Sugar: Japanese, Korean companies still in running for Tavantolgoi

At a forum on developing the Tavantolgoi deposit held at the Civil Hall in Ulaanbaantar on August 18, several participants criticized the way contracts have been awarded for the project. Our correspondent spoke with D. Sugar, the head of State Property Committee. He is also the head of the management board of “Erdenes MNG,” a member of the working group to award contracts for Tavantolgoi.

– How do you respond to criticism about the Tavantolgoi contracts?

– Everything is on schedule. If all the preparatory work is completed, the IPO of Tavantolgoi will take place by the first of next year. The sooner it sells, the more returns the Government will receive. Everything is expected to be arranged in 2012, and the first bonuses are supposed to be released in 2013.

– What about negotiation with international investors?

– Mining has already begun in the Zuun Tsankh area of Tavantolgoi. We expect one million tons of coal to be extracted in the first year. When the operation there expands, we will need more operator companies. Negotiations for developing the Baruun Tsankh area of Tavantolgoi are still ongoing.

– Why aren’t Japanese and Korean companies among those awarded contracts for Tavantolgoi?

– The first thing is, Japanese and Korean operating companies have not been eliminated. There is no official decision yet. When we started negotiations, China and Russia expressed strong interest to us. But the Japanese and Korean operating companies did not offer high technology. They only wanted to buy coal. Again I want to say again that we have not reached a final decision. We have asked them to review their offers.

– What have you focused on in assessing the various bids?

– Many experienced, educated experts in various fields have participated in the process. They offered some good ideas and advice. But, the thing is, the working group of the State Property Committee has limited rights. For instance, the experts said it was wrong to divide Tavantolgoi into two parts for development. And some said domestic companies, not foreigners, should develop the project. But those issues can only be addressed in Parliament. It requires a lot of planning and research to implement this project. We consider the critiques.

– When will the contracts with the operating companies be signed?

– We hope this issue will be resolved this year. Exploration and extraction has already begun at Zuun Tsankh. But we want to focus on getting mining companies to cooperate, to improve the process. Previously, Australian and German companies expressed interest in operating. There is a possibility we could form some sort of consortium.

– There have been accusations of corruption in the process. Will you make any comment?

– I do not want to comment on that. I can say that I did not do anything wrong.