Shenhua hopes to restart talks on Tavantolgoi after Mongolian election
Shenhua Energy Co Ltd , China’s largest coal producer, expects its negotiations to invest in Mongolia’s giant Tavan Tolgoi coal mining project to restart after the country’s parliamentary elections in June, its CEO said on Monday.
“Because this year is Mongolia’s election year, I think we will restart our talks when the election is over,” Shenhua CEO Ling Wen told reporters at the company’s results briefing.
Shenhua is the most competitive bidder for the project given its technology, transport infrastructure, access to the Chinese market and the backing of the Chinese government, he said.
Shenhua chairman Zhang Xiwu added that the launch of a railway linking Inner Mongolia’s Baotou city with Mongolia later this year would give a further boost to Shenhua in the race for a piece of the project.
In July last year, the Mongolian cabinet said it would give Shenhua a 40 percent stake in Tavan Tolgoi’s western block and 24 percent to Peabody Energy Corp of the United States. The remaining 36 percent would be given to a Mongolian-Russian consortium led by Russian Railways.
But after bidders from Japan and South Korea branded the process unfair, the Mongolian government backpedaled and said nothing had been decided yet.
Political uncertainty ahead of Mongolia’s parliamentary elections in June has worried investors. Politicians in Mongolia are under constant pressure to be seen to getting a good deal for the country from resources investors.
The Tavan Tolgoi coal deposit in Mongolia’s south Gobi region has estimated reserves of 6 billion tonnes of coal, including the world’s largest untapped deposit of coking coal, used to make steel.
The western Tsankhi block holds about 1.2 billion tonnes of reserves, 65 percent of which is coking coal. It has an estimated production life of more than 30 years at 15 million tonnes a year.