The race to supply China’s coal demand is shifting from quantity to quality. The era of dust trails amid dirt roads will soon be over in coal transports. Within the frames of its complex policy on the environment, China is setting new standards for not only import coals, but transportation and local mines. Since China is tightening its control, requiring sealed storage, freight transportation, ash standards, and sulfur dioxide emission, the suppliers must meet the regulations to be able to compete. Or else, Mongolia will lose its competitiveness in a country that will import less than 70 million tons of coking coal.
Mongolia’s coal sector reached a new height in 2010-2012. At the time, companies focused on selling faster at a higher price and did not look into mid or long term strategies. The consequence was later shown in 2014-2016 when the entire coal industry faced a risk of bankruptcy except for a few bigger companies. But the last two years made it obvious that companies learned from this mistake and realize that they have to have competitiveness at any given time.
In 2011, “Energy Resource” LLC launched the first coal washing plant in Mongolia. The number of similar plants has reached 17 today. The most recent coal washing plant was launched by MAK and Usukh Zoos is planning to export their processed coal very soon. For Mongolian companies and investors to survive in the market and remain in the competition, they are making investments for as much as they can to export value-added and standards-met products. Pitiful how the state policy that is merely a declaration is failing to support business in reality. We now see the outcome of the lack of policy on supporting processing plants and the unfavorable investment environment, which made companies difficult to build processing plants.
The weight of the coal industry in Mongolia’s economy can be measured by two simple numbers. The coal export revenue, which exceeded USD 17 billion in the last 15 years, is almost 4 times higher than the total bond revenue of the Mongolian Government issued in international markets. Also, the industry provided MNT 2.1 trillion of tax income to the state budget in the last two years. In short, the coal industry is feeding the pockets of the budget and was the biggest support for the central bank in holding the MNT rate stable.
Twenty billion USD of the two “Tolgoi’s”
It’s important that both sides should be satisfied at the end of the negotiation.
Coal industry who learned from its mistakes
Mongolian coal mining companies working hard to stay in the race.
Mongolian Coal Handling Preparation Plants
We require an advanced-technology that could increase the processing plant output
We talked with the board member of the Mongolian Mineral Processing Association and researcher M.Bazarragchaa about the coal processing plants.
China’s coal requirements are getting stricter
We spoke with Ch. Munkhbat, President and CEO of Southgobi Sands LLC.
Coal treatment is inevitable for market competitiveness
We spoke with B.Batmunkh, Chair of Big Mogul Coal & Energy Company LLC.
“Rare earth element” program developed
The Ministry of Mining and Heavy Industry has prepared a draft program “Rare-Earth Element” under the guidelines of the development policy documents.
Mining revenues did not fall short
In comparison, the iron ore export alone added up to USD 576 million in 2019, which is over USD 100 million higher than the total exports of 1995.
Opportunity and Challenge
China’s market, on the other hand, will face multiple headwinds in the following years.
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