Mine contractor Macmahon Holdings' Mongolian subsidiary has suspended work on Tavan Tolgoi coal mine over a delay in payments from state-owned mine operator Erdenes Tavan Tolgoi.

The Australia-based Macmahon Holdings said that the company has overdue payments of $22m from Erdenes Tavan Tolgoi for the works it has completed in the mine.

The company said in a statement, "Macmahon advises that operations at Tavan Tolgoi have now been suspended by ETT, as part of a range of disagreements between the parties.

"The parties are engaging in discussions to see whether the matters can be resolved by agreement."

The company had won the $500m contract in 2011, in a joint venture with German firm Operta to work as a contract miner in the eastern pit of the mine.

"The parties are engaging in discussions to see whether the matters can be resolved by agreement."

Macmahon Holding has been operating at Tavan Tolgoi since 2012, and the contract was due to expire in 2017.

The mine is located in the eastern Tsankhi area of the Tavan Tolgoi deposit, located in Mongolia's South Gobi region, about 540km south of capital Ulaanbaatar. It is estimated to contain 1.08 billion tonnes of thermal and coking coal.

The mine started production at a rate of three million tonnes of coal per year, which was planned to be increased to 15 million tonnes following the completion of the entire mine and transport infrastructure.

Macmahon faced similar delays in payment in 2013 for the work at the Tavan Tolgoi project.

Source: Mining Technology