Peabody Energy Corp. (BTU) and a group consisting of Energy Resources LLC (975), China Shenhua Energy Co. (1088), and Sumitomo Corp. (8053) are the two remaining bidders for a contract to develop Tavan Tolgoi, one of Mongolia’s largest coking coal deposits.
Proposals will be opened tomorrow at 10 a.m. local time in Ulaanbaatar, Lkhagvasuren Ochir, director of the investment planning and economic department at Erdenes Tavan Tolgoi JSC, the state-owned company that controls the mine, said in a phone interview today.
Tavan Tolgoi, about 240 kilometers (149 miles) north of the Chinese border, holds 7.4 billion tons of coal used to make steel. Developing the mine has stalled since a botched tender in 2011 that saw the Mongolian government rescind an agreement that would have allowed Peabody, China Shenhua and OAO Russian Railways to operate the mine.
Companies are bidding to invest in the east and west Tsankhi blocks of the Tavan Tolgoi coal field, both controlled by Erdenes Tavan Tolgoi. The winner must eventually produce 30 million tons of coal a year and deliver it to at least two coal markets, Lkhagvasuren said.
Former Prime Minister Enkhsaikhan Mendsaikhan is leading the main working group studying the proposals. The working group will choose the winning bid “as soon as possible,” Lkhagvasuren said.
Japan-based Itochu Corp., Sojitz Corp., and Mitsui & Co. expressed interest in delivering Mongolian coal to international markets, Lkhagvasuren said.
Energy Resources, a unit of Hong Kong-listed Mongolia Mining Corp., already mines coal at another site in the Tavan Tolgoi coal basin.
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