Mongolia’s Tavan Tolgoi Coal Field Deadline Delayed to Mid-2013

Mongolia may delay the selection of companies to develop part of the nation’s biggest coal field to the middle of 2013 from the end of this year, a government mining official said.

Bidders for the West Tsankhi area of the Tavan Tolgoi deposit “have proposed very attractive offers and the government will discuss with each of them in detail and decide which offer has higher value,” Nemekhbayar Enkhbayar, head of the economy, finance and investment division in the Ministry of Mines, said in an interview in Hong Kong today. “We have to take the geographical situation into account and Chinese companies have big advantages on this.”

Companies such as Peabody Energy Corp. (BTU), China’s Shenhua Group Corp. and Japan’s Mitsui & Co. (8031) have expressed an interest in developing the field. Mongolian President Tsakhia Elbegdorj set an end-of-year deadline for picking the successful bidders in July.

Tavan Tolgoi is less than 200 kilometers (124 miles) from Mongolia’s border with China. Shenhua, the country’s biggest coal producer, won a 40 percent stake to develop the project in July 2011 before the Mongolian government suspended the sale and ordered a review that is still continuing.

Successful bidders will have to promise “maximum returns” and no company, including Shenhua, is guaranteed participation, Enkhbayar said.

To contact the reporter on this story: Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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