The Tavan Tolgoi mine near the Chinese border was to be developed by a consortium made up of Mongolian Mining Co, Shenhua Energy of China and Japan's Sumitomo Corp. The three companies planned to invest US$4 billion in the project, Reuters said.
Representatives of the three companies were in the country this week ready to sign the deal, when the Mongolian parliamentary speaker Zandaakhuu Enkhbold said that it may be in breach of Mongolian law. The government has now said that it must be approved by legislators before going further, Reuters said.
The consortium had planned to take over management of Erdenes Tavan Tolgoi, the state-owned entity in charge of the development, and expand capacity at the mine site, Reuters said.
Erdenes Tavan Tolgoi holds the license to the deposit. It owes US$150 million to Chinese company Chalco Group, according to Mining.com.
The Mongolian government approved the expansion of Rio Tinto-controlled Turquoise Hill Resources' massive Oyu Tolgoi copper-gold mine this week, Mining.com said.