Mongolia Coal Railway Will Link with Russia

Mongolia and Russia may speed up its previous talks to establish a joint venture Dornod Uranium and modernization of railway and mining cooperation, the 14th Mongolia-Russian inter-governmental commission meeting agreed in protocol, which concluded this week in Ulaanbaatar.

During the meeting, in which Russian side is represented by visiting Transportation Minister Igor Levitin, sides agreed to review 1949 agreement of the Ulaanbaatar Railway within this year. Russian side or Russian Railway agreed to invest US$250 million into Ulaanbaatar Railway, and to grant long-term tariff rebates to Mongolia’s transit freights through the Russian territory.

Igor Levitin reconfirmed Russian companies’ interests in developing Mongolia’s coal deposit Tavan Tolgoi, together with Russian Railways.

“We support new suggestions from the consortium to the working group of the Mongolian government on the integrated development of the deposit,” Levitin said.

Tavan-Tolgoi is one of the largest coal deposits in the world, with reserves of nearly 6.5 billion tons of coal, including 40 percent of high-calorie coking coal.

The Mongolian government wants to privatize Erdenes Tavan Tolgoi company, a subsidiary of state owned Erdenes MGL, by selling 30 percent to foreign investors, 10 percent to households by public shares and a further 10 percent to Mongolian private businesses at a nominal value. Remaining half of the shares will stay with the government.

In 2009, the Mongolian government transferred 50 percent of Ulaanbaatar Railway shares to the beneficial ownership of Russian Railways for a five-year term. The country has recently adopted a railway development policy, of which priority project is the construction of a 1,100 kilometer railway link from Tavan Tolgoi to Sainshand and further Choibalsan and reach the Russian border.
Mongolian Parliament in its upcoming fall session may conclude an investment agreement with the project’s potential investor. The bidders included BHP Billiton, India’s Jindal, Brazil’s Vale, U.S. Peabody, China’s Shenhua, and a consortium of South Korea’s COPEC and Russian-Mongolian Infrastructure Development company.

To carry out a large-scale project to modernize Mongolia’s existing infrastructure and build new rail lines to potential mineral deposits, Russian Railways and the Mongolian government created the Russian-Mongolian joint venture Infrastructure Development in May 2009. The purpose of the venture is to provide an effective platform for attracting investment in the development of Mongolia’s railway network.

“Russian Railways rigorously fulfills all its obligations in terms of technical support for the Ulaanbaatar Railway. At the end of 2009, Russian and Mongolian specialists finished work ahead of schedule on laying 108 km of continuous welded rail track on the Mandal – Davaany line, which will allow train speeds to be increased to 120 km/h”, said Vadim Morozov, First Vice President of Russian Railways.

Last year, Russian engineering companies carried out a full inspection of the current state of the Ulaanbaatar Railway network, and found there to be a high level of wear and tear, insufficient carrying capacity of infrastructure, and significant degradation of rolling stock. It is estimated that US$1.7 billion dollars for the construction of a new rail line to the Tavan Tolgoi coal mine, and US$500 million dollars for the modernization and purchase of rolling stock up to 2015.
source: The UB Post