Reports from Mongolia suggest that China Shenhua Energy Co., BHP Billiton Ltd. (BHP), Companhia Vale De Rio Doce (RIO), and Peabody Energy Corp. (BTU) are among the miners that have expressed an interest in Mongolia's Tavan Tolgoi coal mine.
A source familiar with the situation said the thermal and coking coal mine will need capital expenditure of up to US$3 billion before its coal resources are depleted. On that basis, the mine is worth more than US$5 billion, he said. At present the mine currently has small-scale coal operations.
BHP was previously reported to have pulled out of bidding for the mine.
One of the Mongolian government's advisors, Robert Lepsoe, said discussions have begun with a number of companies though he declined to identify them. The Mongolian government has hired Deutsche Bank AG and J.P. Morgan Chase to privatise the coal mine though no stake size or time scale has been fixed.
"The initial plan is for the mine to sell thermal and coking coal, but the government intends to eventually build power plants so that power can be exported to China," Mr Lepsoe said.
He added that the Mongolian government is looking to accelerate production at the Oyu Tolgoi project, a joint venture between Canada's Ivanhoe Mines Ltd. ( IVN) and Rio Tinto PLC (RTP).
This is said to be the world's largest copper-gold development and capable of average annual production in excess of 1 billion pounds of copper and 330,000 ounces of gold for at least 35 years.
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