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Mongolia’s Tavan Tolgoi coal mine deal likely to stall, again

Southern Mongolia’s Tavan Tolgoi coal mine, one of the world’s largest undeveloped coal deposits–estimated to contain reserves in excess of 6 billion tonnes of high-quality coking coal used for steelmaking, has stalled digging again recently.

The likelihood of Mongolia’s parliament approving the $4 billion deal between the government and a consortium of companies–the Mongolian Mining Corp, China’s Shenhua Energy and Japan’s Sumitomo Corp to develop the mine, had fallen dramatically, said Mendsaikhan Enkhsaikhan, one of Mongolia’s lead negotiators on the deal.

In addition, China’s economic tumult throw the mine’s near-future into question. Coal accounts for over 35% of Mongolia’s exports and China is the destination of 89% of all Mongolian exports.

The deal might violate Mongolian laws, said Zandaakhuu Enkhbold, the speaker of parliament. Shortly after, the government agreed that the deal would need to be approved by the legislature.

In the first half of 2015, Mongolia earned $353.9 million from coal exports, a 30% decrease from the same period in 2014. The volume of coal exported also fell 22%. The reasons for the decline were the Chinese economy as well as new regulations in Mongolia making it “compulsory to carry coal by heavy transport road.”

source: http://en.sxcoal.com