* Selection could mean India's Mesco Steel out of running
* Macmahon, BBM likely to start operations later this year -Erdenes Exec
ULAN BATOR Aug 12 (Reuters) - Mongolian state-owned miner Erdenes Tavan Tolgoi LLC has selected Australia's Macmahon Holdings Ltd and Germany's BBM Operta as mining contractors for the major East Tsankhi coal deposit, a top company executive told Reuters on Friday.
The government has split the massive Tavan Tolgoi coal field into two sections for development. The east Tsankhi area is owned by Erdenes TT, which is planning an initial public offering worth at least $10 billion to help fund the development of the deposit, while the west Tsankhi block is being auctioned to miners via an international tender.
The tender to pick mining contractors for east Tsankhi had also included India's privately-owned Mesco Steel. Its not clear how much the contract mining agreement is worth.
"Macmahon and BBM Operta have been chosen as contract miners for east Tsankhi," Erdenes MGL Executive Director B.Enebish told Reuters.
"They should be able to start mining operations this year."
Erdenes has said that it plans to produce 15 million tonnes of coal from the east Tsankhi field by around 2015.
To help bankroll the operations, it signed its first-ever term contract from the field with the Aluminium Corp of China Ltd , which will sell some of the coal to Chinese, Japanese and South Korean companies.