Peabody Energy, the largest U.S. coal producer, was among the companies chosen to develop Mongolia's Tavan Tolgoi coal mine, a deposit that has been speculated to be one of the world's largest untapped deposits of metallurgical coal, the coal grade that is in high demand by Asian steelmakers.
Missouri-based Peabody (BTU) will own a 24% stake in the venture. A Russian/Mongolian consortium will own 36% and China Shenhua Energy will own the remaining 40%. The companies were selected over Arcelor Mittal (MT), the world's largest steel producer, and Brazil's Vale (VALE), the world's second-largest mining company.
Coal production in Mongolia doubled last year to 25 million metric tons to become the nation's top export earner, according to Bloomberg News. Mongolia's parliament will review the bid next week. Tavan Tolgoi has the potential to be one of the largest coal projects in the world sitting on 168,000 acres.
The project is found in the Tsankhi area of Mongolia, a region that may hold more than 1 billion metric tons of coal, 68% of which can be used for steelmaking and the rest as fuel in power plants, Bloomberg reported.