Tue Jul 5, 2011
* Shenhua to own 40 pct of Tavan Tolgoi's western Tsankhi block
* Russian consortium to control 36 pct, Peabody 24 pct
By Fayen Wong and Khaliun Bayar
SHANGHAI/ULAN BATOR, July 5 (Reuters) - A venture led by China Shenhua Energy Co Ltd will hold a 40 percent stake in the western Tsankhi block of Mongolia's Tavan Tolgoi coal project, giving it the biggest share of one of the world's biggest coking coal deposit.
A Russian-led consortium would control 36 percent of the project, while U.S. miner Peabody Energy Corp would own the remaining 24 percent, according to a draft proposal to be submitted to the Mongolian parliament on Wednesday , the government said in a statement.
"This is a big win for Shenhua and will give a significant boost to its long-term growth prospects," said Helen Lau, a senior commodities analyst with UOB-Kay Hian in Hong Kong.
Tuesday's statement confirmed a Reuters exclusive that Peabody, a venture between Shenhua and Japan's Mitsui & Co. , and a Russian-led consortium were chosen in the bid.
The project, which may require initial investment of more than $7 billion, is seen as vital to kick-start the land-locked nation's economy. It will also generate billions of dollars in revenue for the companies involved and add tens of millions of tonnes of increasingly rare coking coal used by steel makers.
China, Japan and South Korea are snapping up iron ore and coking coal mines globally to diversify from heavyweight suppliers such as BHP Billiton and Rio Tinto .
The focus has shifted to undeveloped Mongolia, which some analysts say could be one of the fastest-growing economies of the next decade because of its vast quantities of untapped mineral wealth.
Lau said Hong Kong-listed Winsway Coking Coal Holdings , which has a joint venture with Peabody in China, would also benefit from more coal transportation to China.
Bai Xuefei, Shenhua's investor relations director, said he had no information on the issue and couldn't confirm it. Shenhua's board secretary Huang Qing couldn't be reached for comment.
Shenhua shares were up 2.2 percent by 0750 GMT in a flat Hong Kong market .
As part of the Mongolian government's proposal, the companies will make a $1 billion payment to it, including a non-refundable $500 million.
The Tavan Tolgoi coal deposit, in Mongolia's south Gobi region, has estimated reserves of 6 billion tonnes of coal, including the world's largest untapped deposit of steelmaking coking coal.
The western Tsankhi block holds around 1.2 billion tonnes of reserves, 65 percent of which is coking coal. It has an estimated production life of more than 30 years at 15 million tonnes a year.
The government also plans an up to $5 billion initial public offering for Erdenes-Tavan Tolgoi, the state-owned company in charge of the eastern Tsankhi block. Goldman Sachs Group Inc , Deutsche Bank AG (DBKGn.DE: Quote), BNP Paribas SA and Macquarie Group Ltd have been short-listed to manage the IPO.
Members of the Japanese-Korean-Russian consortium include POSCO , utility firm KEPCO , trading firm LG International and Daewoo International, state-owned Russian Railways and Japanese trading houses Itochu Corp , Sumitomo Corp , Marubeni Corp and Sojitz Corp.(Sourced Thomson Reuters)
* Shenhua to own 40 pct of Tavan Tolgoi's western Tsankhi block
* Russian consortium to control 36 pct, Peabody 24 pct
By Fayen Wong and Khaliun Bayar
SHANGHAI/ULAN BATOR, July 5 (Reuters) - A venture led by China Shenhua Energy Co Ltd will hold a 40 percent stake in the western Tsankhi block of Mongolia's Tavan Tolgoi coal project, giving it the biggest share of one of the world's biggest coking coal deposit.
A Russian-led consortium would control 36 percent of the project, while U.S. miner Peabody Energy Corp would own the remaining 24 percent, according to a draft proposal to be submitted to the Mongolian parliament on Wednesday , the government said in a statement.
"This is a big win for Shenhua and will give a significant boost to its long-term growth prospects," said Helen Lau, a senior commodities analyst with UOB-Kay Hian in Hong Kong.
Tuesday's statement confirmed a Reuters exclusive that Peabody, a venture between Shenhua and Japan's Mitsui & Co. , and a Russian-led consortium were chosen in the bid.
The project, which may require initial investment of more than $7 billion, is seen as vital to kick-start the land-locked nation's economy. It will also generate billions of dollars in revenue for the companies involved and add tens of millions of tonnes of increasingly rare coking coal used by steel makers.
China, Japan and South Korea are snapping up iron ore and coking coal mines globally to diversify from heavyweight suppliers such as BHP Billiton and Rio Tinto .
The focus has shifted to undeveloped Mongolia, which some analysts say could be one of the fastest-growing economies of the next decade because of its vast quantities of untapped mineral wealth.
Lau said Hong Kong-listed Winsway Coking Coal Holdings , which has a joint venture with Peabody in China, would also benefit from more coal transportation to China.
Bai Xuefei, Shenhua's investor relations director, said he had no information on the issue and couldn't confirm it. Shenhua's board secretary Huang Qing couldn't be reached for comment.
Shenhua shares were up 2.2 percent by 0750 GMT in a flat Hong Kong market .
As part of the Mongolian government's proposal, the companies will make a $1 billion payment to it, including a non-refundable $500 million.
The Tavan Tolgoi coal deposit, in Mongolia's south Gobi region, has estimated reserves of 6 billion tonnes of coal, including the world's largest untapped deposit of steelmaking coking coal.
The western Tsankhi block holds around 1.2 billion tonnes of reserves, 65 percent of which is coking coal. It has an estimated production life of more than 30 years at 15 million tonnes a year.
The government also plans an up to $5 billion initial public offering for Erdenes-Tavan Tolgoi, the state-owned company in charge of the eastern Tsankhi block. Goldman Sachs Group Inc , Deutsche Bank AG (DBKGn.DE: Quote), BNP Paribas SA and Macquarie Group Ltd have been short-listed to manage the IPO.
Members of the Japanese-Korean-Russian consortium include POSCO , utility firm KEPCO , trading firm LG International and Daewoo International, state-owned Russian Railways and Japanese trading houses Itochu Corp , Sumitomo Corp , Marubeni Corp and Sojitz Corp.(Sourced Thomson Reuters)
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