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Deals to soon yield US$8 billion in investments for Mongolia coal mines

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World Coal,

The Mongolian prime minister has announced that the country will shortly complete negotiations that will free up US$8 billion for expansions at the country's largest coal and copper mines.

The PM stated that talks between the government and investors are developing towards the close of deals on Mongolia's multi-billion dollar Oyu Tolgoi copper mine and Tavan Tolgoi coking coal mine.

Mongolia is desperate for a revival in foreign investment after it fell 74% last year amid disputes with foreign investors such as global miner Rio Tinto.

The government is in the final stages of forging a deal to hand over management of state-owned Erdenes Tavan Tolgoi coal mine to China's Shenhua Energy, Japan's Sumitomo Corp and Mongolian Mining Corp subsidiary Energy Resources.

Mongolia has asked the partners to spend US$4 billion to expand the Tavan Tolgoi mine's capacity.

Mongolia's mineral riches and strategic location drove peak economic growth of 17.5% in 2011.

However, disputes with investors have recently soured investment appetite.

The Asian Development Bank has estimated the average economic growth rate for 2015 and 2016 could slow to as little as 4%, without a strong recovery in foreign investment.

Saikhanbileg, who entered office last November to kick-start the economy again, blamed the disputes with mining investors on the political posturing by the country's 76 lawmakers.

Mongolia is also planning to announce a final deal this month for the long awaited Combined Heat and Power Plant 5 project led by GDF Suez, Japan's Sojitz Corp. Korea's POSCO and Mongolia's Newcom Group, he said.

The consortium in 2014 signed an initial 25-year power purchase agreement for the 415 megawatt coal-fired facility.

Edited from source by Joseph Green

Source: Reuters

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