CASH-STRAPPED MONGOLIA PUTS GIANT COALMINE BACK IN PLAY

Recent attempts to develop the mine were stymied by nationalists in parliament worried about the involvement of foreign firms, but a financial crisis and a change of government in June have brought it back onto the agenda.

Slowing demand for coal and copper, Mongolia’s chief exports, and a plunge in foreign investment have left the world’s most sparsely populated sovereign country with soaring debts and a rapidly declining currency, forcing government to hike interest rates and slash spending.

Executives at Erdenes Tavan Tolgoi (ETT), the state firm in charge of the project, say they are now actively evaluating bids to revive the coal mine, one of the world’s most promising, with estimated coking coal reserves of 7.5 billion tonnes.

   

"Currently, we’re calculating the (potential) profits for Erdenes Tavan Tolgoi, and our lawyers are reviewing multiple proposals," said Samdandobji Ashidmunkh, chief economic development officer of the state firm in charge of the project.

"We are not ruling out any possibilities," he told Reuters on the sidelines of an investment conference in Ulaanbaatar. "If it’s profitable for Erdenes Tavan Tolgoi and beneficial for the Mongolian economy, we’re open to cooperate with anyone."

In 2014, the Hong Kong-listed Mongolian Mining Corp. (MMC) joined a consortium with Chinese state miner Shenhua Group and Japan’s Sumitomo Corp. to develop Tavan Tolgoi, but though the deal was blocked by parliament last year amid hostility from nationalist backbenchers, another executive said the parties remained ready to revive it.

"The consortium still holds together," said Gotov Battsengel, chief executive officer of Energy Resources, an MMC unit that already extracts coal from a mine on the western edge of Tavan Tolgoi.

   

"I believe the offer is still on the table," he told the conference.

A spokesman for Sumitomo declined to say whether there were any new developments, but added: "We believe our preferential negotiating rights are still valid."

Ashidmunkh of ETT said it was "too early" to say whether this particular consortium represented the best deal.

The Shenhua Group did not respond to questions on the subject, and Mongolia’s mining ministry did not immediately respond to requests for comment.

 

Source:http://www.reuters.com/article/mongolia-tavantolgoi-idUSL3N1BK3EL