Russian Railways Heads Japan, Korea Bid For Tavan Tolgoi - Co

Russian Railways has formed an international consortium to bid together to develop the Tavan Tolgoi mine in Mongolia, one of 15 seperate bids for the remote project.

A spokesman at the Russian state-owned company told Dow Jones Newswires Tuesday that it has teamed up with Russia's largest coal producer Siberian Coal Energy Co., or SUEK, and a number of Japan and Korea companies, including Sumitomo Corp. (8053.TO), Marubeni Corp. (8002.TO), Itochu Corp. (8002.TO) and state-run Korea Resources Corp. Its bid has already been submitted to the Mongolian government, he added, but the timeframe for a decision is unknown.

A person familiar with the matter said that there are 14 other bids, including individual pitches from Vale SA (VALE), Xstrata PLC (XTA.LN), ArcelorMittal (MT), Peabody Energy Corp.'s (BTU) and Russian billionaire Oleg Deripaska's En+ Group Ltd, as well as a joint bid from Mitsui & Co. (8031.TO) and China's Shenhua Group, plus a number of individual bids from Indian and Mongolian companies.

Earlier Tuesday, Vale declined to comment on reports of its possible interest in the mine project.

The Mongolian government is giving strategic investors a chance to develop roughly half the deposit, in the western Tsankhi area of Tavan Tolgoi.

The coal mine is estimated to have about 6.4 billion metric tons of coal reserves.

Russian Railways, the lead investor for its consortium bid, is planning to build a rail road, running from the mine to the rail road, connecting China and Russia via Mongolia.

"The total lack of infrastructure is the main challenge," the spokesman said.

He added that the consortium plans to build the necessary infrastructure, develop the mine and sell the coal.

-By Alexander Kolyandr, Dow Jones Newswires; [phone]; [e-mail]