First Deputy
Prime Minister N.Altankhuyag, who is also the head of DP, has said that the
Tavantolgoi deposits, apart from the areas now held under license by companies
like Tavantolgoi LLC and Energy Resource, is planned to be divided into two
parts, each containing about three billion tons of coal. The plan is to let
domestic companies operate in one part and foreign and joint companies in the
other. Mongolia will retain 100 percent ownership and will be represented
by  Erdenes MGL. Ten percent of the
shares will be distributed free among all citizens, while another ten percent
will be traded in the Stock Exchange. Companies such as Mongol 999 can buy from
this 10 percent. He also said the shares distributed free will not be allowed
to be trade and will remain in families, subject to usual inheritance
practices.

He justified
the decision to have foreign companies operating in one part on four grounds.
First, “we need soft transportation conditions in order to deliver the coal to
Japan and Korea”; second, only foreign companies can make substantial advance
payments; third, the companies can be asked to invest in building a railway and
developing infrastructure; and fourth, “we can make beneficial negotiations
with investing countries”, he said.

Altankhuyag
said the main importers are likely to be China, Korea, Japan and Germany, which
means the coal will have to be transported through both China and Russia. This
calls for new railway routes. The present plan is to first connect Tavantolgoi
with Sainshand. From there, a railroad to Baruu-Urt, Khuut and Choibalsan will
be built to ultmately reach the Chinese port of Wanino. Another option is to
reach the coal to Vladivostok and Vostochni ports in Russia, from where it is about
4,000 km to South Korea. There is another suggestion to enter China from
Bichigt in Sukhbaatar province, and also Rashaant in Dornod.

The
Government wants all the new tracks to have a broad gauge. MPs are still
divided. Some of them favor building two separate railways, with gauges to
facilitate entry to both China and Russia, but, according to Altankhuyag, no MP
has so far said that all the new railroad should have the narrow gauge.