Source: Reuters, Mongolian media                             Date: 10 February, 2011

Resource-hungry Asian private and state-linked firms, scrambling for raw materials to produce steel, are locking horns with the world's top steelmaker ArcelorMittal and the top iron ore miner Vale to develop Tavan Tolgoi, the world's largest untapped coking coal deposit. No official list has been issued by the Government of Mongolia, which on January 31 closed proposals to develop the deposit, but it is believed the following are in the race. The composition of some of the consortia is uncertain.

1. ArcelorMittal SA, registered in Luxemburg;

2. Vale of Brazil;

3. Xstrata of Australia;

4. Peabody Energy of the USA;

5. State-run Korea Resources Corp. consortium formed of nine Korean firms;

6. Shenhua Energy of China and Mitsui Corporation of Japan;

7.  Mongolian Gold of Mongolia;

8.  E-Tai Group of Inner Mongolia, China;

9.  EN+ Group of Russia;

10. Signum Industrial.

11. Fortescue Metal of Australia;

12. Russian Railways and North Ural Energy Company, of Russia;

13. Sumitomo-Itochu-Sojitsu-Marubeni consortium of Japan;

14. Mesco Steel Ltd. of India;

15. International Coal Venture Ltd. consortium of India;

16. Mongolian Roads Consortium of Mongolia;

17. Erdos Chenglon Group of China;

The government plans to keep ownership of the mine, estimated to house a total 6.4 billion tons of coal reserves, and give strategic investors a chance to develop its western block on a contract basis. The Mongolian Government will now review these initial proposals, and will decide which are qualified to proceed before launching the official bidding process. The proposals must also include offers of an upfront payment to win the deal, said Mr. Ch.Baatbayer, a senior official at Erdenes MGL, the government entity that owns the mine.

The auction faces uncertainty, as Mongolia has struggled to develop a consistent strategy when it comes to overseas companies buying into national assets.

An initial 2009 bidding auction for the Tavan Tolgoi coal project attracted consortia from South Korea, Japan and Russia as well as mining giants such as BHP, Vale, India's Jindal, and China Shenhua Energy. But early last year the government abruptly announced the auction would be cancelled and said the state would maintain control and foreign firms could bid for licenses to develop and run the mine.