Mongolia’s State-owned miner Erdenes Tavan Tolgoi has agreed to sell $250 million worth of coal from the east Tsankhi deposit to Aluminium Corp of China Ltd (Chalco), a move insiders said was aimed at raising cash to help fund its impending listing fees.
Under the agreement, Chalco would resell 30 percent of the coal to Japanese trading houses Itochu Corp and Mitsui as well as State-owned Korea Resources Corp, Erdenes TT said in a statement on Wednesday.
A source involved in the listing of Erdenes TT said the government has been working hard to raise $500 million of initial funding needed to kick off the IPO process.
Erdenes TT did not say how much coal would be sold to Chalco under the $250 million deal, but it said the agreement would expire within one to 1-1/2 years. However, a newspaper report quoted B. Enebish, head of State-run Erdenes MGL, as saying the deal would last five years.
After the deal expires, Chalco would then have to pay market price for the coal, Erdenes TT said. But it was unclear whether Chalco would continue to be the sole recipient of the coal from east Tsankhi deposit when the agreement expires.