Mongolia's government, trying to sell a stake in a coal mine said to be worth around $2 billion, may allow multiple companies to buy into the deal rather than hand it to a single bidder, sources said.
The division, if it occurs, would complicate an auction for what is called the world's largest untapped coking coal deposit, and could slow the process down considerably.
Mongolia has hired JP Morgan and Deutsche Bank to sell up to a 49 percent stake in the mine, which has drawn interest from China Shenhua, Peabody, Severstal and world No.1 miner BHP Billiton, among others.
Mongolia's government -- aiming to pull its 3 million people out of poverty with the country's mineral wealth -- is on the verge of signing a final deal with partners Rio Tinto and Ivanhoe Mines to approve the huge $3-$5 billion Oyu Tolgoi copper and gold mine.
The stake in Tavan Tolgoi, which holds estimated reserves of 6.5 billion tonnes of coking coal, is still up for grabs, and the government is undecided about whether to divide the deposit between bidders to satisfy multiple political allegiances, the sources said.
This is splitting the main deposit, a source with direct knowledge of the situation told Reuters, adding that it may be divided two to three ways.
Some people talk about ending up with five deposits, but there are satellite deposits. So it depends on how you actually want to define it.
China Shenhua -- which told Reuters in early September that it was still pursuing Tavan Tolgoi -- is a preferred bidder, resources investment bankers have said.
But landlocked Mongolia is wary of becoming too dependent on China and is hesitant to have a bidder such as Shenhua own the whole stake, one of the sources said.
Both sources declined to be named as they were not authorised to speak publicly about the matter.
Splitting Tavan Tolgoi between too many parties could significantly impact the development of the mine, some analysts said, and would come as a surprise move.
I can see to some degree the motivation by the government to have a number of different parties developing the key asset from a political and partnership diversification stance, said Andrew Driscoll, CLSA's head of resources research.
I'd be very surprised if they did that, he added. It's more likely they'd get a number of parties together to develop the asset in a joint venture.
Successfully developing national resources assets such as Tavan Tolgoi is a political imperative for Mongolia's new president Tsakhiagiin Elbegdorj, who took power in May promising more benefits from the country's mineral wealth.
The global financial crisis crushed the value of the country's mineral exports as commodity prices plummeted, causing government revenues to plunge.
Mongolia's main export is copper, and mining at its peak accounted for 40 percent of government coffers even though fewer than 2 percent of Mongolians were formally employed in the sector.
Still, World Bank officials estimate Mongolia's economy would grow 2-3 percent this year, rising to 5-7 percent or more next year.
We are developing the roadmap of the start of the project so we have not yet come to any concrete solution on this, Elbegdorj said of Tavan Tolgoi in a recent interview with Reuters in New York.
(Editing by Ian Geoghegan)