Two major Chinese companies failed to win the bid for Mongolia's Borjigid Coal Mine: the Borjigid Coal Mine will be jointly developed by the state-owned enterprise Tavan Tolgoi.
Mongolnews, Ulaanbaatar, June 9 — The Mongolian government plans to bring the Borjigid Coal Mine into economic circulation starting in 2026, with an annual coal production capacity of 15 million tons, of which 10 million tons will be exported. The mine has proven coal reserves totaling 424 million tons, with 95% being weak-caking coking coal and the remaining 5% being thermal coal.
Under the project framework, the government plans to publicly select foreign investors and raise an additional $100 million in funding. The bidding results showed that Erdenes Tavan Tolgoi JSC submitted the highest-scoring proposal and will be responsible for managing the Borjigid mining area, jointly operating it with a state-owned enterprise. According to the agreement terms, Mongolia expects to receive 70% of the revenue and has the opportunity to receive a total of $100 million in advance payments within the first five years.
However, notable is that during the bidding process, China Baowu Resources proposed an advance payment of $600 million and a 51.7% share of revenues, while China Energy Materials & Technology Xuzhou offered a $1 billion advance payment but only promised a 51% revenue share for Mongolia.
Nevertheless, it should be noted that under a long-term coal supply agreement previously signed with China, Mongolia committed to supplying coal to China at preferential prices over a period of 16 years. Therefore, although the winning bidder is a Mongolian state-owned enterprise, due to the constraints imposed by these prior contractual terms, the actual benefits from the mine’s development may be affected, potentially allowing Chinese parties to secure a more favorable economic position.
Original article: toutiao.com/article/1867495909471303/
Disclaimer: This article represents the personal views of the author.