Mongolia President Tsakhia Elbegdorj set an end-of-year deadline to select companies to develop part of its biggest coal field, seeking to resolve a year-long battle for the resource between groups from five nations.
Peabody Energy Corp. (BTU) (BTU), OAO Russian Railways, and China’s Shenhua Group are among companies affected by stalled talks to develop the West Tsankhi area of the Tavan Tolgoi coal deposit, Elbegdorj said in his Ulan Bator office. Mongolia is due to get a new government by September at the latest and resolving the impasse will be among its top priorities, he said.
“We will push our government to negotiate with the interested parties within this year,” Elbegdorj said. “The process continues but it cannot continue indefinitely.”
The coal field would become the biggest foreign investment project in Mongolia after Rio Tinto Group’s (RIO) $6 billion Oyu Tolgoi copper mine. Picking the companies to develop West Tsankhi is also key to the planned $3 billion public offering of Mongolia’s state-run Erdenes TT, which holds the rights to the land and would receive royalty fees from the operation.
Mongolia first announced and then said it would review an accord in July that planned to give Shenhua Group a 40 percent stake in West Tsankhi, with Peabody taking 24 percent and a Russia-Mongolian group the rest. The government didn’t say who the Russia-Mongolia group included. Originally, Japanese traders Itochu Corp. (8001) and Sojitz Corp. (2768) and companies from South Korea bid as part of the group led by Russian Railways.