A government working group and Erdenes TT held discussions with TTJVCo in order to improve the existing contract and increase the price of coal. The price of coal to be sold in December has been set at 50 USD per ton, an 85 percent increase compared to last quarter.
Erdenes TT’s forecast for the first quarter of 2017 estimates that coal from the Tsankhiin Zuun mine will be sold for 60 USD per ton.
As a result of higher prices for coal in the global market, the government has instructed Erdenes TT to start production at the Tsankhiin Baruun mine. The government made the decision in order to increase state revenue.
SJS LLC, Khishig Arvin LLC, and Monnis LLC are the major mine operators that will be excavating the Tsankhiin Baruun mine. Early estimates suggest that 1.1 million tons of coal could be mined in two months.
Erdenes TT reported that starting production at the Tsankhiin Zuun and Tsankhiin Baruun mines is expected to increase state revenue by 100 million USD in the first six months of 2017. Production at the two mines is also expected to contribute to paying off debt owed to Chalco and TTJVCo, while also increasing foreign currency inflow.
Officials note that beginning production at the two mines will create an estimated 5,000 jobs, while also supporting SMEs that provide supplies to the mine.