Source: Reuters                            Date: 10 March, 2011

Of the original list of 15 bidders to develop Tavan Tolgoi, the world's largest untapped coking coal deposit, Australia's Fortescue Metals, China's Erdos Chenglong, Oleg Deripaska's En + Group, and three Mongolian firms did not make the shortlist. The other three who did not find favor were Signum International, and two Indian bidders, MESCO Steel, and International Coal Ventures Ltd., a consortium of large state-owned companies in India

Of those that did, ArcelorMittal is the world's leading steel company, with operations in more than 60 countries. In 2010, ArcelorMittal had revenues of USD78.0 billion and crude steel production of 90.6 million tons, representing approximately 8 per cent of world steel output. Its head office is in Luxembourg City.

Vale is a diversified mining multinational corporation based in Brazil. In addition to being the second-largest mining company in the world, Vale is also the largest producer of iron ore. hydroelectric plants.

Xstrata plc is a global mining company headquartered in Zug, Switzerland and with its registered office in London. It is a major producer of coal and is the world's largest exporter of thermal coal. Its officials gave a presentation to Prime Minister S.Batbold when he was in Australia.

The biggest U.S. coal miner, St. Louis-based Peabody, said in July it has formed a venture with Winsway Coking Coal Holdings Ltd. to develop Mongolian resources. Winsway, which is listed in Hong Kong, was the biggest buyer of Mongolian coking coal in 2009, Peabody said.

The Shenhua Group of China, which produced 320 million tons of coking and thermal coal in 2009, plans to have a capacity of 560 million tons by 2014. It had a tie-up with Peabody to bid for Tavan Tolgoi, but later chose Japan's Mitsui & Co as its partner in the quest.

OAO Russian Railways is leading the Russo-Japanese-South Korean group in the bidding, the state-run company said in January. The group’s members include Siberian Coal & Energy Co., Russia’s biggest coal producer, Sumitomo Corp., Marubeni Corp., and Itochu Corp. Korea Resources leads the South Korean companies including Posco, the world’s No.3 steelmaker, and state-run Korea Electric Power Corp.

One of the South Korea bidders said the project would need an initial investment of around USD7.3 billion, with the winning bid announced on June 30, but Mongolian official Ch. Batbaatar, who is handling the bids, said there was no specific timeframe for selecting the final bidder. The USD7.3 billion figure could also not be confirmed, he said.

“Tavan Tolgoi is massively significant in terms of large, undeveloped metallurgical coal resources. So it's a big prize for whichever parties get to ultimately develop it," said Mr. Tim Schroeders, a portfolio manager at Pengana Capital in Melbourne. "The cost is going to be big because it's going to be difficult for whoever does get the gig to ensure the infrastructure solution is in keeping with the size of the resource."

The deposit consists of six coal fields and Tsankhi is the main one, containing most of its coking coal resources. The bid is for this. It lies 540 km south of Ulaanbaatar and 270 km north of the Chinese border. The nearest port is China's Tianjin 1,570 km away, with the closest Russian port of Vanino more than three times the distance.

"Russia has traditionally had a very strong relationship with Mongolia; the Mitsui-Shenhua grouping is interesting because Mitsui is a very active and early player in difficult jurisdictions, they are quite forward in their outlook, they'll go into places earlier than others," said Andrew Harrington, an analyst with Patersons Securities in Sydney.