Mongolia: ETT to develop West Tsankhi coal field to offset loss-making Chalco deal

The US$250m coal deal, signed and sealed in 2011, is allegedly costing ETT more than the contract is worth. ETT wanted to renegotiate the deal but was put off by the threat of legal action from Chalco.

Mongolian state-owned mine operator Erdenes Tavan Tolgoi (ETT) is to develop the West Tsankhi coal field of its Tavan Tolgoi coal mine in an effort to offset the cost of a coal supply contract with Chinese aluminium producer, Chalco.The US$250m coal deal, signed and sealed in 2011, is allegedly costing ETT more than the contract is worth. ETT wanted to renegotiate the deal but was put off by the threat of legal action from Chalco.

Exports of coal from the new field will begin in Q3 2013 and it is hoped that 2Mt will be produced this year from estimated reserves of 888Mt. The Tavan Tolgoi mine as a whole is said to hold up to 7.5bn tonnes of coal and is only 300km from the Chinese border.