Mongolia will have a better chance to recapture its position as the top exporter of coal, used to smelt steel in China, after a railway project will complete in late 2015, according to the chief executive of Mongolian Mining.
Competitiveness of Mongolian coal is strongest in the China market due to its geographical proximity, but it has been hampered by the major obstacle of transportation. With the expected completion of a railway by the end of 2015. Mongolia will make a comeback.
company posted a net loss of USD 25.2 million for the first half of the year, against a profit of USD 31 million a year earlier, due to lower coal prices and higher finance costs. Mongolia lost its leading export position to Australia in the first half of the year with its coking coal exports to China falling 36% to 6 MnT. Australia's exports to China doubled to 13.3 MnT. Australia's share of the Chinese market jump to 37.7% in the first half of this year from 26.2% for the whole of last year, while Mongolia's share had dropped to 17% from 35.7%.
Despite the shorter distance to China's steel mills, a lack of efficient transport by rail meant that Mongolian coal trucked to the Chinese border lost market share to seaborne Australian coal. A large portion of imported coking coal is sold to coastal steel mills, with Mongolian coal requiring further rail transport after crossing the border.
Mongolia gained the top position in 2011 and retained it last year, after floods in 2011 and labour disputes last year reduced production and exports from Australia.
It was more competitive than its domestic rivals because it had coal washing and processing facilities that added value to raw coal and helped it soften the blow from a 19.3%year-on-year.fall in average selling prices in the first half of the year to USD 79 a tonne.
To bolster Mongolia's competitiveness and help lighten Mongolia Mining's debt load, the Mongolian government has offered to buy the company's paved road, which Gotov said could bring in about USD 100 million. He hopes to conclude talks on the road's sale by the end of this year. Government had proposed to Beijing extending a Chinese railway into Mongolia, which could cut transshipment costs by USD 9 a tonne.
– sourced
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