The Standing Committee on Economy’s meeting in parliament on Wednesday heard about the implementation of the 39th decree on the development of Tavan Tolgoi coal deposit that passed through parliament in 2010.
The operations of Erdenes Tavan Tolgoi LLC have come to a stand-still due to financial restraints. Erdenes TT signed a 350 million US dollar coal export deal with the Aluminum Corporation of China Limited (CHALCO). Erdenes TT already took the money in advance to start operations at Tavan Tolgoi. As Erdenes TT LLC is state owned it contributed much of that 350 million US dollars to the Human Development Fund of Mongolia in 2011-2012.
Erdenes TT LLC started operations only with 170 million US dollars and the operating became critical from last August. Erdenes TT LLC even took a 100 million US dollar loans from the Development Bank to keep operations running, but the company is asking for a financial bailout from the Government because again it is experiencing financial difficulties.
The 200 million US dollar bailout from the Development Bank of Mongolia is in the discussion stages. Erdenes TT LLC says that this amount of bailout finances will help the company to get over its financial difficulties and enable them to distributing the 1,072 shares of Tavan Tolgoi to each citizen of Mongolia.
The company expects it will distribute the shares in 2016.
According to a deal that the former Government signed with CHALCO, Erdenes TT LLC sells high quality coking coal for 70 US dollar per ton to China. But the deal causes loss to the company. Therefore Erdenes TT LLC is trying to re-negotiate with China over the deal.