It is widely reported that a consortium of China’s Shenhua Energy, Japan’s Sumitomo and Mongolia’s Energy Resources (a subsidiary of Mongolian Mining Corp) has won the tender to develop the 7,400 Mt Tavan Tolgoi coal deposit in Mongolia, though none of the companies’ websites currently carry any announcement. The consortium is said to have beat bids from US-based mining company Peabody Energy and Japan’s Itochu. Steel First says the tender that has been won is “for the right to develop both East and West Tsankhi blocks of Tavan Tolgoi.”
The Government of Mongolia will retain full ownership of the mine, which is reported to be one of the world’s largest known untapped coking and thermal coal deposits. It is situated in the Ömnögovi Province and located around 240 km north of the Chinese border.
It is thought that, under the contract, the consortium will have to produce 30 Mt/y of coal at Tavan Tolgoi and deliver into at least two export markets.
The massive resource is divided into six sections: Tsankhi, Ukhaa Khudag, Bor tolgoi, Borteeg and southwest and eastern coalfields.
Energy Resources is already engaged in open-pit mining at the Ukhaa Khudag (UHG) deposit located within the Tavan Tolgoi coal formation in the Southern Gobi, some 560 km from the capital city of Ulaanbaatar. The UHG mine is also strategically located about 600 km from Baotou, China, an important railway transportation hub providing access for Mongolian coal to the largest steel producing provinces in China.
Energy Resources holds mining license MV-11952 for the UHG coking coal deposit. Covering a licensed area of approximately 2,960 ha in size, the UHG deposit had around 701 Mt of JORC-compliant Measured, Indicated and Inferred resources as of 30 June 2012 and 315 Mt of ROM coal reserves as of 31 December 2012. According to Wood Mackenzie, the vast majority of the reserves falls within the highest quality parameters and is ideal for manufacturing needs at markets across the world. The company says that “due to its low stripping ratio, favorable geological conditions and proximity to its target market in China, MMC has lower operational costs than the majority of its competitors around the world.
The company commenced commercial mining operations at UHG in April 2009 and has steadily ramped up the ROM coal production at UHG from 1.8 Mt in 2009 to 3.9 Mt in 2010, 7.1 Mt in 2011 and 8.6 Mt in 2012. ROM coal production from UHG mine reached 9.2 Mt in 2013.