Analysis on the Situation of Coal Mining in Mongolia in 2012

The battle for the Mongolian Tabon Tolgoi coal mine, which lasted for a year, has yet to come to an end. Recently, Mongolian President Elbegdorj announced that the participation of foreign companies in the mining of the Tavan Tolgoi coalfield will be resolved by the end of this year.

On July 10th, the reporter contacted Sukhbattle, Ambassador Extraordinary and Plenipotentiary of the Mongolian Embassy in China. As of this writing, he has not received a response from the other party.

Chia Xizhe, a researcher in the coal industry of China Investment Advisors Co., Ltd., said that at present, the development of the domestic coal market has entered a bottleneck period, coal prices have fallen, and the profitability of coal companies is worrying. This has an important impact on the handling of mining problems in the Tabei Tolgoi coalfield in Mongolia, and may be considered by the Mongolian parliament with caution. Consider the time for open mining and the problems associated with foreign participation.

For the China Shenhua Group, which is participating in the bid for the mining of the Tarben Tolgoi coal mine, it may be faced with a protracted war.

Forever

As the largest undeveloped coalfield in the world, the coal storage area of ​​the Tarben Tolgoi coal mine area is 400 square kilometers and the coal seam thickness is 190 meters. It has a total of 16 layers. The coal mine is a high-quality coking coal and the raw coal output is over 60%. The world's shortage of coal. The preliminary proved reserves of coking coal are about 6.4 billion tons, including 1.8 billion tons of main coking coal and 4.6 billion tons of thermal coal, with a value of more than 300 billion US dollars.

The high reserves of high-quality coal in the Tarben Tolgoi coal mine have made the international energy giants coveted. The giants fought fiercely around the development rights of the coal mine.

Previously, in addition to the consortium consisting of Mitsui & Co., Ltd. of Shenhua Group and the Japanese trading company, including the US mining giant Bodi Energy, Vale Brazil, Xstrata Switzerland, the European steel giant Arcelor Mittal and the Russian state-owned Russian Railway Group; A total of six bidders from a consortium of South Korea’s Pohang Iron and Steel, South Korea’s electric power and other companies participated in the bid for development rights.

In June last year, Mongolia’s ambassador to China, Sukhbutter, revealed that there were three companies in the first round of bidding, of which two were Russian and Chinese companies, and Shenhua Group was considered one of the hottest competitors at the time.

In July last year, the consortium led by Shenhua Group obtained the rights in the Tsankhi block in the western part of the Taben Tolgoi coal mine. Among them, Shenhua and Mitsui will account for 40% of the interest. The Russian consortium and Peabody Energy will hold 36% of the project respectively. And 24% interest. It is estimated that the initial investment of the project is 7 billion U.S. dollars.

The Taubeng Tolgoi coal mine project that was settled like dust settled on a drastic change in less than two months. On August 20 last year, the Mongolian president Elbegdorj said: “As the nation does not support, the president also "Cannot support", indicating that due to the importance of the results of the investigation, the plan will be reviewed.

As a result, the battle for the Tarben Tolgoi coal mine has once again reached an impasse.

Does Mongolia give priority to neighboring countries?

As the second largest landlocked country in the world, transportation is a problem that restricts the export of Mongolia's resource products.

Earlier, Mongolian President Elbegdorj stated that when choosing a developer in the Tarben Tolgoi mining area, the Mongolian parliament took into consideration the interests of neighboring countries. He pointed out that China is the closest market to Mongolia and the largest source of investment. It does not consider the interests of China and cannot solve the development of these projects.

Sukhbaatar said that because mining products will face huge transportation expenses after mining, the Mongolian Parliament will give priority to China and Russia when designing large-scale mining areas. The next step may be further consideration of South Korea and Japan.

At present, the bottleneck that restricts the development of coal in the Taben Tolgoi mining area of ​​Mongolia is still the transport corridor. Mongolia's infrastructure is relatively poor, and coal shipments have been a headache. From the geopolitical point of view, China is the world's largest coal consumer market, and the Tabong Tolgoi coal mine is only less than 300 kilometers away from the Chinese border. If Shenhua can win the bid, Mongolia's abundant energy will be able to use the Shenhua perfect and powerful transportation system to radiate East Asia and Southeast Asia.

Of course, Mongolia’s decision to consider the interests of China and Russia at the same time may also indicate that the government does not want to offend any of the Chinese and Russian sides. The Mongolian government had earlier stated that there may be more than one bidder for the development of this project.

Although China has a favorable geographical position for the mining of the coal mine, Russia and the Mongolian countries use the same-size roads. Through the Russian railway network, Mongolia can also enable the country to transport resource products to a wider market.