WITH hard coking coal from TerraCom Limited’s Baruun Noyon Uul (BNU) project flowing to China as part of a 5.5 year offtake agreement with the Kingho Group, the company is focusing on advancing plans to develop a coal handling and processing plant (CHPP) at the project.

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A coking coal sample mined from TerraCom’s Baruun Noyon Uul project in southern Mongolia.

Recommissioning of BNU has been completed and the mine is in full production with coal deliveries to Kingho starting on February 10.

The first 100% US$ irrevocable letter of credit (LC) received from Kingho for sales of January/February production tonnes from BNU was issued by the Agricultural Bank of China and received by TerraCom’s Mongolian banking counterpart.

The tonnage and pricing were agreed by Kingho and TerraCom early in 2017 in line with the agreement, with the price linked to a commercially in confidence mine gate pricing structure that reflects the seaborne market.

TerraCom says the CHPP feasibility was approved by the Mineral Professional Council (MPC) in December.

The CHPP strategy provides a pivotal asset in controlling the volume and quality of coal supplied from BNU through the Shivee Khuren and Ceke border into China. The CHPP will allow TerraCom to increase the BNU cash operating margin through a freight cost reduction as clean coal will only be transported into China.

TerraCom has signed an agreement with Guohua Technology Corporation (GTC), an experienced and competitive CHPP provider from Tangshan, China. GTC has designed and built over 500 wash plants in China and has more than 10 patented technologies that are widely accepted within the China coking coal industry.

GTC will incorporate a number of these technologies into the BNU CHPP, including the ‘gravity fed three product HM cyclone’, ‘fine coal HM cyclone’, inline analysis and control systems and its patented flotation cell technology. This technology results in lower capital and operating costs compared to conventional dense medium cyclone plants, and also for meaningfully lower water consumption.

The plant will produce dry rejects and tailings slime, alleviating the need for a tailings storage facility with associated complex management systems. General engineering is complete and detailed engineering will advance with manufacture in China of the modular plant and construction activities on site beginning in the second quarter. Start up and commissioning of the plant is expected to be begin mid-year.

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