Erdenes Tavan Tolgoi LLC, Mongolia’s largest state-owned coal company, agreed to pay a higher interest rate on $186 million due to Aluminum Corp. of China Ltd. as part of an accord to resume coal deliveries.
During a standoff between Erdenes TT and Chalco, as the Chinese state company is also known, the Mongolian side failed to repay $86 million of the loan due last month, the Ulaanbaatar-based miner said today in an e-mailed response to questions. As a result, the interest on the loan amount has been increased, Erdenes TT said, without specifying the rate.
Erdenes TT restarted coal shipments to Chalco on April 22 after winning a $3 a metric ton price increase from the Chinese buyer, the Mongolian company said. Chalco will pay $56 a ton and Erdenes TT will supply the Chinese company 5 million to 6 million tons this year, the company said.
Exports to Chalco, China’s biggest producer of aluminum, stopped on Jan. 11 due to a lack of funds required to pay the logistics companies involved in the transportation and storage of the coal. 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.
Li Dongguang, head of Chalco’s international trading unit, said he couldn’t confirm details of the debt and interest rate payment and declined to comment further.