Mongolia’s Tavan Tolgoi to Resume Coal Exports to China

Erdenes Tavan Tolgoi LLC, Mongolia’s largest state-owned coal company, will resume shipments to China next week, ending a three month stand-off with its biggest customer, Mongolia’s Prime Minister Norovyn Altankhuyag said.

The breakthrough follows negotiations with its main customer, Aluminum Corp. of China Ltd., or Chalco, according to a government press statement on the prime minister’s comments in parliament today.

Exports to Chalco, China’s biggest producer of aluminum, stopped on Jan. 11 due to a lack of funds required to pay Altangovi, which provides warehousing services at the border with China. The chief executive officer of Erdenes TT, Yaichil Batsuuri, said his company had run into financial trouble and wanted to raise prices and cut shipments, changing the terms of the $250 million contract it signed in July 2011.

“The prime minister said Mongolia will begin shipments of coal from next week,” according to the press statement. They will include 337,000 metric tons of coal held at the border and 1 million tons at the Tavan Tolgoi coal field, Mongolia’s largest.

Erdenes TT is one of three companies operating at Tavan Tolgoi, which contains 6.4 billion tons of reserves. The company declined to comment on details of its negotiations with Chalco.

Mongolia has informed the company that the nation is resuming coal exports to China, Cheng Zhiqiang, Chalco’s deputy general manager of international trade, said by phone. He declined to comment on whether any terms of the supply contract with Erdenes TT had changed.

To contact the reporter on this story: Michael Kohn in Ulaanbaatar at mkohn5@bloomberg.net

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

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