Reuters reported that Mongolian state owned Erdenes Tavan Tolgoi commencing production of coal from a block of its giant Tavan Tolgoi mine this year should boost confidence of global mining companies about their investemnt plans in Mongolia

Mr Batdorj Enkhbat CFO of Erdenes-Tavan Tolgoi told a mining conference that coal extraction at the western Tsankhi block would begin soon, providing a much needed fillip for the cash strapped company which last month was forced to suspend deliveries to its only customer China because of financial difficulties.

A local newspaper, citing E-TT, said production would start by April.

The development of the western block would add 888 million tonnes of reserves to the mine, bringing the total current exploitable reserves to 1.8 billion tonnes, Mr Enkhbat said.

Domestic miner Khishig Arvin LLC would carry out the initial development work, but Mr Enkhbat would not say whether E-TT would finally take on foreign partners. “We don”t yet know the answer to the question,” he said.

Major foreign mining companies, including Peabody Energy and Shenhua Group, have long sought to invest in the 7.5 billion tonne coal development at the core of a mining boom expected to transform land locked Mongolia”s fortunes. In 2011, Peabody and Shenhua were named as members of a consortium that would be granted the rights to develop Tavan Tolgoi”s western block, but the Mongolian government was forced to backtrack after other bidders from Japan and South Korea branded the decision unfair.