B.Enebish: The contract with Chalco concerns only certain layers of coal
During the Discover Mongolia International Forum 2012, the Executive Director of Erdenes Tavan Tolgoi, B.Enebish, took a moment to answer time-sensitive questions from the press.
-There are reports that your company’s coal exports has reached 20 million ton. Is this true?
-This report is false and baseless. That isn’t possible.
-It has been said that Erdenes Tavan Tolgoi needs a certain amount of investment to release the IPO. Is the government investing into Erdenes Tavan Tolgoi through some form of infrastructure development program? Even today doesn’t the Erdenes Tavan Togloi use the Energy Resource’s road?
-We plan to sell stock on international bond exchanges to raise part of the needed investment. After all, the mining sector requires many hundreds of millions or billions MNT to initiate. Due to the IPO release being postponed, we are facing some difficulties with the financing. Up until today, we have given money to the government and Human Development Fund—we have never taken any. For instance, the Human Development Fund was given about 300 billion MNT in 2011 and 2012. This money was given to the public each month in the form of 21 thousand MNT. The idea behind this is that it’s a distribution of the wealth of natural resources to the nation. Though it looks as though the wealth of Tavan Tolgoi has been given since the beginning, it is hurtful to the company to give so much of the financing to the Human Development Fund.
-Has Erdenes Tavan Tolgoi met with Chalco again?
-At the moment, we have a contract with the Chinese-owned Chalco Company on the marketing of the coal. But this concerns only coal that is found on certain layers. More specifically, it concerns the upper-most layer of coal of the mine, or the fourth layer. The price on that coal was set differently on the first month and from then on, it was set based on an index. Next year, the mine will progress to the coal found on the third layer. Then we will agree on a different price. Meaning, we will confer again.
-Since your company uses the road Energy Resource built, it has been said that you have to pay rent for transporting on certain roads. Will you expand more on that?
-Yes. All of the companies that have conducted operations at the Tavan Tolgoi previously used to transport on modified dirt roads. Energy Resource has built the first paved road. The Erdenes Tavan Togloi mine uses that road to transport goods. To do this, we pay a fee to the Energy Resource’s road construction company, Gobiin zam.
-How was the road fee determined?
-The road fee was discussed for some time before we agreed upon it. During this time, we had our misunderstandings. Lately, things have been very cooperative about the issue.
-It has been said that because of the problems in the transportation operation of your company, many smaller companies have had losses. Can you please expand on this?
-Due to transferring large sums of money to the Human Development Fund, we had previously faced temporary financial difficulties—but now that issue has been settled.
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