Japan has joined South Korea in filing a complaint with Mongolia over the bidding process for part of its massive Tavan Tolgoi coal development project, as firms from both countries appear to have been excluded from the winners.
Mongolia this month said it had picked U.S. miner Peabody Energy, China’s Shenhua and a Russian Railway- Mongolia consortium out of six preferred bidders to develop the west Tsankhi deposit but later added the decision was not final.
Japanese and Korean firms were not mentioned in the announcement even though they are part of the consortium that includes Russian Railway. Instead the announcement says that Russian Railway is now part of a consortium with Mongolian firms but it is not clear what firms are being referred to.
Trading firm Mitsui & Co was also not mentioned although it is a partner with China’s Shenhua.
The complaint said Mongolia’s President Tsakhia Elbegdorj `in a visit last November called on Japan to help with the development of its resources, saying that bilateral partnerships in minerals development would be mutually beneficial.
“If it transpires that Japanese firms are not included in the winning camps, it would go against what the two governments have been working towards”, the complaint said. “It would be extremely regrettable.”
South Korea has called the bidding process “unclear and unfair.” Company sources also said that the four Japanese trading firms in the consortium with Russian Railways — Itochu Corp , Sumitomo Corp , Marubeni Corp and Sojitz Corp — have also jointly filed a complaint with Mongolia but have yet to get an official response, sources said.
The west Tsankhi block of Mongolia’s Tavan Tolgoi coal deposit holds approximately 1.2 billion tons of mostly high-priced coking coal which is used in steel making.