Japan’s Marubeni Corporation has won the Tavan Tolgoi Power Plant project tender. The plant will be built adjacent to Tavan Tolgoi, one of the world’s largest untapped coking and thermal coal deposits, in southern Mongolia.
The power plant is expected to source its coal supply from Tavan Tolgoi (TT), which has a total estimated resource of 6.4 billion tonnes, 25% of which is high quality coking coal.
The Mongolian government decided to build a power plant adjacent to TT in 2013 and formed a project team. The project team says that they have completed over 20 studies and 15 draft contracts for the TT project. These include a pre-feasibility study, and studies of the mine’s deposit, water reserves, air quality, location, power lines, and pipelines.
The Tavan Tolgoi Power Plant project committee met on February 28 and selected Marubeni Corporation to undertake investment in the plant. Marubeni is a leading energy sector company that manages and operates power plants in more than 22 countries. The selection process was monitored by the Deloitte auditing firm.
The mine is divided into six sections - Tsankhi, Ukhaa Khudag, Bor Tolgoi, Borteeg, and the Southwest and Eastern coalfields. The Tsankhi section is the largest part, and is divided into the East and West Tsankhi.
TT is state-owned through Erdenes Mongol LLC, except for the Ukhaa Khudag section, which is mined by the Mongolian Mining Corporation. Erdenes Tavan Tolgoi JSC, a subsidiary of Erdenes Mongol, is managing the development of the East Tsankhi section.
Dry coal preparation system at TT
A Japan-Mongolia joint project will investigate the use of water-free dry coal preparation technology at the Tavan Tolgoi (TT) coal project. The New Energy and Industrial Technology Development Organization (NEDO) earlier this year entered into an MoU with the Ministry of Mining of Mongolia to start a joint project.
This project will demonstrate dry coal preparation technology, which does not require the use of any water.
The TT coal mine in Mongolia’s South Gobi region, which is one of the world’s largest coking and thermal coal deposits, will be the world’s first to use and demonstrate this dry coal preparation system that has the same sorting capacity as conventional water-based coal preparation processes.
The project aims to reduce energy consumption by approximately 20% compared to conventional water-based coal preparation systems.
Khan receives US$70 million settlement
After receiving a US$70 million settlement from the Government of Mongolia, Canadian company Khan Resources is investigating options to distribute the majority of the funds remaining, after discharge of liabilities and obligations, to shareholders in a tax-efficient and timely manner. The process may entail multiple tranches.
The settlement related to the cancellation of Khan’s uranium licences in Mongolia in 2009.
On March 2, 2015 the international arbitration tribunal rendered an award to Khan as compensation for the Government of Mongolia’s illegal actions in relation to the licences.
On March 6, 2016, the company signed a settlement agreement with the Government of Mongolia under which, Mongolia would pay it US$70 million on or before May 16, 2016 and all outstanding matters pursuant to the international arbitration award would be resolved and terminated.
On May 18, 2016, the company announced that Khan and the government had signed all of the documentation required for the release of the US$70 million from an escrow account to Khan. The funds have now been received. In addition, Khan’s petition for certification of the international arbitration award has now been dismissed.
The settlement has seen the company’s primary objectives met and Martin Quick and Raffi Babikian subsequently announced their retirement from the Board.
Viking in Berkh Uul discussions
Viking Mines is working with the Mongolian Government in regards to licensing of its Berkh Uul Coal Project. A review of the Mongolian law on Prohibiting Mineral Exploration and Extraction near Water Sources, Protected Areas and Forests, commonly referred to as the ‘Long Name Law’, has impacted on the Berkh Uul licence.
Following a government resolution that licence areas in headwater zones and river basins are to be annexed and revoked, Viking has been advised by the Ministry of Tourism, Green Development and Environment that approximately 53% of the Berkh Uul prospecting licence falls within a headwaters of rivers zone.
This government determination impacts upon the company’s current coal resource and Viking continues to engage in discussions on this matter with the Mineral Resource Authority of Mongolia (MRAM) and the Ministry of Tourism, Green Development and Environment.
MRAM and the Ministry of Tourism, Green Development and Environment have indicated they are prepared to review the Long Name Law zone boundaries at Berkh Uul on receipt of a formal written submission. This submission was lodged by Viking on February 18, 2016 with MRAM.
The company has received informal advice that the various government departments are to form a working group to review its submission, commencing with a field inspection of the project area during the northern summer.
Berkh Uul is 400km north of Ulaanbaatar in northeast Mongolia within the Orkhon-
Selenge coal district and within 20km of the Russian border. The project is within 40km of rail access into Russian offtake markets, in close proximity to water, infrastructure and transport.
The deposit consists of shallow, consistent coal seams of high quality bituminous coal amenable to low strip ratio open pit mining. It contains a 38.3 million tonnes bituminous coal resource with 21.4 million tonnes in the indicated category and 16.9 in the inferred category.
In its March quarterly report Viking advised that no on-ground work had been undertaken at its Khonkor Zag Coal Project.