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Foreign coal mining companies have been given encouraging news as an announcement was made that Mongolia’s state run coal company will begin to produce coal from a block of the country’s giant Tavan Tolgoi mine. The new production from the mine may open up the way for foreign firms, such as Peabody Energy from the US and Shenhua Group of China, to become a part of the long-delayed 7.5 billion tonne project.
Batdorj Enkhbat, the CFO of Erdenes-Tavan Tolgoi (E-TT), the company that is in charge of the mine, has stated that coal extraction will begin at the western Tsankhi block by April, although he could not say whether foreign partners would be accepted, stating that, “we don't yet know the answer to the question.”
The mine, situated near to the Chinese border, has been delayed repeatedly due to multiple financing problems, bureaucratic hold-ups, and political opposition to initial plans to the inclusion of foreign investors.
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Two years ago in 2011 both Peabody and Shenhua were named as part of a consortium that was given the rights to develop the western block of Tavan Tolgoi, but the government had to rescind its offer after bidders from Japan and South Korea complained that the decision was unfair.
The fates have smiled on Peabody once more as last year it was asked to draw up logistic and infrastructure plans for the block with a view to becoming the contractor for the mine ahead of a new bidding auction. Then last month it was offered an official contract by E-TT, although it has yet to decide whether or not to accept.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com