On the topic of Mongolia / country risk:
Peabody Energy eyes Mongolia coal investment
Thu Nov 16, 2006 7:57am ET
By Luke Distelhorst
ULAN BATOR, Nov 16 (Reuters) - Peabody Energy Corp. (BTU.N: Quote, Profile, Research), the world's largest coal miner, has enlisted Washington's support as competition heats up for the right to develop a six billion tonne coal deposit in Mongolia's Gobi desert.
Representatives from Peabody Energy were in the Mongolian capital of Ulan Bator last week for introductory meetings with Mongolian government officials, including the prime minister and speaker of parliament.
In the televised meetings, Peabody Energy's China representative said the company was interested in investing in the Tavan Tolgoi coal deposit, which lies just north of Mongolia's border with China.
Chinese coal prices have doubled over the last three years as its economy has grown by 10 percent annually. That has fed a wave of interest in Mongolia's untapped deposits from miners in China, Russia, Canada and elsewhere.
"Of course it is preferable for a world class American company to be involved in the development of Mongolian resources," U.S. Ambassador to Mongolia Mark Minton told Reuters on Thursday.
"They have support and advocacy from the Embassy as instructed by the US Department of Commerce... We think that Peabody's involvement would lead to a greater utilization of best practices in the development of Mongolian resources."
Small scale mining at Tavan Tolgoi is under way by the local Mongolian companies which hold the license to the deposit. But they lack the cash and technology for large-scale development of the deposit.
BHP Billiton (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research), the world's largest miner, held the rights to Tavan Tolgoi between 1998 and 1999. It relinquished them after studies showed Chinese coal prices at the time would not justify initial development costs totalling over $1.5 billion.
Miners including Japan's Itochu Corp. (8001.T: Quote, NEWS, Research) and Mitsubishi Corp. (8058.T: Quote, NEWS, Research) and a consortium of Russian businesses including steel maker Severstal (CHMFq.L: Quote, Profile, Research)(CHMF.RTS: Quote, Profile, Research) have expressed interest in developing Tavan Tolgoi.
Tavan Tolgoi was found with state funds giving the government a possible 50 percent stake in any future development under the terms of a new mining law.
© Reuters 2006. All Rights Reserved |
