OREANDA-NEWS. March 21, 2011. The organisers of the tender have formally notified Russian Railways that the Company and its partners have passed the pre-qualification stage on the tender to develop the huge Tavan Tolgoi coal field in Mongolia, which has reserves of 6.5 billion tons of coal, making it one of the ten largest in the world, reported the press-centre of Russian Railways.

In addition to Russian Railways, the consortium includes the Siberian Coal Energy Company from Russia, several Korean companies led by the Korean Resources Corporation and Japanese companies, including Itochu and Sumitomo.

In the second stage of the tender, a working group from the Mongolian Government will propose conducting negotiations with qualified parties with a view to determining the winner and agree on the conditions of the agreements to be concluded.

In addition to developing the deposit, one of the requirements the bidders have to fulfil is the construction of a 1520mm broad-gauge railway line from the Tavan Tolgoi field itself to the town of Sayshand, which is connected to the existing network of Ulan Bator Railways.

A major competitive advantage of the proposal by the Russian-Korean-Japanese consortium is that it can provide a complete transport and logistics supply chain for the delivery of Mongolian coal to potential consumers in China and other countries.

In addition to the construction of a new rail line, the consortium has proposed the modernisation of Ulan Bator Railways since if through capacity is not increased, it will be impossible to export coal from Mongolia, use the port facilities of the Siberian Coal Energy Company in the Far East or achieve favourable tariffs for transit shipments of coal on the Ulan Bator Railways’ network.

This makes the consortium’s proposal very attractive for consumers of coal in Japan, Korea, India and other countries and will allow Mongolia to expand significantly its sales market.

It must be emphasised that tariff decisions are aimed at ensuring the effectiveness of an integrated project involving Russian Railways and cannot be used to implement alternative projects with other partners.