To Mongolia for coal

Russian companies are waiting for an invitation to develop the world's largest deposit, Tavan Tolgoi.

The issue of developing the world's largest coking coal deposit, Tavan Tolgoi, in Mongolia, is again on the agenda two years later . Russian companies still remain interested in it and expect a speedy decision from the authorities on this issue. Yesterday, Russian Prime Minister Viktor Zubkov discussed this issue with President of Mongolia Nambaryn Enkhbayar. “We know that the bill has now been submitted to parliament, and after approval of the project, 36% of the shares will be transferred to a strategic foreign investor on the basis of an open tender,” Interfax quotes Mr. Zubkov. “Leading Russian companies, such as Basel, Severstal, Renova, RAO UES of Russia, Norilsk Nickel and Zarubezhgeologiya, have announced their support for many projects in Mongolia.” At the same time, according to him, the intergovernmental Russian-Mongolian commission can provide them with support.

The Tavan Tolgoi deposit is located in the south of Mongolia, 250 km from the border with China. Coal reserves are estimated at 5-6 billion tons, and its value is more than $300 billion. About 40% of the deposit's reserves are high-calorie coking coal. The license for its development belongs to the Mongolian Energy Resources.

Previously, the country's authorities did not want to give the rights to develop Tavan Tolgoi to only one investor and were inclined to divide the rights to the field among all interested parties by creating a joint venture. And such a joint venture was created: in July 2006, Basic Element, Renova and Severstal, in order to avoid competition, signed a protocol of the intergovernmental commission, which recorded their intention to develop Mongolian coal in the alliance. Subsequently, Chinese and Japanese corporations, in particular Mitsui, Sumitomo and Shenhua Group Corporation Limited, expressed their desire to join the joint venture. However, then the negotiations did not develop and the question of developing the field remained open.

Viktor Zubkov yesterday, in a conversation with Nambaryn Enkhbayar, once again recalled that Russian companies could become strategic partners. At the same time, Severstal has not yet abandoned its previous intentions. “We consider this project interesting and are ready to develop it,” Sergei Loktionov, head of the press service of Severstal-Resurs (manages Severstal’s mining enterprises), told Vremya Novostey. -- The previously formed alliance between Severstal, Basel and Renova is relevant. And now, like two years ago, the main word remains with the Mongolian side, which must determine the rules of participation for Russian partners.” He explained that Severstal is ready to invest in both infrastructure and coal production.

Mr. Loktionov did not comment on what size of the package would be attractive for the company, noting only that “a share of about 5% would be unlikely to be of interest to a Russian investor, because strategic investments are a different scale.” However, everything will depend on the number of countries that decide to participate in the project. Mr. Zubkov expressed hope that the Mongolian prime minister's visit to Moscow, scheduled for March, “will give a new impetus to improving cooperation” between the two countries.

Irina TSYRULEVA