Mongolian Mining faces looming debt challenge

By Denise Wee

Hongkong-listed Mongolian Mining Corp, which operates two coal mines in Ukhaa Khudag and Baruun Naran, both located in the Southern Gobi province of Mongolia, is faced with a looming debt challenge amid a slump in coking coal prices.
Coking coal prices in its main market China have fallen about 25% in the last two years, increasing MMC's net loss to $ 58.1 million in 2013 from $ 2.5 million in the previous attention to some of the debt repayments that the company has to make from next year.

In an interview with Finance Asia in Hongkong, Dr.Battsengel Gotov, chief executive officer of Mongolian Mining Corp (MMC), said the company has no major capital expenditure plans and that any rebound in coking coal prices will help MMC generate enough cash to pay down its debt.

"Without any expected cash outflow we have confidence to settle out debt obligations," Gotiv told Finance Asia. "We don't need prices to double in order to be able to meet out debt obligations in 2015. We just need a slight recovery in pricing by maybe 15%," he said, additing that if rices rise to $ 100 per tonne the company will generate sufficient cash to meet all its debt obligations.
The average selling price of MC's coking coal is currently $ 85 per tonne.
Coking coal is used in steel-making and many of China's steel makers are struggling amid a cyclical downturn in the industry, exacerbating a glut in the supply of coking coal. "The supply and demand equilibrium is out of order. This is why we see the sharp fall in prices which started in early 2012 and still continues," Gotov said.
Gotov expects the oversupply of coking coal to ease this year, as major miners globally are cutting back coal production. Last week, Glencore Xstrata closed its Ravensworth coal mine in Australia and other major names such as BHP Billiton have also cut back.However, he doesn't expect prices to rebound swiftly.

"Short term for 2014, we expect we will still see depressed pricing for coking coal, "Gotov said.
"We don't expect any meaningful price improvements until the demand supply equilibrium is restored but we believe this will be restored."

Looming debt challenge
The company managed to reduce its debt repayment due tin 2014 from $102 million to $ 34 million by refinancing a $ 130 million outstanding loan with BHP Paribas. The loan was previously extended by South Africa's Standard Bank but was transferred to BNP Paribas, when the latter took over Standard Bank's loan portfolio in Asia.
In March, MMC entered into a facilities agreement with BNP and Chinese bank  ICBC for  a $ 150 million loan, which refinanced the $ 130 million loan.Its new facility matures in December 2016.
According to Gotov, the reduction in debt repayment in 104 gives the company "breathing space." As of December 31, 2013, Mongolian  Mining had cash of $ 76.5 million

Source:www.financeasia.com


Share:

0 comments:

Post a Comment

Facebook page

Powered by Blogger.

Categories

Advertising in Mongolia An Culture Editorial of the Mongolianviews education Environmental protection Famous Mongolians Foreigners in Mongolia Inner Mongolia Ivanhoe Mines Mongolia agriculture Mongolia analysis Mongolia and Australia Mongolia and Belorussia Mongolia and Cambodia Mongolia and Canada Mongolia and central Asia Mongolia and China Mongolia and Cuba Mongolia and EU Mongolia and Germany Mongolia and Hongkong Mongolia and Hungary Mongolia and India Mongolia and Inner Mongolia Mongolia and Iran Mongolia and Italy Mongolia and Japan Mongolia and Kazakhstan Mongolia and Korea Mongolia and Kuwait Mongolia and Malaysia Mongolia and Nato Mongolia and North Korean Mongolia and Poland Mongolia and Russia Mongolia and Singapore Mongolia and South Korea Mongolia and Taiwan Mongolia and the world Mongolia and Tibet Mongolia and Turkey Mongolia and UK Mongolia and Ukraine Mongolia and UN Mongolia and USA Mongolia and Vietnam Mongolia Banking Mongolia civic society Mongolia crime Mongolia diplomacy Mongolia Economy Mongolia Education Mongolia Energy Mongolia Finance Mongolia Health Mongolia History Mongolia holiday Mongolia in international media Mongolia Industries Mongolia Joke Mongolia law Mongolia LGBT Mongolia medical Mongolia military Mongolia Mining Mongolia Mining Developments Mongolia Mortgage Mongolia natural disaster Mongolia Petroleum Mongolia public announcements Mongolia railways Mongolia Religion Mongolia society Mongolia Sports Mongolia Stamp Mongolia telecommunication Mongolia tourism Mongolia Urbanization Mongolia Wild Life Mongolian Agriculture Mongolian Archeology Mongolian Food Mongolian Gay Mongolian Government news Mongolian History Mongolian Military Mongolian Mining Development Mongolian Movie Mongolian News Mongolian Parliament Mongolian Political news Mongolian Press Mongolian Songs Mongolian Women Mongolian Youth Mongolians abroad Moninfo Opinion Oyu Tolgoi Investment Agreement Photo news Press Release Rio Tinto Tavan Tolgoi coal mine Ulaanbaatar development Weird expatriates in Mongolia

Blog Archive

Followers

Live Traffic