UPDATE 1-Mongolia ends $2 bln Tavan Tolgoi stake sale-sources

* Government cancels auction of 49 percent stake – sources

* Mongolia to hold 100 pct of Tavan Tolgoi coal mine

* JP Morgan, Deutsche Bank no longer advising on sale

* Mongolia seeking extraction agreement with global miner

By Joseph Chaney, Asia Resources Correspondent

HONG KONG, Feb 4 (BestGrowthStock) – Mongolia’s government has
canceled the auction of an estimated $2 billion stake in one of
the world’s largest undeveloped coal deposits, ending hopes of
global mining giants eager for a slice of the project, sources
said.

JP Morgan (JPM.N: ) and Deutsche Bank (DBKGn.DE: ) were no longer
advising on the sale of the 49 percent stake, three sources
familiar with the matter told Reuters on Thursday. The two banks
were retained more than a year ago to run the auction.

Shortlisted bidders for the stake in the Tavan Tolgoi mine
included heavyweights BHP Billiton (BHP.AX: ), India’s Jindal,
Brazil’s Vale (VALE5.SA: ), U.S. coal miner Peabody (BTU.N: ), and
China’s Shenhua (1088.HK: ).

The Mongolian government could not be immediately reached for
comment. Deutsche Bank and JP Morgan both declined to comment.

Mongolia’s government had decided to hold 100 percent of the
huge Tavan Tolgoi coal deposit, the sources said. The reversal
shows the determination of the government to, in the case of
Tavan Tolgoi, fully control one of its most prized natural
resources.

Late last year, Mongolia struck a deal to develop a massive
copper and gold project with Ivanhoe Mines (IVN.TO: ) and Rio Tinto
(RIO.L: )(RIO.AX: ).

A South Korean COPEC consortium, a group of Japanese
companies, and a Russian consortium including Gazprom (GAZP.MM: )
and Renova were also named as bidders.

Mongolia’s state-owned Erdenes MGL was originally slated to
own at least 51 percent of the project [ID:nPEK305507]

Now, the sources said, the country’s government hoped to
strike a deal with a global miner to develop Tavan Tolgoi on a
contract basis, without a significant equity holding in the
project.

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UPDATE 1-Mongolia ends $2 bln Tavan Tolgoi stake sale-sources