Tavan Tolgoi Coal Mine

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Tavan Tolgoi Coal Mine (Таван толгой уурхай) is an operating coal mine in South Gobi, Mongolia.

Location

Table 1: Project-level location details

Mine Name	Location	Coordinates (WGS 84)
Tavan Tolgoi Coal Mine	South Gobi, Mongolia	43.625, 105.474167 (exact)

The map below shows the exact location of the coal mine:

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Project Details

Table 2: Project status

Status	Status Detail	Opening Year	Closing Year
Operating	–	2011	–

Table 3: Operation details

Note: The asterisk (*) signifies that the value is a GEM estimated figure.

Capacity (Mtpa)	Production (Mtpa)	Year of Production	Mine Type	Mining Method	Mine Size (km2)	Mine Depth (m)	Workforce Size
–	11.2	2022	Surface	Open Pit	–	60*	439

Table 4: Coal resources and destination

Total Reserves (Mt)	Year of Total Reserves Recorded	Total Resources (Mt)	Coalfield	Coal Type	Coal Grade	Primary Consumer/ Destination
–	–	6009	Tavan Tolgoi	Bituminous	Thermal & Met	–

Table 5: Ownership and parent company

Owner	Parent Company	Headquarters
Erdenes MGL	Erdenes MGL [100%]	Mongolia

Table 6: Historical production (unit: million tonnes per annum)

ROM or Saleable	2017	2018	2019	2020	2021	2022	2023
Saleable	10	11	16	13	8	11	30

Note: The above section was automatically generated and is based on data from the Global Coal Mine Tracker April 2024 release and the September supplement.

Background

The Tavan Tolgoi coal deposit is a coal mine in South Gobi (Ömnögovi) Province, Mongolia.

The deposit is in Umnugovi province and is located 90 km from Dalanzadgad city and 540 km from the Mongolian capital, Ulaanbaatar. A November 2010 presentation by a Mongolian government official stated that the deposit comprises six coalfields being Tsankhi, Ukhaa khudag, Bor tolgoi, Borteeg, and Southwest and the Eastern coalfields. "Tsankhi is the main coalfield and contains most of its coking coal resources," the presentation stated.

In 2010, the Mongolian government company which owns the mining licences over the Tavan Tolgoi coal deposit, Erdenes MGL, stated that the deposit comprises just over 6 billion tonnes of coal: 1,529 million metric tonnes of coking coal and 4,480 million tonnes of thermal coal. Another Mongolian government presentation from around the same time stated that the deposit has 6.4 billion tonnes of coal. The official also noted that the Bor tolgoi and Southwest and Eastern coalfields within the Tavan Tolgoi deposit "need to be studied more." The initial development of the coalfield has been flagged as being based on annual production of between 15 and 30 million tonnes over a 30 year mine life. An industry report from 2024 referred to total resource base estimated at 7 billion tonnes, based on independent assessment conducted by Stantec, a US-based consulting firm in 2020.

In June 2011, Mongolia's prime minister said that the coal mine was on track to be completed in 2012. Mongolia was inviting foreign companies to bid to operate Tavan Tolgoi. In mid-September 2011 Mongolia rejected plans for Peabody Energy, China's Shenhua Group and a Russian-Mongolian consortium to jointly develop the Tavan Tolgoi coal deposit. Mongolian officials said they would hold new negotiations with various companies involved.

Plans to develop the mine again fell through in 2015. In April 2020, Mongolia’s parliament cancelled a deal with a consortium of foreign firms to develop the giant coal mine. In July 2020, it was reported the Mongolian government was looking to sell its stakes in the US$4 billion Tavan Tolgoi coal mine.

