdenes Tavan Tolgoi, which has
contracted out work at its East Tsankhi deposit to Australia's
Macmahon Holdings and Germany's BBM Operta.
The company said it expects to mine a total of 5-6 million
tonnes this year at the east block and 2 million tonnes at West
Erdenes Tavan Tolgoi owes Chalco $170 million, the
outstanding amount from a total debt of $350 million from an
off-take agreement it signed with Chalco in 2011 to be paid in
The company expects to repay the sum by December this year,
according to an interview with Chief Executive Yaichil Batsuuri
on the news website Business-Mongolia.com in June.
Chief Financial Officer Batdorj Enkhbat told Reuters that
the company was in talks to export coal to new international
markets, such as Japan or Korea, as the landlocked country looks
to ease its dependence on China.
Mongolia's massive neighbour consumes more than 90 percent
of all minerals produced in the country.
Erdenes Tavan Tolgoi has not yet given up on trying to come
up with a strategic agreement with international stakeholders to
develop the West Tsankhi block, but that plan has been held up
by political debate over foreign investment.
The Mongolian government backtracked on awarding rights to
West Tsankhi in 2011 to a consortium including Peabody Energy
and China's Shenhua Group after rival bidders
from Japan and South Korea branded the decision unfair.