The coal price at the Tavan Tolgoi mine has increased USD 60 or by 70 cents per ton after agreement reached between ‘Erdenes Tavan Tolgoi’ JSC and Chalco Trading Hong Kong Co Limited. The coal price has remained unchanged since 2017.  

If the Board of Directors of Chalco Trading Hong Kong Co Limited approve the request of ETT JSC to increase the price, then Tavan Tolgoi coal price will reach USD 61.35. Representatives promised to give an answer next week.

The two sides also agreed to make two kinds of updates in the price adjustment mechanism or price-indexing methodology, within the framework of correcting the mechanism’s disadvantages in the agreement established in 2011 with Chalco Trading Hong Kong Co Limited. Specifically, one more indice will be added. By doing so, the price will be calculated in accordance with five indices, which changes the index basket coefficients.  As a result, it decreases CR China Coking Price Index, which was at 60 percent, to 30 percent.

It creates advantages to raise the price in harmony with market growth, bring the price closer to the coal price of West Tsankhi mine within 1 and 1.5 years, and protect from risks that may occur when coal prices fall.