Erdenes Tavan Tolgoi reportedly owes $US3 million to Altangovi, a warehouse service provider near the Chinese border.
As a result, Altangovi cannot buy enough diesel to run its warehouse operations.
The debt with Altangovi, subsequent stoppage of China-bound exports and a recent request for a government loan come as Erdenes works to develop the gigantic Tavan Tolgoi complex – one of the world’s largest untapped coal deposits.
“Our financial situation is very complicated at the moment and we have to cover our debts and finance all our infrastructure projects and operations,” Erdenes chief executive Yaichil Batsuuri told Bloomberg.
The company is seeking $400 million to $500 million from the government to repay debt and build infrastructure, but has not yet received a response.
In 2011, it signed a $250 million coal supply deal with a group of companies including Aluminum Corporation of China (Chalco).
According to Bloomberg, Erdenes supplies coal to Chalco at $53 a tonne, while it pays $61 a tonne to transport it 150 miles south to the border station.
Erdenes is planning to float simultaneously on the London, Hong Kong and Mongolia exchanges this year.