2024 Expansion Plans

As of 2024, ETT has extracted about 2% of the total coal resource, according to an interview with ETT's CEO. Two out of six coal fields were in operation, and one more was in the development in the feasibility study phase for a coal mine with 400 million tonnes of resources, anticipated to have a life of mine of 30 years. (estimated annual equivalent is therefore 13 Mtpa). The remaining three fields are in development phases while exploration continues. Coking coal that ETT mines is of high quality and grade and much sought after in the market. The viability of ETT operations is tied to the performance of steel makers in the region, including China. When built, the 450MW Tavan Tolgoi power station (Rio Tinto) will also consume coal.

• Owner: Erdenes Tavan Tolgoi
• Parent company: Erdenes Tavan Tolgoi
• Location: Tsogttsetsii district, South Gobi province, Mongolia
• GPS coordinates: 43.625, 105.474167 (exact)
• Mine status: Operating
• Capacity:
• Mineable reserves: 4,480 million tons (thermal); 1,529 million tons (metallurgical)
• Coal type: Thermal, Metallurgical
• Mine size: 68,522 hectares
• Mine type: Surface
• Start year:
• Life of mine: 30 years
• Equipment:
• Number of employees:

Project plans (2010)

The development of the mine has been flagged as needing to tap into the Balgasiin Ulaan Nuur underground water deposit 70 km to the south of the Tavan Tolgoi deposit and require the construction of the Tavan Tolgoi power station, a 75-100 megawatt power station to support the mine and a proposed new town to house the 600 plus miners and support services. It is proposed that the coal be trucked 270 kilometres to Gashuun Sukhait near the Chinese border. The road is currently under construction and scheduled to be completed in 2011. In the longer term, railway connections to China or Russia will be necessary.

Jostling for the mine of the century

In the first half of 2010 it had been suggested that the deposit would be split with one half being developed by a consortium comprising Shenhua-Peabody and the other by a Russian-Korean consortium.

In June 2010, Peabody Energy executives announced that Wyoming's Powder River Basin model for mining coal should be applied to nations around the world in order to "lift growing populations out of poverty." Fred Palmer, senior vice president of government relations for Peabody, spoke at the International Advanced Coal Technologies Conference in Laramie, WY. Palmer called coal "a matter of human rights" in that "cheap coal offers a higher standard of living for all." Peabody Energy - and other companies - are eyeing a coal field in Mongolia to apply the Powder River Basin model of cheap and abundant coal leasing. Peabody, which operates three coal mines in the Powder River Basin, has argued against climate change legislation at the national and international level, pushing instead for coal gasification and carbon sequestration technologies, under the name clean coal. Others believe the scenario of building Powder River Basin-sized coal fields would have a devastating impact in terms of climate change.

Despite Peabody's optimism that it had the inside running, the Mongolian parliament decided in july 2010 that it would maintain a majority stake in the project. An Australian government trade agency reports that "a daughter company of the government owned Erdenes MGL, Erdenes TT, has been formed to control the project. Erdenes TT will maintain a 50 per cent stake in the project, 10 per cent of the shares will be issued to every citizen of Mongolia, 10 per cent will be listed on the MSE [Mongolian Stock Exchange] and 30 per cent open to foreign investment."

In December 2010, bidders from Japan and South Korea expressed interest in developing the Tavan Tolgoi coal deposit. Interest came after Mongolia's government abandoned a plan to use contract miners to develop the entire site. The government is now looking for outside investors to invest in and develop roughly half the deposit, in the western Tsankhi area. Under a contract-mining arrangement, the government is responsible for financing development of the deposit, including the cost of any related infrastructure such as roads, and retains most of the earnings from selling the extracted coal. Contract-mining companies typically work for fixed fees. The site has an estimated 6.4 billion metric tons of coal reserves, making it the world's second-largest coal deposit, after the Shengli field in China, according to data provider Raw Materials Group.

Mongolia picks coal field developers

On July 4, 2011 it was announced that United States based Peabody Energy, China’s Shenhua Group (神華能源) and a Russian-led consortium were selected to develop the Tavan Tolgoi coal deposit in Mongolia. Authorities in the country stated that they hoped its mining industry could help pull thousands of people out of poverty. The government announcement made no mention of Japan’s Mitsui and South Korea’s Korea Resources Co — originally on the shortlist of preferred bidders to develop Tavan Tolgoi.

