Vale, Xstrata Vie for Coal Asset Mongolia Sees as Springboard

Vale SA （VALE3）, the world’s largest iron- ore supplier and Xstrata Plc （XTA）, the No. 1 thermal coal exporter, head two of six groups shortlisted to develop part of Mongolia’s biggest coal asset as the nation seeks to become a resource hub.

ArcelorMittal （MT）, Peabody Energy Corp. （BTU）, a venture between Mitsui & Co. and Chinese coal producer Shenhua Group, and a Russo-Japanese-South Korean group led by OAO Russian Railways round out the shortlist, Baasangombo Enebish, head of the state- run Erdenes MGL LLC, which owns the asset, said March 5. It may take about four months to pick one to three winners for the Tavan Tolgoi field, he said.

Coal output doubled to 25 million metric tons to become Mongolia’s top export last year, encouraging the government to speed up Tavan Tolgoi’s development after years of debate. The mining industry can help fund broader economic growth, which may hit 10 percent this year, Prime Minister Sukhbaatar Batbold said last week. That would exceed China’s targeted 8 percent for 2011.

Mongolia attracted 15 initial bids to develop the field as floods in Australia curb supply. The price of steelmaking coal may rise to a record $340 a metric ton in the next quarter, according to UBS AG’s forecast in a Feb. 21 report.

The Asian nation is “definitely” where Noble Group Ltd., a Hong Kong-based commodity supplier backed by China’s sovereign wealth fund, wants to expand coal operations, Chief Executive Officer Ricardo Leiman said March 1.