Prime Minister J.Erdenebat met with the administration of Erdenes Tavan Tolgoi JSC (Erdenes TT) on January 20, who reported that 300,000 tons of coal will be sold for 71.5 USD per ton.
In 2016, the government delegated the responsibility of restarting operations at the West Tsankhi mine of Tavan Tolgoi to Erdenes TT. The decision to restart the mine was in response to rising global coal market prices and the need to increase state budget revenue. During the meeting, CEO of Erdenes TT D.Ariunbold told the Prime Minister that operations at the West Tsankhi mine have resumed and that the first sale has been taken place.
Through an open call for bids, an initial 300,000 tons of coal will now be sold for 71.5 USD per ton. The money will be paid in advance, marking two firsts for sales procedures at Erdenes TT.
As determined by the four indices used for pricing, in Q2’16, Erdenes TT was selling coal for 24.4 USD per ton. That number improved slightly, rising to 27 USD per ton in Q3, and to 33 USD per ton in Q4. After contract renegotiations with TTJVCo, Erdenes TT started selling coal for 50 USD per ton in December. As of the first quarter of 2017, the price of coal per ton was at 59.3 USD. On January 15, an agreement to sell 300,000 tons of coal for 71.5 USD per ton was signed.
Erdenes TT sold 4.2 million tons of coal in 2015, 7.65 million tons in 2016, and has stated they are working to sell 11.5 million tons in 2017. They also stated that they are focusing on repaying the remainder of the money owed to Chalco.