Mongolia will keep full
ownership of Tavantolgoi, its mining minister, D. Zorigt has said while
expressing the hope that the coking coal deposit 
is likely to finally go ahead in 2012. “A state-owned company is
going to own 100 percent of Tavan Tolgoi and license the mining operations,”
he has told Reuters. “It will be a 50 percent state-owned company, and the
rest will be sold publicly” in a domestic share offering.

Mongolia is trying to make
the most of its huge, untapped reserves of coal, copper, gold and uranium. Its
fledgling democracy has had to manage high public expectations and show it will
not sell the country”s riches on the cheap. Zorigt was reiterating a decision
made earlier this year, and his comments could help quell speculation the
government might change its mind. He said the government had already announced
it was open to bids from “fee-based” mining operators across the
world to help develop the project.

At the beginning of this
year, the government abruptly announced the state would maintain control and
foreign companies could bid for licenses to develop and run the mine. “We
certainly believe (the decision) will give us a chance to create a national
flagship company that will be a player in the region and a leading player
globally,” Zorigt said.

But Mongolia has not
completely ruled out foreign ownership at Tavantolgoi, he said. “The
second portion of it — in due time we are going to have bidding by
international investors, but that will be done in conjunction with other
aspects of the project, particularly transportation issues.”

Tavantolgoi is estimated to
hold around 6.5 billion tons of coking coal, and total annual output could
reach 50 million tons, with the bulk of it to be shipped south to China, where
demand is almost guaranteed. Although funding was already available for a
dedicated rail line to the Chinese border, the Mongolian Parliament decided in
June that priority would be given to a rail route running east, enabling the
coal to be shipped to Russia and the Pacific coast.

Investors suggested the decision
was motivated by concerns about Mongolia”s growing dependence on China, but
Zorigt said it was the country”s dependence on unprocessed raw materials that
was the chief concern. “It is driven by … the logic of economic
growth,” he said.

“Certainly when it comes
to the resources of the south, while we are aware that most of it will go to
the markets in China and northeast Asia, a significant portion needs to be
delivered to industrial production in Mongolia itself, and that”s why the
railway decision has been made.”

Analysts have suggested the
decision to cancel the auction at Tavantolgoi was partly a response to
accusations the government had sold resource rights cheap to foreign firms such
as Ivanhoe Mines, the majority stakeholder in the country”s other flagship
mining project at Oyutolgoi.

“There are debates about
the economic benefits of the project, but I can only say that Mongolia is an
open and free country and everybody is entitled to his or her views,”
Zorigt said. “Our conviction is that the (Oyu Tolgoi) project is going to
be a very significant one that will drive the growth of the country for the
next decades.”

Mongolia, dubbed
“Minegolia” by analysts, could see more big discoveries in the coming
years. “Mongolia is a big country and one of the last remaining places in
the world where such big discoveries can be made,” Zorigt said.

But the future of its economy will ultimately hinge on its ability
to transcend mining, he added. “It is our ultimate belief that economic
prosperity is not delivered by one particular industry or one particular
resource. Economic prosperity and economic growth are actually made possible by
the skill-sets of the people.”