Mar. 28 – A major consortium of South Korean companies has signed a US$3 billion preliminary rail deal with Mongolian Railway in Seoul on Thursday to help transport coal out of Mongolia’s Tavan Tolgoi – the world’s largest untapped coal mine with an estimated 6.4 billion tons of reserves.
The consortium, consisting of state-run Korea Rail Network Authority and top manufacturing companies including Lotte Engineering & Construction, Hyundai Engineering & Construction, and Daewoo Engineering & Construction, looks to begin work in the first half of next year on a 1,040-kilometer railway connecting Tavan Tolgoi in the Gobi Desert to eastern Mongolia’s Choibalsan.
The project is expected to take up to five years to complete and comes as part of the Mongolian government’s plans to build 5,500 kilometers of rail across the country by 2015 to help transport the country’s immense natural resources from mines to markets.
Demand for Mongolia’s coking coal from Asia’s major economies such as China, Japan, and South Korea has caused prices to soar, reaching near record highs this year.
Tavan Tolgoi’s IPO, tentatively scheduled now for the end of 2011 or first quarter 2012, is forecast to bring in as much as much as US$5 billion.
Goldman Sachs Group, Deutsche Bank AG, BNP Paribas SA, and Macquarie Group have reportedly been short-listed to manage the IPO. The Mongolian government is expected to announce the listing venue by as early as June this year.