Tavan Tolgoi (, also Tavantolgoi, Tavantolgoy, "Five Hill") is one of the world's largest untapped coking and thermal coal deposits, located in the Ömnögovi Province in southern Mongolia. It has a total estimated resource of 6.4 billion tonnes, one quarter of which is high quality coking coal. It is divided into six sections: Tsankhi, Ukhaa Khudag, Bor tolgoi, Borteeg, and Southwest and Eastern coalfields. The Tsankhi section is the largest part, and is divided into East and West Tsankhi - these have had the most focus recently.
All of Tavan Tolgoi is owned by Erdenes MGL (a government owned company) except for Ukhaa Khudag section which is mined by the Mongolian Mining Corporation. Erdenes Tavan Tolgoi JSC (Erdenes TT), a subsidiary of Erdenes MGL, is managing the development of East Tsankhi, and the company is due to float on the Hong Kong, London and Ulaanbaatar stock markets in late 2012. Mining of West Tsankhi is planned to be contracted to a consortium of international mining companies – a decision is due in late 2012.
Tavan Tolgoi is situated in the southern Gobi Desert. Tavan Tolgoi is 15 km SW from Tsogttsetsii sum center, 98 km E from Ömnögovi Province center Dalandzadgad. It is 150 km from Oyu Tolgoi and about 240 km north of the Chinese border.
History
The Tavan Talgoi deposit was discovered by a Soviet exploration team that included the first Mongolian geologist Jaltsavyn Dugersuren in 1945, and exploratory drilling and feasibility studies continued until 1985. After Mongolia's democratic transition in 1990/91, the government allowed foreign companies to explore the deposit. BHP gained the exploratory rights in the early 1990s; however, they relinquished the rights in the mid-1990s because of financial concerns. In 2006, the government awarded Energy Resources LLC the mining license over the Ukhaa Khudag section (license MV-11952). The government also amended the Minerals Law in 2006 and identified 15 strategic deposits (allowing the government greater ownership of mines), of which Tavan Tolgoi was one.
In 2007, the government decided to review the ownership and investment rights over Tavan Tolgoi, and the prime minister (Bayar Sanjaa) proposed to renationalise the deposit - the government would gain 50%, Energy Resources keeping 14% and other investors the remaining 36%. Erdenes MGL LLC was formed as a wholly government-owned company in 2007, and later that year the government renationalised Tavan Tolgoi, leaving Energy Resources with the Ukhaa Khudag section. The government began negotiations in 2009 with mining companies to give them a 48% stake in Tavan Tolgoi. BHP was initially interested in, but in early 2009 withdrew its bid. After this, Peabody Energy (an American mining company) reportedly approached the government interested in the deposit.
In 2010, the Erdenes MGL LLC formed a new company - Erdenes Tavan Tolgoi - which would hold the licenses and manage the Tavan Tolgoi deposit. In July 2010 it was reported that the government had decided to sell 30% of Erdenes TT, keep 40%, give 10% to Mongolian citizens and 20% to Mongolian companies. However, in 2011 the government announced plans for an IPO of 29% of Erdenes TT, and to continue to give 10% of the shares to citizens and reduce from 20% to 10% the amount given to Mongolian companies, with the government to hold the remaining 51%. The money raised from the IPO would be used to fund the development of East Tsankhi, while West Tsankhi would be sold to a mining consortia.
Sections
East and West Tsankhi
The Tsankhi section is the largest in the Tavan Tolgoi deposit, and there are plans to develop both East and West Tsankhi, although both developments have been surrounded by confusion and delays.
There is often a misunderstanding that the title ‘Tavan Tolgoi’ refers to the Erdenes Tavan Tolgoi development in Tsankhi, since this is the largest and highest profile area in the entire coal deposit; however Tavan Tolgoi covers a much larger area.