[Sponsored Report] Local consortium eyes Tavan Tolgoi coal mine

A Korea Resources Corp.-led group is looking to develop a coal mine in Mongolia

In an effort to secure the world’s largest amount of bituminous coal, a consortium headed by state-run Korea Resources Corp. is targeting the Tavan Tolgoi mine located 540 kilometers (335.5 miles) south of Ulan Bator, the capital of Mongolia.

Tavan Tolgoi is the world’s largest mine of its kind, home to an estimated 5.07 billion tons of bituminous coal. It is one of four major bituminous coal sites that have not yet been developed. The others are in Russia, Indonesia and Mozambique in southeastern Africa.

Australia’s largest mine developer, BHP, gave up on the Tavan Tolgoi site in 1997, saying that the project wasn’t economically feasible. But in January of last year, the Mongolian government received investment proposals to develop the site from individual companies and consortiums from nine countries including the United States, Russia, China and Japan.

Korea also jumped into the competition to develop the coal mine. Leveraging the Korea-Mongolia Summit Talks held in 2007, 10 local companies including Samsung C&T and Posco formed a consortium headed by Korea Resources Corporation. In November 2007, the group submitted its first proposal. It modified it and then resubmitted it in January 2009. Earlier this month, it began negotiating with the Mongolian government.

The reason so many countries around the world are interested in the Tavan Tolgoi mine is because of the enormous amount of coal it contains. The site consists of five mine districts encompassing 685.23 square kilometers.

Through the open pit mining method, Korea Resources Corp. plans to produce 15 million tons of coal every year and gradually increase production to 30 million tons annually. With just one mine, Korea will be able to cover 15 percent of the national demand. Erdenes MGL currently controls the mine and is laying out plans to develop it on a massive scale.

The Korea consortium plans to actively support resource development in Mongolia through the Tavan Tolgoi mine development project, which is expected to be a win-win situation for both sides.

By Lee Ji-hyun [concordia@joongang.co.kr]