D.SUGAR: There is no reason to exclude Japan and South Korea from the bid
Translated by Kh.KHALIUN UB Post interviewed the State Property Committee chairman D.Sugar. He is the chairman of “Erdenes MGL”, “ErdenesTavantolgoi and a member of government workgroup; which is responsible for the developer’s bid over west Thanhi, Tavan Tolgoi.
-How is the investors’ bidding over the Tavan Tolgoi process going? When do you plan to send the proposal of the contract to the State Great Khural?
-Tavan Tolgoi’s resources are located mainly in two sites, which are the east and west of Tsanhi. The State Great Khural assigned Erdenes MGL as the developer of east Tsanhi. At the moment, we are working on the process of choosing the developer of the west Tanhi. During the process there have been various issues, however we’re hoping to finish it before October, 2011.
-What was the reason to exclude Japan and South Korea from the bid? The governments of the two countries complained for the lack of announcement from the Mongolian side?
-Let me clarify a few points here. First of all, the bidding over west Tsanhi of Tavan Tilgoi hasn’t fi nished yet. The Cabinet assigned the State Property Committee to make changes according to recommendations from the National Security Council of Mongolia (NSCM). Once we receive the recommendations from NSCM, the Committee will proceed and send the proposal back to the State Great Khural. Secondly, there are consortiums with America’s Peabody Energy, China’s Shenhua and Japanese trading fi rm Mitsui & Co, and a consortium with Russian Railways, Japan and Korea. During the organisation process our people mistakenly sent out invitations about the announcement only to the major decision makers from each consortium. As a result, Japan and Korea presumed that they were excluded from the bid.
-So, does this mean that Japan and Korea are still in the bid?
-I can tell you my personal point of view but I believe that the PM shares similar opinions on this issue. There are no particular reasons to exclude Japan and South Korea from the bid. However, both Japanese and Korean companies disappointed us. Previously we all agreed that the best success will come from a combination of Japan’s high technology Mongolia’s natural resources. Unfortunately, later on they refused our proposal for new technologies and said that their intentions are limited to only buying coal
-But I believe the Mongolian consortium was absent in the fi rst round of the bid. When did the Mongolian and Russian consortium enter?
There are three consortiums which are offi cial and it is true that the Mongolian consortium is not there. But the State Great Khural’s 39th Act states that it is legally possible for a Mongolian company to enter the bid, hence the Cabinet will decide which company will represent. At the moment I don’t know whether it will be Erdenes MGL or a different company. Moreover, it is not illegal to have four companies in the bid. There has been misunderstanding in the media; in reality, a coalition of Mongolia and Russia does not mean that Japan and South Korea were excluded. Nevertheless, it is important to understand that Mongolia did not eliminate Japan or South Korea from our political and economy partner countries.
-Has the Cabinet chosen the Mongolian company to enter the bid?
As I said before, the Cabinet hasn’t decided yet. It could be anyone; Mongolia may race independently as the fourth consortium or it might form a partnership with one of the existing three consortiums. It is crucial to come to an understanding with the international partner companies fi rst; internal affairs can be decided later. At the moment, we have offers from the following consortiums to enter the bid as partners. Firstly, China is prepared to consume the left over coal after the usage of high-priced coking coal. However, this non-coking coal forms almost 40 percent of the total resource. Secondly, they said we can transport our high-priced coking coal via Chinese land and lastly, Shenhua is one of the world’s best mining companies therefore China is requesting 51 percent of the shares of Tavan Tolgoi. Russia is prepared to take care of Mongolia’s railway development in the future and let us transport our produced coal using their border points. The Russians also want a 51 percent share. On the other hand, Peabody states that they should hold 51 percent of the shares, because their reputation as a safe and responsible mining company will bring advantages for Mongolia. Additionally, Mongolia will benefi t from Peabody’s distribution channels when exporting their coal. As you can see we have 153 percent offers from the world’s largest companies to consider and this is not a simple task.
-How is the investors’ bidding over the Tavan Tolgoi process going? When do you plan to send the proposal of the contract to the State Great Khural?
-Tavan Tolgoi’s resources are located mainly in two sites, which are the east and west of Tsanhi. The State Great Khural assigned Erdenes MGL as the developer of east Tsanhi. At the moment, we are working on the process of choosing the developer of the west Tanhi. During the process there have been various issues, however we’re hoping to finish it before October, 2011.
-What was the reason to exclude Japan and South Korea from the bid? The governments of the two countries complained for the lack of announcement from the Mongolian side?
-Let me clarify a few points here. First of all, the bidding over west Tsanhi of Tavan Tilgoi hasn’t fi nished yet. The Cabinet assigned the State Property Committee to make changes according to recommendations from the National Security Council of Mongolia (NSCM). Once we receive the recommendations from NSCM, the Committee will proceed and send the proposal back to the State Great Khural. Secondly, there are consortiums with America’s Peabody Energy, China’s Shenhua and Japanese trading fi rm Mitsui & Co, and a consortium with Russian Railways, Japan and Korea. During the organisation process our people mistakenly sent out invitations about the announcement only to the major decision makers from each consortium. As a result, Japan and Korea presumed that they were excluded from the bid.
-So, does this mean that Japan and Korea are still in the bid?
-I can tell you my personal point of view but I believe that the PM shares similar opinions on this issue. There are no particular reasons to exclude Japan and South Korea from the bid. However, both Japanese and Korean companies disappointed us. Previously we all agreed that the best success will come from a combination of Japan’s high technology Mongolia’s natural resources. Unfortunately, later on they refused our proposal for new technologies and said that their intentions are limited to only buying coal
-But I believe the Mongolian consortium was absent in the fi rst round of the bid. When did the Mongolian and Russian consortium enter?
There are three consortiums which are offi cial and it is true that the Mongolian consortium is not there. But the State Great Khural’s 39th Act states that it is legally possible for a Mongolian company to enter the bid, hence the Cabinet will decide which company will represent. At the moment I don’t know whether it will be Erdenes MGL or a different company. Moreover, it is not illegal to have four companies in the bid. There has been misunderstanding in the media; in reality, a coalition of Mongolia and Russia does not mean that Japan and South Korea were excluded. Nevertheless, it is important to understand that Mongolia did not eliminate Japan or South Korea from our political and economy partner countries.
-Has the Cabinet chosen the Mongolian company to enter the bid?
As I said before, the Cabinet hasn’t decided yet. It could be anyone; Mongolia may race independently as the fourth consortium or it might form a partnership with one of the existing three consortiums. It is crucial to come to an understanding with the international partner companies fi rst; internal affairs can be decided later. At the moment, we have offers from the following consortiums to enter the bid as partners. Firstly, China is prepared to consume the left over coal after the usage of high-priced coking coal. However, this non-coking coal forms almost 40 percent of the total resource. Secondly, they said we can transport our high-priced coking coal via Chinese land and lastly, Shenhua is one of the world’s best mining companies therefore China is requesting 51 percent of the shares of Tavan Tolgoi. Russia is prepared to take care of Mongolia’s railway development in the future and let us transport our produced coal using their border points. The Russians also want a 51 percent share. On the other hand, Peabody states that they should hold 51 percent of the shares, because their reputation as a safe and responsible mining company will bring advantages for Mongolia. Additionally, Mongolia will benefi t from Peabody’s distribution channels when exporting their coal. As you can see we have 153 percent offers from the world’s largest companies to consider and this is not a simple task.
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