Uncertainty regarding a possible request from Mongolia’s Mineral Resources Authority to suspend SouthGobi’s exploration and mining activities has dogged the miner since the government notification was made public last April.

The move, believed to be in connection to a proposed takeover bid by Aluminum Corporation of China (Chalco), was never made official but has nevertheless affected progress of SouthGobi’s agenda in the country.

The miner reports many government bodies and regulatory authorities in Mongolia are reluctant to provide approvals and permits, citing one subsidiary which has been unable to receive approval for a revision of an environmental impact statement, effectively stalling the facility.

A substantial deterioration in sentiment among SouthGobi customers in recent weeks has compounded the company’s woes, causing a decline in reference prices in key end-use markets.

SouthGobi said customers were reluctant to enter into meaningful new purchase commitments in the 2012 second quarter because their ability to transport coal this year was below projections and there was a lack of clarity about a possible license suspension from the government.

Transport difficulties have been linked to a delay in the opening of the expanded border crossing with China and the closure of the export road for more than four weeks in April and May for repair.

The company expects for June alone (the first full month with expanded border capacity), about 500,000-600,000 tonnes of Ovoot Tolgoi coal will be transported to China.

However, the current estimate for Q2 2012 new coal sales is between 200,000t and 300,000t.