This news is probably one of the reasons for todays action...
Mon Apr 22, 2013 12:54am EDT
ULAN BATOR, April 22 (Reuters) - Mongolia's massive Tavan Tolgoi coal mine will resume exports of coking coal to China on Monday after suspending deliveries in January due to cost pressures, the state firm in charge of the project said.
Erdenes Tavan Tolgoi signed an initial $250 million coal sales agreement with Aluminium Corporation of China (Chalco) in July 2011, but halted deliveries in January, saying the price paid for the coal was below the cost of production.
The firm, already saddled with huge debts, said it wanted to renegotiate the terms of the Chalco deal.
Late in January, Chalco, threatened to take legal action against Erdenes Tavan Tolgoi if it failed to comply with the terms of the contract.
Erdenes Tavan Tolgoi said in a statement on Monday that cost cutting at the mine had allowed it to reduce its losses. It would resume deliveries to Chalco immediately, but was still seeking to renegotiate the 2011 deal.
Chalco was not immediately available for comment when contacted by Reuters on Monday.
The development of the Tavan Tolgoi mine, located about 300 km (185 miles) from the Chinese border and thought to contain as much as 7.5 billion tonnes of coal, has been repeatedly delayed due to financing problems and bureaucratic hold-ups, as well as debates about the role of foreign investment in the project.
A plan to allow an international consortium including Peabody Energy Corp of the United States and China's Shenhua Group to develop the western section of the project fell by the wayside in 2011 amid complaints that the bidding process was unfair.
Erdenes Tavan Tolgoi said in January that it had also shelved a plan to list the eastern block of the project on overseas stock exchanges this year, saying market conditions were not favourable.