Fourth annual ‘Coal Mongolia 2014’ attracts investors

O.Chuluunbat: “High cost of transportation is the most pressing issue”

On 20 February, the Fourth 
international coal investors’ 
conference and exhibition, “Coal 
Mongolia” 2014 started. Delegations 
from all types of companies operating 
in all areas of mining industry, 
government policy makers, banking 
and financing specialists, researchers, 
a total of over 1000 participants from 
some 10 countries are attending the 
conference. Key agenda items of 
the conference are Mongolia`s coal 
industry`s development strategy, 
competitiveness in the international 
market, project financing, downstream 
processing of coal (value-added 
industrial production) and coking and 
thermal coal projects.
Mongolian first mining portal 
site Mining.mn is jointly organizing 
the Conference for the fourth time 
with the Mining Ministry to attract 
investment in coal exploration, 
production and processing projects in 
Mongolia, to introduce government 
policy on coal industry, to introduce 
environmental-friendly, advanced 
technique, practices and technologies, 
to develop international cooperation, 
and most importantly to increase the 
competitiveness of Mongolia’s coal 
industry.
Prime Minister N.Altankhuyag 
gave a speech at the conference 
opening. “Big goals and big works 
are waiting for us. In the coming
years, some large scale projects will 
be implemented in the coal sector 
which has the capability to draw a 
great amount of investment”, he said. 
The Prime Minister highlighted that 
Mongolia agreed with China to supply 
1 billion tons of coal in the next 20 
years and that it is a vital indicator 
of the coal sector’s development in 
the near future. Another big project 
is to build a flammable gas producing 
industry based on the brown coal 
deposit. This industry, which requires 
investment of USD 30 billion, will 
process 50 million tons of coal that not 
only enables Mongolia to provide its 
domestic need of flammable gas, but 
also to supply gas to China. A project 
to produce fuel from coal has also
started. These projects benefit society 
and the economy, including creating 
a new source of energy, developing 
industries and increasing employment, 
said Prime Minister N.Altankhuyag.
The fourth conference is special as 
it is being held soon after Mongolian 
parliament passed the ‘State policy 
on the mineral sector’ and the new 
Investment Law. At the opening of 
the conference, Mining Minister 
D.Gankhuyag gave a presentation 
‘The government policy in the mineral 
sector and the strategic direction of 
coal sector development’, noting 
that government will encourage the 
coal sector by supporting to build
value-added coal product processing 
plants, power plants based on coal 
deposits and to develop semi-coke 
fuels and coal-chemical green field 
projects. During the Mongolian Prime 
Minister’s visit to China, the two 
countries signed a memorandum that 
Mongolia will export 1 billion tons 
of coal to China in the next 20 years. 
To implement this goal, the ministry 
is working to export 50 million tons 
of coal in recent years, said Minister 
D.Gankhuyag. “Mongolia placed 
second in its coal exports to China 
in 2013. However, we supplied coal 
for half the price of other countries”. 
He said that the ministry was holding 
talks with China, Japan, Korea and 
other South East Asian countries about 
possibilities to supply coal, and the 
ministry with other relevant agencies
developed the ‘Coal’ program which 
would be implemented in two stages 
from 2014-2018 and 2019-2025.
According to the minister, the 
coking coal price per ton exported to 
China decreased in each of the last 
three consecutive years. It was USD73 
per ton in 2013, USD98.9 in 2012, 
and USD100.6 in 2011. Meanwhile, 
coal production grew annually while 
the export amount of coal decreased. 
Mongolia mined 33.3 million tons of 
coal in 2013, of which 18.1 million 
tons were exported. In 2012, coal 
production was 31.9 million tons and 
coal export was 20.4 million tons. 
Therefore in 2013, the coal industry 
was responsible for 27.7 percent 
of State Budget revenues and 26.1 
percent of total exports of the country. 
Mongolia’s coal reserve estimates 
stand at 173.3 billion tons and today 
a total of 141 companies have 213 
mining licenses and some 50 coal
mines run actively.
