Arcelor Mittal, Vale Competing For Mongolian Coal Mine

Arcelor Mittal MT, the world's largest steelmaker, and Brazil's Vale VALE, the world's largest iron ore producer, are among six companies in a heated competition to Mongolia's Tavan Tolgoi mine, the world's largest coking coal deposit that has yet to be mined.

Peabody Energy BTU, the largest U.S. coal producer, part of consortium with Chinese and Japanese companies that are interested in the mine and a group of Japanese, South Korean and Russian companies are also said to be among Mongolia's preferred bidders.

The firms want to develop the west Tsankhi block of the mine, which could take an initial investment of $7.3 billion, according to Reuters. The block has 1.2 billion tons of coal reserves and could produce 15 million tons annually for more than 30 years, Reuters reported.

Tavan Tolgoi is believed to coal reserves equal to 6 billion tons. Coking coal is in high demand because it is a key ingredient in the production of steel. Asian steel producers in both developed and emerging markets are looking to tap other supplies of coking coal outside of what they already purchase from BHP Billiton BHP and Rio Tinto RIO.

Mongolia could usurp Australia as the world's largest coking producer this year, Reuters reported. The country, which shares a border with China, is also home to massive copper deposits. A decision on the sale of the Tavan Tolgoi block is expected in June.