Talks on investment agreement on developing Tavan Tolgoi re-started

The Mongol Messenger
2016-12-16 16:58:57

Investment agreement of TT deposit, one of the largest untapped coking and thermal coal deposits in the world with its estimated resource of 6.4 billion tons, is again under talks, as the Government considers proper utilization of the deposit and following projects including railway construction and power plant, is one of main leverages for overcoming economic difficult situation.

On December 09, a working group in charge of proceeding talks with investors in TT project to improve agreements conditions, holds its first meeting with delegates of China Shenhua Energy Co group, one member of a consortium, who won in TT bid earlier. The Government’s working group comprises of 19 persons, including Minister of Mining and Heavy industry Ts.Dashdorj as the head of the working group and Minister of Road development D.Ganbat and Minister of Environment and Tourism as the deputy heads of the working group.

Minister Ts.Dashdorj expressed the Government’s position that talks regarding utilization of TT deposit should continue in a way to resolve issues in complex including mining, product sale, railway construction and regional construction and infrastructure projects of Umnugobi province. The meeting was held behind closed door. Minister said to journalists that the working group focuses on how this talk could be more beneficial to Mongolia, comparing to previous talks and agreements. Lu Bing from Shenhua Energy Co said “The group won in the bids for developing the TT deposit twice. We are glad that new Government is going to continue TT talks and interested in cooperating with Shenhua. Our group has an interest to participate in this project and want to continue talks”.

The initial bid for developing the TT deposit was announced in late 2010 and in 2011 without final decision. On December 25, 2014 the Government working group announced that a consortium of Energy Resources LLC of Mongolia, China Shenhua Energy Co. and Sumitomo Corp of Japan won the bid for the investment and development project of the Tavan Tolgoi and the winner promised to make investment worth USD4 billion. Former working group head, Minister M.Enkhsaihan noted that the consortium accepted all tender requirements including the building of a coal processing plant with annual capacity of 30 million tons in 2.5 years and a railroad connecting Tavan Tolgoi with the Gashuunsukhait border point in a ‘Build, Operate and Transfer’ condition, which means the investors would use their railway for 30 years and then transfer 51 percent ownership to state for free. The winner would also take charge of selling the coking coal on the market and ensure that at least 51 percent of operator companies are Mongolian companies. 

In April, 2015 the Government submitted the Bills related to the investment agreement of TT deposit, but when Parliament scheduled to discuss it, then Parliament Speaker Z.Enkhbold made a proposal to establish a working group to make conclusion and then start the discussion. On April 29, the working group in charge of checking the Bills and make conclusion whether the Bills contradict existing Mongolian laws, was established and on June 2, the working group head MP L.Erdenechimeg stated that the TT agreement Bill violates many laws, resolutions and guidelines released from the National Security council and they expect the Government to withdraw the Bill to make it adhere to laws and resolutions.  MP Erdenechimeg also commented that it was proper that TT investors should resolve building railways in the direction of Gashuun sukhait-Ukhaakhudag as well as a 1300 km long eastern railroad jointly with ‘Mongoliin Tomor Zam (Mongolian Railways) company while the company owns 51 percent of the railways.

Later or in May, 40 MPs developed and submitted a parliamentary resolution draft considering it proper to give the Government instruction and guidelines regarding the issue of utilization of TT deposit. The resolution aimed at creating condition to establish TT investment agreement meeting interest of Mongolia and improve benefits from the project and effect to Mongolian economy and social development.

Head of the working group Minister Ts.Dashdorj noted that the working group has a position to ensure national companies to participate in the project with major role. The working group also met with delegates of some 10 national mining companies capable to participate in the TT project. National companies including ‘Khishig Arvin industrial’, ‘Grand power’, ‘Undesnii olborlogch’ (National miner) and ‘Monnis’ attended the meeting and they expressed their interest to participate in the project.  


The full artcile is inlcuded in the Mongol Messenger's issue No. 50 for December 16.

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