Mongolian mines sizzle as China, India raise steel demand
March 7, 2011

The world’s largest coking coal deposit is up for sale, the Mongolian mine located in the South Gobi desert near China’s northern border is being hotly contested by firms from China, India, Korea, Russia and Japan, as demand for steel in the emerging economies soars. A key component in the manufacture of steel, the coking coal mine is part of the state-owned company Erdenes-Tavan Tolgoi Co., which controls the massive deposit. The Mongolian government plans to sell half the state-owned holding company in an initial public offering which would value the holding company between US$10 billion and US$15 billion. Also you can use additional resource to learn more.

Rapid industrialization in the emerging economies coupled with a near-by port through Russia to the Pacific make the Tavan Tolgoi mine a prized possession for any company. Estimated to contain at least 5- 6.5 billion metric tons of coal, the development of the Tavan Tolgoi mine will likely require an initial investment of about US$7.3 billion.

While the China-Japan consortium of Mitsui & Co and Shenhua Group represent the Chinese bidders, Indian led ArcelorMittal is also contesting for the mines. Other players are said to include US based Peabody Energy, Brazil’s Vale S.A., Xstrata, a Korea-Japan-Russia consortium including Kores, state-run utility Korea Electric Power Corp., South Korean steel giant Posco, Daewoo International Corp. and LG International Corp. and Japanese participants in the consortium includes Itochu Corp., Sumitomo Corp., Marubeni Corp. and Sojitz Corp..

Mongolia, which shares a border with China and Russia and has some of the world’s largest untapped mineral reserves. Here mines and quarries account for about 60 percent of industrial output. The country is seeking developers to help it feed demand for raw materials from its neighbors, while maintaining control over the deposits. Big mining houses, while watching to see whether Mongolia’s fledgling democratic government can build needed infrastructure to support widespread mining and negotiate its way through geopolitical pressures exerted by Russia and China, are circling rich deposits that until recently fell under the radar of most geologists.

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