Shenhua is to have a 40 percent share and Peabody 24 percent, while the remaining 36 percent is to be held by the Russian-led consortium. The draft agreement is subject to parliamentary approval and would be submitted to lawmakers. The selected companies will jointly develop the western part of the Tsenkhi block of Tavan Tolgoi, which contains mainly coking coal. State-owned Erdenes Tavan Tolgoi (ETT), set up to manage Mongolia’s coal mining interests, owns the rights to mine the block, and will do so with its foreign partners.

Developers rejected

In mid-September 2011 Mongolia rejected plans for Peabody Energy, China's Shenhua Group and a Russian-Mongolian consortium to jointly develop the Tavan Tolgoi coal deposit. Mongolian officials said they would hold new negotiations with various companies involved.

Public offering

In September 2011 it was reported that Mongolia planned to sell a stake in its Erdenes Tavan Tolgoi coal-mining company to the public in 2012, hoping to raise more than US$3 billion. The sale would be the nation's largest IPO. The four investment banks selected to lead and arrange the share offering were Deutsche Bank, BNP Paribas, Goldman Sachs and Macquarie Group. Erdenes was expected to retain a stake in the Tavan mine with a consortium of US, Chinese and Russian companies developing the project in return for a share.

The winning bid, however, was annulled after Japan and South Korea complained the process was unfair, and Mongolia has also attempted – unsuccessfully – to list the mine on global stock exchanges. In March 2021, and with Erdenes seeking to build out infrastructure in order to replace Australia as one of China's top coal suppliers, the company raised approximately US$200 million in an initial bond issue, arranged by two local investment banks, BDSec JSC and the Mongolian International Capital Corporation. A second bond issue is planned to take place in the third quarter of 2021. According to the company's chief executive, Tavan Tolgoi will require US$3.4 billion in investment over the 2021-2025 period, with 70 percent of that to potentially come from the company's own reserves.

World Bank flags coal development

In a 1995 review of the country's energy policy, the World Bank signalled its support for the development of a substantial export-oriented mine at Tavan Togloi. The bank noted that while there was a small mine producing coal for local heating plants, far greater operations could be possible with the development of infrastructure. The bank noted that "in a series [of] exploration activities and feasibility studies during 1945-1985, Russian specialists identified huge coal reserves with low stripping ratios in this area, with prospects for development of a 20 mtpy [million tonnes per annum] thermal and coking coal mining operation. The thermal coal seams are reported as exceptionally high quality (8,000 kcal/kg), as are the coking coal reserves, although the Russian determinations of coking properties are not easily comparable with international testing parameters and specifications. From a mining point of view, at least, there are very promising long-term prospects for development on a large scale through private sector financing."

A mine developing the deposits, the report stated, "could both supply Mongolia's thermal coal requirements and provide exports of thermal and coking coal to Russia and/or China, or, through these countries, to other international markets. International experts should assist MEGM to undertake further review of the Russian evaluations completed in the past (including further sampling and testing of the thermal and coking coal qualities), and to complete a preliminary assessment of infrastructure (transport) needs, options, and costs."

Details of the deposit

According to Erdenes MGL the Tavan Tolgoi deposit comprises:

• comprise five mining licences -- 11943À, 11953À, 11954A, 11955A, 11956A -- over a 68,522 hectare mining field. The licences are all owned by Erdenes MGL LLC;

• the company states that the field has "poor infrastructure development" and an "improved dirt road from Tavan Tolgoi to Gashuun Sukhait border crossing";

• the deposit comprises 1,529 million metric tonnes of coking coal and 4,480 million tonnes of thermal coal giving a total of 6,009 million tonnes;

• Coking coal calorific value 6500-7500 Kcal/kg; Sulfur content 0.6%; ash: 10%; moisture content: 8.5%

• Thermal coal calorific value 4900 Kcal/kg; Sulfur content 0.8%; ash content: 20.1-33.3%; moisture content: 8.5%.