Reports by 30 presenters 
representing the government, 
investment community, technology 
suppliers and researchers will be 
heard and discussed during the two 
day conference. At the beginning 
of the conference, representatives 
of government and state owned 
companies including Minister of 
Foreign affairs L.Bold, Finance 
Minister Ch.Ulaan, CEO of ‘Erdenes 
MGL’ LLC O.Sainbuyan, Department 
head of Ministry of Environment 
and Green development D.Enkhbat 
made reports on government policies 
to foreign investment, impact of 
the coal sector on the government’s 
budget, future trends of state-owned 
companies in the coal sector and 
environmental issues in coal mining. 
While Mongolia sells its coal at a 
low price, it spends more money and 
time than its competitors for its coal 
transportation as it is transported by 
trucks. This issue was the focus of 
discussions. Minister D.Gankhuyag 
said that there is tendency that 
economic importance is preferred 
rather than strategic importance when 
discussing railway gauge resolution
In his presentation ‘Investment in 
coal mining and creating an attractive 
environment for international trade’, 
O.Chuluunbat, Vice Minister of 
Economic development said that the 
government set a goal to increase 
coal exports reaching 30 million tons 
in 2014 through solving problems of 
paved roads, cross-border railway 
and coal trade. He underlined high 
costs and time-consuming coal 
transportation as the most pressing 
issues in the coal sector and said. 
“Preparation work to transfer the paved 
road between the Tavan Tolgoi deposit 
to the Gashuunsukhait border station 
to the ownership of ‘Erdenes MGL
LLC is underway. This action is taken 
to coordinate coal transportation in a 
united way to lower coal transportation 
costs, and improve the financial ability 
of coal companies. A tender to build 
a 435 km paved road in the direction 
of Tavan Tolgoi-Khanbogd-Khanghi 
by concession was announced and 
MCCC Company won the tender. We 
also plan to put a cross border railway 
into operation within the third quarter 
of 2014’. According to Vice Minister 
O.Chuluunbat, the government intends 
to establish agreements with China 
and other big coal buying countries 
to sell coal sustainably for long term 
and to set up a company in charge of 
coal export trade covering companies 
which run mining activities at the 
Tavan Tolgoi deposit. In the future, 
more coal export companies will be 
involved.
G.Battsengel, CEO of MMC LLC, 
which runs Ukhaa-Khutag coal mine 
at the Tavan Tolgoi deposit expressed 
the same view with vice minister 
O.Chuluunbat that coal transportation 
is one of key drivers to improve the 
competitiveness of Mongolian coking 
coal. He said that the short-term target 
should focus on a cross-border railway 
including gaining access to the Chinese 
railway network and completing 
the TT-GS railway which includes 
resolving the gauge related decisions 
and negotiating and agreeing transit 
arrangements to access sea-ports 
at Bohai-Rim including upgrading 
Gashuun sukhait to an international 
land-port as a mid-term target.
He also pointed out the importance 
of value-added production, increase 
pricing by offering products 
with consistent quality matching 
international benchmark and 
customers’ requirements, and 
reducing transportation costs by 
increasing product value. He said
G.Battsengel, CEO of MMC LLC, 
which runs Ukhaa-Khutag coal mine 
at the Tavan Tolgoi deposit expressed 
the same view with vice minister 
O.Chuluunbat that coal transportation 
is one of key drivers to improve the 
competitiveness of Mongolian coking 
coal. He said that the short-term target 
should focus on a cross-border railway 
including gaining access to the Chinese 
railway network and completing 
the TT-GS railway which includes 
resolving the gauge related decisions 
and negotiating and agreeing transit 
arrangements to access sea-ports 
at Bohai-Rim including upgrading 
Gashuun sukhait to an international 
land-port as a mid-term target.
He also pointed out the importance 
of value-added production, increase 
pricing by offering products 
with consistent quality matching 
international benchmark and 
customers’ requirements, and 
reducing transportation costs by 
increasing product value. He said
There are over 60 companies 
participating in the Coal Mongolia 
2014 exhibition. Traditionally, at the 
end of the conference, special awards 
will be presented to the person of the 
year in the coal sector of Mongolia, 
the best mining company of the year 
(exporter and domestic supplier), 
the best coal miner and the best 
exploration company.
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