Economic collapse, Mongolia, China to restart the Tao Le cover coal mine tender: Shenhua two setbacks in the project
Mongolia’s economy is on the verge of collapse. In order to stimulate its economy, Mongolia is expected to restart in the south of the country, the world’s largest coal tower Tolgoi (Tavan Tolgoi, referred to as TT mine) tender.
Earlier, China Shenhua Refco Group Ltd (hereinafter referred to as the “Shenhua Group”) has twice won the bid of the project part of the mining rights, but because of opposition and other reasons Mongolia members, the project has been stranded in the. Today, Mongolia is facing a serious financial crisis, coupled with the election of the country’s Government in June, members of the replacement, so that the development of TT mine to put on the agenda.
However, now the market for coal demand is no longer as high as that year, and the global coal industry has excess capacity. As the world’s largest coal producer and consumer countries, China is also going to coal production capacity. TT mine if the restart, whether it will be as much as the same year by so much attention, whether there will be so significant?
Is located in the south of Mongolia in the world’s largest coal tower tolgoi. Data chart
Tao Le cover coal mine is expected to restart the tender, but the importance may be far less than the year
According to the Reuters reported on September 9th, because of Mongolia’s most important export commodities, coal and copper are slowing in global demand, and plunged the foreign investment, the country’s debt rose sharply, the increasing pressure of national finance.
Nearly a month, the Mongolia national currency devaluation of the U.S. dollar to more than 10%, becoming the world’s largest in nearly a month to the world’s largest currency. At the end of June, the people’s party, which won the general election, has been fully in power. How to get rid of the economic plight has become the urgent task of the new government. Previously stranded TT mine project, perhaps will become one of the Mongolia government to boost the economic choice.
TT mine straight line distance from the border about 180 km distance Chinese Ganqimaodu Port about 245 kilometers, about 15 tons of proven reserves, estimated reserves of more than 64 tons, is one of the largest open-pit coal mine coke has not yet fully developed in the world, and the quality is very good. At the same time, the TT mine project or Mongolia second major domestic mineral development projects, after the oyu Tolgoi project.
The TT mine in eastern mining area by Mongolia’s state-owned enterprises Eerdengsi tarvin Tolgoi company (Erdenes Tavan Tolgoi, hereinafter referred to as “ETT”) is responsible for the operation. Currently is expected to restart the TT mine west block Tsankhi project development rights tender.
According to Reuters reported in September 9th, ETT executives said they are actively evaluating the bid to restart the general situation. ETT TT, director of the mine project’s economic development director Ashidmunkh Samdandobji said, “we are currently calculating the potential profitability of the company’s ETT, our lawyers are also in the assessment of a number of letters of intent.”
“We do not rule out any possibility,” a gap in Samdandobji Ashidmunkh investment conference in Mongolia’s capital Ulan Bator, the Reuters said, “if the ETT company is profitable, and also on the Mongolia’s economic benefit, so we to anyone with the cooperation is open to all.”
Mongolia’s new mining and heavy industry policy. Daxidaoerji minister DEB (Tsedev Dashdorj) on Thursday (September 8th) said the meeting had “nationalism contributed to a number of policy mistakes”. The political atmosphere in Mongolia has been transformed into the direction of a TT mine agreement, according to a study by BDSec, a Ulan Bator’s economic and business operator, in the study’s report, Cousyn Nick.” It added, because the people’s Party of Mongolia in the majority of the seats in the parliament, plus the current Mongolia urgent need to invest, we believe that the possibility of TT mine agreement reached and passed is very large.”
Although Mongolia’s ideas may have changed, also need to promote local economic development through the TT mine investment operations, and is also a great deal of TT ore through the possibility, but now the coal market and then compared also has been greatly changed. At present, the global supply of coal industry as a whole is greater than the demand, China’s coal production capacity is a serious surplus.
Today, the market for coal demand is no longer as high as those in the year, and the global coal industry has excess capacity. Data chart
Early February of this year, the State Council issued the guidance of coal and steel to resolve excess capacity. Starting in 2016, China will use three to five years of time, exit the coal production capacity of about 5 tons, reducing the amount of about 5 tons. Among them, the 2016 year to remove the coal production capacity of 2.5 tons.
Deputy general manager of Fenwei energy company Xue Wenlin in this year’s Mongolia coal and metals international summit investment conference said, if the coking coal producing provinces of Shanxi, Shanxi Province in 2015, coal production capacity of 10.13 tons. As of March 3, 2016, Shanxi Province, the production of the mine has 562, production capacity of 9.09 tons, re approved production capacity of 7.64 tons, a total reduction of 2.49 tons of production capacity. Coking coal will be reduced by about 80 million tons.
