Mongolia taps Shenhua to break China coal
Mongolia is reaching out to China's largest coal producer China Shenhua Energy in an effort to break a deadlock over the terms of a souring coal supply deal with another Chinese giant Aluminum Corp of China.
The growing squabble with China its largest trading partner, underscores ho swiftly changing political and public sentiment in Mongolia toward foreign investment. In the country's fledgling mining sector could throw into disarray the development Its Tavan Tolgoi deposit potentially the world's largest untapped coal reserve. Stat owned Erdenes Tavan Tolgoi JSC which owns the project has halted coal exports in a bid to renegotiate an agreement reached last July to sell coking coal to Muminum Corp of China also called Chalco. Mongolia ambassador Tsedeniav Sukhbaatartold the Wall Street Journal.
Mr. Sukhbaatarsaid that “Under the original terms of the deal Chalco lent Tavan Tolgoi USD 350 million to be repaid in coal but capped the commodity's price at USD 70 a tonnne. Chalco was just using a moment when the government badly needed funding to get a deal that was unacceptable in the sense of normal international trade."
He said that “New management team at Tavan Tolgoi appointed last fall by the freshly elected Mongolian government has repaid nearly o-thirds of the USD 350 million loan but now wants to redraw the contract to reflect fluctuating market prices for coal.”
Coking coal import prices have since reached around USD 190 per tonne according to the 52 Steel.com consultancy.
Source - www.marketwatch.com
The growing squabble with China its largest trading partner, underscores ho swiftly changing political and public sentiment in Mongolia toward foreign investment. In the country's fledgling mining sector could throw into disarray the development Its Tavan Tolgoi deposit potentially the world's largest untapped coal reserve. Stat owned Erdenes Tavan Tolgoi JSC which owns the project has halted coal exports in a bid to renegotiate an agreement reached last July to sell coking coal to Muminum Corp of China also called Chalco. Mongolia ambassador Tsedeniav Sukhbaatartold the Wall Street Journal.
Mr. Sukhbaatarsaid that “Under the original terms of the deal Chalco lent Tavan Tolgoi USD 350 million to be repaid in coal but capped the commodity's price at USD 70 a tonnne. Chalco was just using a moment when the government badly needed funding to get a deal that was unacceptable in the sense of normal international trade."
He said that “New management team at Tavan Tolgoi appointed last fall by the freshly elected Mongolian government has repaid nearly o-thirds of the USD 350 million loan but now wants to redraw the contract to reflect fluctuating market prices for coal.”
Coking coal import prices have since reached around USD 190 per tonne according to the 52 Steel.com consultancy.
Source - www.marketwatch.com
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