Mongolia's largest coal mine development restart

Mongolia and foreign companies reopened negotiations on the development of the Tavan Tolgoi coal mine. This new trend, a preliminary agreement from the China Shenhua Group to develop shares in the above-mentioned coal mines, was rejected by the Mongolian National Security Council. It was less than a month.

Reopening negotiations this month According to a report from the Wall Street Journal reported on October 8th, the Russian and South Korean companies will attend negotiations on developing the Tabine Tolgoi coal mine in the month. According to a previous analysis, due to the fact that Japanese and Korean companies were excluded from the above-mentioned mine mining transactions in July this year, they caused dissatisfaction and lobbying between the two countries, resulting in the failure of China Shenhua’s share purchase agreement.

The Russian News Agency reported that an official Mongolian spokesperson told the Wall Street Journal reporter: “We need to consider not only the interests of Russia, China, and the United States but also Japan and South Korea.”

According to analysis, after the negotiations on the development of the Tabine Tolgoi coal mine were restarted, it may take several months for the participating parties to negotiate the terms of the contract. However, the report of RussiaNews.com did not mention whether the three countries of China, Russia, and the United States will participate in the competition again.

The Tabine Tolgoi coal mine is the largest undeveloped coal mine in the world with reserves of about 6 billion tons, of which the coal resources in the western Tsankhi block amount to 1.2 billion tons, 65% is coking coal, and the annual production capacity can reach 15 million tons. It is expected to be exploitable for more than 30 years. The project is about 270 kilometers from the Chinese border.

According to the Mongolian government's draft submitted to the Mongolian parliament on July 5th, China Shenhua won a 40% stake in the Tabine Tolgoi mining area, which was held by a consortium of Russian and Mongolian companies. There is a 36% interest in the project, and Peabody Energy Corp will hold the remaining 24% equity.

However, just over two months later, on September 19, Xinhua Overseas Finance quoted a spokesman for Mongolian President S. Batzaya stated on the 17th that the preliminary agreement between China Shenhua Group and the development of the Taben Tolgoi coal mine was rejected by the Mongolian Committee. The Mongolian Council consists of the President, the Prime Minister and the President of the country. At the time, Batzaya did not explain why the Mongolian Communist Party rejected the decision.

The Xinhua Overseas Financial Report stated that due to the failure of Japanese and Korean companies to obtain any rights in the coal mine, after the above-mentioned draft decision was announced in Mongolia in July, Japanese and South Korean officials immediately expressed their dissatisfaction and stated that the bidding process was unfair. Since then, Mongolian officials said that the decision has not yet been finalized. Previously, Shenhua and Mitsui’s products formed a consortium, but Mitsui’s property was lost in the bid.

Kyodo News reported on August 21st that the Japanese Liberal Democratic Party’s "Japan-Mongolia Friendship Promotion Council of Parliamentarians" (Wujibe Qinqin, who served as the Director-General of the Japanese Liberal Democratic Party in 2006) visited Ulaanbaatar, the capital of Mongolia, on the 20th. He held talks with the country’s President Elbegdorj. Wu Wuqing asked Meng to take care of Japanese companies during the retrial process.

Reuters quoted a statement from the South Korean energy sector, saying that “while we are still negotiating, the Mongolian government has announced that the three parties have been elected in a one-sided manner without consulting the participants.”

On September 19, Xinhua Overseas Finance reported that a Ulaanbaatar analyst familiar with the situation disclosed to AFP that the reason behind the China Shenhua share-sharing agreement may be to pull votes. He said that Mongolian officials are very clear that if they make choices that can bring more benefits to the public, they will be regarded as patriotic decisions.

On October 8th, the report of RussiaNewNet predicted that all agreements related to the development of the Tabine Tolgoi coal mine should be signed before the election of the Mongolian parliament in June 2012. This is the main task.