Mitsui,Shenhua tie up for Mongolia coalfield bid-Nikkei

Sept 14 (Reuters) - Japanese trading house Mitsui & Co (8031.T: Quote) will team up with the world's largest coal producer Shenhua Group Corp to bid for development rights to Mongolia's Tavan Tolgoi coalfield, the Nikkei business daily reported.

Chinese Premier Wen Jiabao has also pledged a total of 500 million yuan to the Mongolian government, in the form of both aid and loans, but the Mongolian government is believed to be cautious about falling under the economic control of China, the business daily reported.

Brisk economic growth in emerging markets has fueled global demand for coal, setting off a race to secure production sources, the newspaper said.

China-based Shenhua has decided to extend its private railway network to Mongolian border to provide a coal transport route, the daily said.

The collaboration with Mitsui will mitigate the fear and will give Shenhua, the world's largest coal producer, an edge in winning the mining project, which is said to be one of the largest in the world, the daily said.

For Mitsui, which hopes to tap Shenhua's coal mining know-how, the tie-up would provide an opportunity to increase its mine concessions, the Nikkei report said.

However, Mitsui and Shenhua are likely to face a stiff competition from other bidders from the U.S., Japan, India, Russia and South Korea, according to the report. (Reporting by Swati Chitnis in Bangalore; Editing by Prem Udayabhanu)

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