Xue Wenlin also pointed out that Mongolia’s coal exports to China in 2012 the amount of up to 21 million 720 thousand tons, most of which are coking coal.
Single from the data point of view, Shanxi province in 2016 a year to remove the amount of coking coal is far greater than the import of coking coal production from Mongolia, and even more than a year of coal production in Mongolia.
In today’s coal market, if the TT mining project to restart, may also not be as concerned as the year so. For the bidding for the enterprise, its importance may not be so before the.
Political and other factors affect the development of the project, Shenhua two times the winning but are stranded
Reuters quoted the Mongolia National Bureau of statistics data show that in the first half of this year, about 1\/3 of Mongolia’s industrial output value from mining. TT mine as well as the development of the general situation of investment is about $4 billion, while Mongolia’s GDP total of 12 billion U.S. dollars in 2014, such a large investment will bring a strong boost to the economy of Mongolia.
However, why have such a big impact on national economic development projects, but the time dragged on, that did not catch up with the good days of the coal industry “”. The reason, mainly because of the limited financial resources of Mongolia, can not fully bear the cost of TT mine development. On the other hand, in the process of introducing foreign investment in joint development, the government of Mongolia to play role of foreign enterprises has to worry about, some of which are firmly opposed to foreign investors Nationalist government members.
TT mine west block Tsankhi project development rights, the government of Mongolia later decided to conduct an international tender. TT mine west block Tsankhi project of coal resources amounted to 12 tons, 65% coking coal, annual production capacity of up to 15 million tons, is expected to be more than 30 years of mining. The project is about 270 kilometers from the Chinese border, is one of the world’s remaining large high-quality coking coal and China’s neighboring one of the resources.
Due to the rich resources and high quality, as early as 2011, the bidding of the right to development attracted the global mining energy giants, including the United States Peabody energy, Brazil River Valley, etc.. In the auction, the Shenhua Group and Japanese Mitsui consortium to participate in bidding.
In July 2011, Shenhua led consortium won the TT mine in Western Tsankhi block project 40% stake, led by the Russian consortium will hold a 36% interest in the project, and Peabody energy company (Peabody Energy Corp) will hold the remaining 24% equity.
However, when the domestic opposition Mongolia good times don’t last long, continuous, and failed to win the other consortium also expressed dissatisfaction, saying the bidding process is opaque. August 2011, President of Mongolia Tsakhiagiyn Elbegdorj said, because the national does not support, the president can not support, the bid will be re.
In the face of the TT mine coal quality, especially a large number of coking coal resources, in 2011 the TT mine project ran aground, coking coal production is not much of the Shenhua Group did not give up on the Mongolia coal resources in acquisition efforts, of which the main point is the construction of transport channels in Mongolia coal and abroad.
October 2013, Shenhua Group signed a memorandum of cooperation with the state enterprises in Mongolia (railway construction project) and promote coal trade memorandum of understanding. In April 2014, the agreement gashusuhai figure Mongolia signed a joint venture railway company. It is understood that the joint venture by China Shenhua Group, ETT company, Mongolia Mining Group (Mongolian Mining Corp) a wholly owned subsidiary of energy resources Ltd. (Energy Resources LLC, hereinafter referred to as “ER”) and Tolgoi company jointly funded. China Shenhua Group, which accounted for 49%, the other three companies in Mongolia accounted for 51%. Mongolia will build Chinese Ganqimaodu to Mongolia’s 18 km Suhaitu Shu GA port railway. Through this railway, the world’s largest mining TT mine in Mongolia country will be able to access the Chinese railway network, Mongolia, China’s exports to China will be more convenient coal.
During this period, the TT Mine Re bidding continues. Finally, in December 2014, China Shenhua Group and the largest coal enterprises in Japan Sumitomo Corporation (hereinafter referred to as “Sumitomo commercial” Sumitomo Corp) and ER together to form a consortium to bid Tolgoi coal mine project. However, due to the impact of the political conditions of the disorder and weak government agencies, the project was blocked by the Mongolia national assembly, has been unable to successfully achieve the transfer of coal mine ownership.
Today, the TT mine development bid is expected to restart, a spokesman for Sumitomo commercial said, “we believe that our priority bargaining is still valid.” However, it declined to say whether the project has any new progress. “Our consortium has been united,” said GotovBattsengel, CEO of LLC. “I think the plan is still in discussion.”
ETT Ashidmunkh said it was “too early”, also cannot say – Sumitomo consortium and Shenhua trading is the best.