Macmahon Holdings, Operta awarded $500 mln Tavan Tolgoi Coal mining contract

Australia's Macmahon Holdings and its German joint venture partner Operta GmbH have won a five-year, $500 million coal mining contract for the Tavan Tolgoi Coal Mine in Mongolia, one of the world's largest coking coal deposit.

The contract was awarded by Erdenes Tavan Tolgoi JSC, the state-owned mining company, which owns a part of the Tavan Tolgoi project.

The project involves large scale open cut mining operations in the Eastern Tsankhi area of the Tavan Tolgoi deposit, located in Mongolia's South Gobi region about 540km south of Ulaanbaatar.

Mining will start in January 2012 at a rate of three million tonnes of coal per annum, using Erdenes' existing equipment, with production expected to ramp up to six million tonnes in the second year, which will require additional capital expenditure.

Erdenes anticipates coal production will continue to ramp up to 15 million tonnes per annum once the entire mine and transport infrastructure is established.

Erdenes awarded the contract in July after the Mongolian government granted US mining giant Peabody Energy, China's Shenhua Energy Co and a Russian-Mongolian consortium to jointly develop the western Tsankhi area of Tavan Tolgoi coking coal deposits. (See: Peabody, China's Shenhua, Russian-Mongolian consortium to develop Tavan Tolgoi)