SouthGobi sees jump in Mongolian coal exports to China

* Mongolia expected to export 12 mln T to China in 2010

* China domestic coking coal output short of demand

BEIJING, April 13 - Coal imports from Mongolia are expected to nearly double in 2010 from a year earlier, making Mongolia the third or fourth largest coal supplier to China, the top executive of SouthGobi Energy Resources Ltd said on Tuesday.

Mongolia is likely to ship 12 million tonnes of coal to China this year, up from 8.5 million tonnes in 2009, Alexander Molyneux told Reuters on the sidelines of a Coaltrans conference.

But official statistics showed that China imported just over 6 million tonnes of coal from Mongolia in 2009.

"We estimate that this year already about 3 million tonnes of coal has been sold from Mongolia to China," said Molyneux.

"People see Mongolia as an emerging exporter of coal to China, but nobody is aware how quickly it's becoming a reality."

Last year, Australia was the top supplier of coking coal to China, exporting more than 22.7 million tonnes in 2009, compared to Mongolia's nearly 4 million tonnes.

Molyneux said Mongolia's coal exports to China this year will be predominantly coking coal.

SouthGobi -- which is 80 percent owned by Canada's Ivanhoe Mines -- owns the Ovoot Tolgoi mine in Mongolia, located about 40 km from the Chinese border and containing both thermal and metallurgical coal.

China's sovereign wealth fund, the China Investment Corp (CIC), is also a strategic investor in the company.

COKING COAL SUPPLY SQUEEZE

China's massive steel sector, the largest in the world, has grown increasingly hungry for high-quality coking coal imports, because the country's coking coal resources are mostly of inferior quality and are getting scarcer.

Some industry officials expected China's coking coal imports to stay at a similar level as a year earlier or even fall slightly. Price differences no longer favour importers, and domestic supplies are likely to improve as Shanxi completes the consolidation drive that slashed output last year.

But coking coal production in the provinces of Henan, Anhui and Shandong, the three largest coking coal producers in China after Shanxi, have either peaked or are about to peak, Molyneux said.

Even in Shanxi, mining coking coal is increasingly costly and dangerous, with miners digging deeper as shallow-lying resources become depleted, he added.

"China could be importing 180 million tonnes of coking coal in five years," he said, adding that by 2015, 15 to 20 percent of the country's coking coal demand would be met by imports.

China's imports of coking coal are expected to jump about 47 percent from a year earlier to 50 million tonnes in 2010, a senior executive of the country's top coking coal producer said earlier on Tuesday.

Source:Reuters news wire service
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