A group comprising Mongolia's Energy Resources, China Shenhua Energy and Sumitomo have won the right to develop one of Mongolia's largest metallurgical-coal deposits, beating a bid from US miner Peabody Energy.
Mongolia's government will retain full ownership of the Tavan Tolgoi deposit, according to a statement by the working group that oversaw the bidding.
Developing a mine may help to spur an economic recovery in Mongolia, where foreign direct investment has tumbled. Economic growth peaked at 17.5 per cent in 2011 before slowing to 7 per cent in the first nine months of this year.
"I see this as a breakthrough, but only as a part in a series of successive breakthroughs we'll need to meaningfully attract foreign investment again," said Munkhdul Badral, the head of market intelligence firm Cover Mongolia.
Tavan Tolgoi, about 240km north of the Chinese border, has 7.4 billion tonnes of coal reserves. Development of the mine stalled after 2011, when Mongolia rescinded an earlier decision to award the right to develop the project to a partnership between Peabody, China Shenhua and Russian Railways.
The latest winner is required to eventually produce 30 million tonnes of coal a year at Tavan Tolgoi and deliver into at least two export markets.
This article appeared in the South China Morning Post print edition as Mongolian coal mine bid seen boosting recovery