IGO to record impairment against nickel assets in strategy shift
IGO has been undertaking a strategic review in an attempt to revaluate its resources.
Tavan Tolgoi (Image from WikiMedia Commons)
Barely 24 hours after Rio Tinto-controlled Turquoise Hill (TSE:TRQ) got the go-ahead for the long-delayed expansion of the massive copper-gold Oyu Tolgoi mine, the Asian country authorities have struck again. This time, the parliament has decided to cancel a deal with a consortium of foreign firms to develop the giant Tavan Tolgoi coal mine near the Chinese border.
The move took investors by surprise as during the weekend Prime Minister Chimed Saikhanbileg said talks with China’s Shenhua Energy and Japan’s Sumitomo Corp. were in their final stages, Reuters reports.
A sticking point is the fact that Erdenes Tavan Tolgoi, the state-owned company that holds the license to the deposit, owes US$150 million to China’s Chalco Group.
Located in the South Gobi desert, Tavan Tolgoi — mined since the 60s — is home to the world’s largest high-quality coking coal deposit used in steelmaking, with reserves estimated in 7.4 billion tonnes. However management of the operation has been characterized by bureaucratic bungling.
On again- Off again
In 2011 Mongolia’s National Security Council rejected a deal struck with US giant Peabody Energy, China’s Shenhua and a Russian-Mongolian consortium mid-September, just two months after they were announced as winners. At the time losing bidders from Brazil, India and South Korea raised serious concerns and Japan went so far as to call the bidding process “extremely regrettable.”
Foreign financial contribution is key to move the project forward. Tavan Tolgoi, the second largest mining investment in Mongolia behind Oyu Tolgoi, is located in an area without the roads and railways needed to quickly and economically deliver the coal to markets. It also lacks the power and water supplies to support big mining camps.
The mine is divided into six sections: Tsankhi, Ukhaa Khudag, Bor tolgoi, Borteeg and south-west and eastern coalfields.
Tavan Tolgoi is considered to be crucial to the efforts of Mongolia to convert its mineral wealth into economic gains.
7 Comments
JH
The Ghengis Khan mentality lives on.
Clueless about business.
The heritage is to do nothing except plunder from others.
Skilful with bow and pony, rape and pillage.
Did I miss any skills out?
Individuals in Mongolia the same as everywhere, good and bad, but the cultural mindset, bedtime stories and attitude of the culture ,,,and what you know is what you create. In this case…a rabble.
Honheree
I hate to tell you I told you so, but this is what I wrote 3 days ago. Just confirming that Mongolia cannot be trusted……
The PM of Mongolia also stated that the dispute would be settled by the end of 2015…………after going on for many years! This just another Mongolian ploy of ‘making a poison’ to allow the corrupt greedy elite, and politicians to make it difficult for Rio Tinto. Read the first three paragraphs of the Mongolian President’s speech on February 12, 2015 to understand what I mean…http://www.president.mn/eng/ne…
They have employed this along with false accusations to disrupt Centerra, and are now facing the $100 million consequences of their illegal, corrupt dealing with Khan Resources. It is this dirty way of thinking and corruption that has brought Mongolia where it is today.
An additional comment and more ‘making poison’. After the PM of Mongolia stated that not only Oyu tolgoi but Tavan tolgoi would be settled, the Speaker of Ikh Khural (Parliament) stated, ‘no way” per the following:
http://mongolia.gogo.mn/r/1452…
So, on and on it goes!!! Delay after delay……….. Who in the Mongolian Government speaks for Mongolia and who can be trusted. They should be so ashamed and embarrassed, but no they prefer to show the world how arrogant, corrupt, greedy and incapable of governing democratically they are.
BaatFarka
Gents,
Don’t be too harsh on the poor Mongolians. Their country
is built on donations for America/Russia and China. The rich live the high life
down town, with their leather jackets and mink coats, while the majority live
with no water or sanitation up on the surrounding hills. Do they really want to
manage their resources and help build the infrastructure desperately needed to
make the country civilized?
Who knows? But the way they are going they will be left
behind, a looking glass into a time that the rest of the world forgot?
Good luck to them, they seem happy to remain this way?
BF
Nautilus
With every election and change of Government, just about all State employees are ‘fired’ to make way for the next horde of inexperienced, uninformed, misinformed, self centered, greedy, super suspicious, superstitious, officials who know that their tenure and opportunity for self enrichment will be short lived.
No continuity = No stability = No Progress = No Development
Investment, HR, Legal and other analysts / specialists must live in Mongolia and do business in Mongolia for at least two years before reporting back on investment opportunities, procedures, policies, action plans, procedures, etc. to improve the odds on success.
Heaven
God bless Mongolia!
rockhound17
Wow!
Akala34
Good & wise decision, China’s Shenhua Energy and Japan’s Sumitomo Corp should have tried to make a deal with Erdenes Tavan Tolgoi instead MMC. So simple is that!!!