SHU Shenhua Internatl Ltd

Japan's Ministry of Foreign Affairs said Friday that there have been recent high-level talks with Mongolia over the role of Japanese companies in developing the country's huge mineral reserves, but contrary to a recent report, there was no official complaint from Tokyo about the bidding for a major coal project.

The rights to be mine operator of Mongolia's planned Tavan Tolgoi coal mines, which contain some of the world's largest untapped coking coal reserves, are being hotly contested, including by neighboring Russia and China.

A recent announcement by Mongolia after a two-year bidding process didn't list Japanese or South Korean companies among the winners, although several had been in short listed consortiums whose other members were named. Mongolia said the winners were China's Shenhua International Ltd. (SHU.AU), Peabody Energy Corp. (BTU) and a Russia-Mongolia consortium.

"We have not confirmed if Japanese companies are indeed excluded in the first place," a ministry official said. "We are still trying to find out."

The clarification comes after Reuters reported Friday, citing unnamed government officials, that Japan had filed a complaint with Mongolia over the bidding process for the right to develop Tavan Tolgoi.

Separately, a senior Mongolian government official said Friday that talks were continuing. "The Japanese and the Koreans are unhappy and are working to get themselves in," he said.

Japanese Vice Foreign Minister Yutaka Banno said Tuesday that he hoped "Japanese companies participate in developing Mongolia's mineral resources including the Tavan Tolgoi coal mine" in a meeting in Tokyo with Mongolia's Minister for Road, Transportation and Construction Khaltmaa Battulga, MOFA said in a statement on its website.

Battulga responded by saying Mongolia "expects Japanese companies' participation in mineral resource development projects and related infrastructure businesses such as railroad," the MOFA statement said.

Battulga also called for Japanese firms to invest in a state-run rail company planning to link the coal mine with Russia, The Nikkei newspaper reported Thursday.

Most of Mongolia's coal is exported to China, weakening its ability to negotiate prices. The rail link would make it easier to export coal to Japan and elsewhere, via Russia, Battulga said.

On July 5, South Korea's government complained that the bidding for the contract had been unfair.

Itochu Corp. (8001.TO) Sumitomo Corp. (8053.TO), Marubeni Corp. (8002.TO) and Sojitz Corp (2768.TO) were originally part of the Russian consortium, while Mitsui & Co. (8031.TO) had partnered Shenhua.

A spokesman for Itochu, who leads Sumitomo, Marubeni and Sojitz in the bidding, said Friday it is unclear whether they have been excluded or not.

-By Mari Iwata, Dow Jones Newswires; 813-6269-2798; mari.iwata@dowjones.com

-- Venkat Ramakrishnan in Singapore contributed to this article.

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