• The project is targeting 15 million tonnes of production annually.

Timeline

• 1990's: BHP Billiton held the rights to the Tavan Tolgoi deposit. However, they determined that the deposit was uneconomic and relinquished the rights to the project.

• August 2006: Energy Resources LLC was "granted with mining license MV-11952 for the Ukhaa Khudag coking coal deposit covering area of 2,960 hectares and mining at Ukhaa Khudag commenced in April, 2009."

• November 2007: The Mongolian government decided to establish a working group to renegotiate the ownership and investment rights for Tavan Tolgoi which were held by Energy Resources LLC, a consortium of Mongolian businessman. The then Mongolians prime minister, Bayar Sanjaa, flagged the possibility of nationalizing Tavan Tolgoi following public criticism of a draft investment agreement for the deposit. Under the draft agreement, Energy Resources were to hold a 14% stake, other investors 36% and the government 50%.

• December 2007: The Mongolian government takes control the the deposit. "Tavan Tolgoi has become an issue of national security and public interests," Sanjaa was reported as stating in his inaugural speech in parlaiment.

• January 2009: BHP Billiton withdraws its bid to hold a 49% stake in a company developing the Tavan Tolgoi deposit. Subsequently, Peabody Energy met with Mongolian government officials about the project.

• June 2010: Government announces plans to sell 30% of a company controlling the Tavan Tolgoi deposit to help fund the $1.5 billion of development cost with the government retaining a 40%;

• December 8, 2010: Erdenes MGL announces details of bidding process for seeking companies that "will invest and cooperate in tenements" for the western Tsankhi section of the Tavan Tolgoi coal deposit". Erdenes states in the document that it is seeking "investors that will conduct negotiations on transit transportation, prerequisites, upfront payment, port utilization, and investment and product sales terms in relation to Tavan Tolgoi coal deposit development as set out in Resolution No. 39 of the Parliament of Mongolia dated 2010 on Tavan Tolgoi coal deposit development". The selected bidder, the company stated, "shall conduct operations by entering into a contract with Erdenes Tavan Tolgoi company on investment and cooperation in coal mining in the coking coal areas at the Tavan Tolgoi deposi". The coal block is referred to as Tsankhi block 1, which is reported as having an estimated 1.2 billion tons of coal.

• December 27, 2010: Erdences MGL releases details of bidding process for contract miners seeking the development of the eastern Tsankhi deposits;

• January 17, 2011: Deadline for proposals for companies interested in investing in the company developing the western Tsankhi, comprising approximately half the Tavan Tolgoi deposits.

• January 27, 2011: Deadline for expressions of interest from contract-mining companies in developing the eastern Tsankhi section of Tavan Tolgoi;

• February 2011: Mongolian government cancels auction of stake for private companies in the the Tavan Tolgoi deposits;

• March 2011: The Mongolian government selected six selected preferred bidders for the development of Tsankhi block 1. The six, which began negotiations with the Mongolian government on March 15, are:

• • a Korea Resources Corporation led consortium which also includes Itochu Corporation, Sumitomo Corporation, Marubeni Corporation, Sojitz Corporation and OAO Russian Railways;
  • Mitsui & Co. and Shenhua Group
  • Peabody Energy
  • Vale,
  • Xstrata Coal
  • ArcelorMittal (MT).

• June 2011: Mongolia's prime minister states that coal mine will be operational in 2012, but the country is still looking for outside bidders to manage the project.

• July 2011: Mongolia picks trio to develop mine, including United States based Peabody Energy.

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Additional data

To access additional data, including an interactive map of world coal mines, a downloadable dataset, and summary data, please visit the Global Coal Mine Tracker on the Global Energy Monitor website.