Erdenes TT seeks to repay Chalco amid low coal prices
Erdenes Tavan Tolgoi, Mongolia’s largest state-owned coal miner, has trimmed its debt to a Chinese customer to USD 130 million from USD 350 million, and aims to pay the remaining amount due this year.
Mr Batsuuri Yaichil CEO of Erdenes TT said that the company pays its debt to the Aluminum Corporation of China Limited, also known as Chalco, in coal. It will need to deliver an additional 2.5 million metric tonne to 3.5 million tonne of the fuel to fully settle the advance payment.
The price of coal has declined over the past two years, increasing the amount of coal the company needs to ship to pay creditors. The mounting debts delay income the government needs to plug budget holes caused by declining foreign investment, which fell 54% last year, and reduced GDP growth, which slowed to 11.7% last year from 12.4% in 2012.
Mr Batsuuri said that “The debt to Chalco will be resolved in the next few months; it depends on transportation,” Adding that the exact amount varies on the delivery point because coal can be picked up at the mine mouth or the border, with different prices at each location.
Meanwhile, Erdenes TT, located 270 kilometers (168 miles) north of the Chinese border in the Gobi Desert, also owes the Development Bank of Mongolia USD 200 million.