Mining Journal > Exploration & Development > Mongolia to hire contractor for Tavan Tolgoi

Exploration & Development

Mongolia, where mines and quarries account for about 60% of industrial output, plans to start talks to select a contractor to develop the Tavan Tolgoi coal project, the mineral resources minister said.

“Our preferred option is now to negotiate a contract agreement to develop the project,” Minister of Mineral Resources and Energy Dashdorj Zorigt said by phone today. “We have been given a directive by the prime minister.” He didn’t elaborate on what a contract agreement would entail.

Tavan Tolgoi, which has reserves of 6,500Mt of metallurgical coal used in steelmaking, may be the world’s biggest untapped deposit of its kind, the Business Council of Mongolia said in January 2009.

The Mongolia government in October said it planned to choose a partner for the US$2 billion project by the end of 2009. The nation cancelled an auction to sell a 49% stake in Tavan Tolgoi, Reuters reported yesterday.

“The new prime minister is more commercially minded and wants to retain full control of the resources,” Alisher Djumanov, managing partner at Singapore-based Eurasia Capital Management, said today. “This apparent U-turn shows decision makers in Mongolia are leaning more that way.”

Zorigt neither confirmed nor denied the government has cancelled plans to sell a stake. The government wants to end talks by March or April and will be in contact with interested parties soon, he said.

In December 2007 the Mongolian government claimed control of the Tavan Tolgoi project, which BHP Billiton, Peabody Energy Corp and China Shenhua Energy Co had been in talks to develop.

Shenhua said last March it was among 10 bidders for the project. Shenhua’s Beijing-based spokesman Huang Qing declined to comment on the situation today.

Feb 5 (Bloomberg)