Tavan Tolgoi Coal Mine Due For Expected Upgrade

Tavan Tolgoi Coal Mine Due For Expected Upgrade

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Estimates of coal reserves at the Tavan Tolgoi are due to be reexamined. The deposit was estimated in 2011 to hold 7.4 billion tons of coal, worth an estimated $ 5.7 billion USD. Now due to improvements in geological scanning and extraction technologies, the amount of reserves is expected to be much higher.

The mine generated over 10.1 million tons of coal last year, 8.4 of which were exported from Mongolia for 1.1 trillion MNT ($449 million USD), MNT 243 billion ($99 million USD) of which went to the state budget.

The Cabinet of Mongolia recently met to discuss issues regarding management and operations of the Tavan Tolgoi mine. The reevaluation will include additional contrition projects, additional infrastructure including new railway and road access, energy supply and water supply. The Feasibility for the mine will also be revamped. Planning is underway to enable the mine to generate and export larger amounts of coal in the future.

It is also expected that the operator of the mine Erdenes Tavan Tolgoi JSC will put 30% of shares up for grabs in IPOs in Hong Kong, London and at the Ulaanbaatar stock exchange.

Tavan Tolgoi is one of the world’s largest untapped coking and thermal coal deposits, located in the South Gobi Province in southern Mongolia.

While the stock offering represents a step away from government ownership, the mine will remain primarily controlled by the government of Mongolia. Mongolia has made efforts in recent years to diversify its economy away from mining and commodity exports, but the profit potential of the Tavan Tolgoi mine offer a clear reason why mining will remain the predominant industry in Mongolia for years to come.

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