According to a lawmaker, Peabody Energy Corp, China Shenhua Energy Co, Vale SA and other companies interested in mining a coal deposit in Mongolia should expect to produce fuel for domestic consumption if they’re awarded the development rights.

Mr Batkhuu Gavaa deputy speaker of Mongolia’s parliament in an interview today in the capital said that the winning group of investors, to be selected by April, will be required to convert some of the thermal coal in the Tavan Tolgoi deposit into clean burning fuel. Mr Gavaa said that lawmakers want to include the provision into any agreement to help cut Mongolia’s dependence on foreign fuel and create jobs.

Mr Gavaa said that “Some of the coal will be used in various modern technologies to convert coal into various forms of fuel like liquefied or gasified coal, and this will probably be part of the Tavan Tolgoi investment agreement. The priority should be to meet domestic needs first and the rest can go to China.”

Mongolia wants the Tavan Tolgoi deposit which holds 5 billion metric tonnes of coking and thermal coal, as well as other mineral deposits, put into production to bolster government finances and spur economic growth. The country signed an accord in October with Ivanhoe Mines Ltd. and Rio Tinto Group to develop the Oyu Tolgoi copper field which may require USD 9 billion of investment over three decades.

(Sourced from Bloomberg)