CEO of Erdenes Tavan Tolgoi JSC D.Ariunbold announced that the company paid off its USD 350 million debt to China’s aluminum company, Chalco.
Thus, the first phase of contract established in 2011 between the Chalco and the Government of Mongolia led by Prime Minister Su.Batbold has ended.
Erdenes Tavan Tolgoi JSC borrowed USD 350 million from Chalco and agreed to pay back the debt in form of coal deliveries from the East Tsankhi mine.
In Nov 2016, Erdenes Tavan Tolgoi increased the price for per tons of coal to US$ 71 from US$ 28. A rapid increase in China's coal prices since June 2016 caused an early payoff, as it has projected to finish the debt in July, 2017.
Mongolia received US$ 250 million as prepayment of a loan from Chalco under the contract. However, the fund financed social welfare program called Human Development Foundation and it granted to every citizen of Mongolia as a monthly welfare of MNT 21 thousand.
If the Government built coal washing plant by the prepayment of a loan, the benefit would be larger and broader. Moreover, the previous authorities promised to export coal to the second and third markets (Japan and South Korea). However, it has not implemented yet.
During the first phase of the contract, Erdenes Tavan Tolgoi supplied 100 percent of its coal deliveries from East Tsankhi pit to Chalco.
At the second phase of the contract which will be finished in 2022, Erdenes Tavan Tolgoi to supply 80 percent of its coal deliveries from East Tsankhi pit to Chalco.
Erdenes Tavan Tolgoi to supply 60 percent of its coal deliveries from East Tsankhi pit to Chalco in 2022-2027.
PROJECTS TO BE IMPLEMENTED THIS YEAR BY ERDENES TAVAN TOLGOI JSC
Erdenes Tavan Tolgoi JSC introduced its further plans.
About Erdenes Tavan Tolgoi deposit:
Tavan Tolgoi deposit is one of the world’s largest untapped coking and thermal coa deposits, , located in the Umnugobi aimag in southern Mongolia. It has a total estimated resource of 6.4 billion tonnes, one quarter of which is high-quality coking coal. It is divided into six sections: Tsankhi, Ukhaa Khudag, Bor tolgoi, Borteeg, and Southwest and Eastern coalfields. The Tsankhi section is the largest part, and is divided into East and West Tsankhi - these have had the most focus recently.
In 2010, the Erdenes MGL LLC formed a new company - Erdenes Tavan Tolgoi - which would hold the licenses and manage the Tavan Tolgoi deposit.
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