Feb. 1: Resource-hungry Asian states are locking horns with steelmaker ArcelorMittal and miner Vale to develop the world’s largest untapped coking coal deposit in Mongolia, as they scramble for raw materials to produce steel.
China, Japan and South Korea are scouring the world — from Africa, India, Australia and South America — and snapping up iron ore and coking coal assets to diversify from heavyweight suppliers such as BHP Billiton and Rio Tinto.
Asian private and state-linked firms are among the 15 bidders vying for the Tavan Tolgoi coking coal project, along with the world’s top steelmaker ArcelorMittal SA and the top iron ore miner Vale of Brazil, according to a source with direct knowledge of the matter.
Mongolia, while poor and undeveloped, sits on vast quantities of untapped mineral wealth, analysts say it could be one of the fastest growing economies of the next decade.
The country’s fledgling democratic government plans to give strategic investors a chance to develop the western block of the Tavan Tolgoi mine, estimated to house a total 6 billion tonnes of coal reserves, on a contract basis and cut its stake in the eastern block through an initial public offering, seen worth around $1.5 billion.
Over 20 investment banks were planning to submit written proposals for the stake sale, The Independent on Sunday reported this week.
“Erdenet, which has been tasked with running the eastern bloc (for the IPO), has been absolutely inundated by investment banks over the past two or three weeks,” said a banker in Ulan Bator. “It is the biggest undeveloped coking coal mine in the world, it is strategically important and that’s why you see so many interested parties,” said Carol Cao, an analyst with Macquarie in Hong Kong.