Mongolian miners plan coal output hikes as China demand rises

Mongolian Mining

08/09/2017 11:02

ULAANBAATAR, Sept 8 (Reuters) - Mongolia's coal miners are 
looking to ramp up production to meet  growing demand from top 
buyer China, but longstanding transportation issues continue to 
hold back sales, industry executives said at a conference.  
    Mongolia's mining-dependent economy grew at its slowest in 
seven years in 2016 as a result of declining commodity demand, 
but growth has picked up this year after a revival in 
cross-border coal trade with China.  
    Mongolian producers have been taking advantage of stricter 
environmental regulations that have closed hundreds of 
small-scale mines in China, their biggest market.  
    "As domestic production (in China) goes down, China buys 
from Australia and Mongolia to close the gap," said Gotov 
Battsengel, chief executive of Energy Resources, a subsidiary of 
the Mongolian Mining Corporation (MMC)  0975.HK .  
    The miners have also sought to fill a supply shortage opened 
up by sanctions and China's ban on imports from North Korea.  
    They now intend to raise production further after a fourfold 
increase in coal exports from Mongolia in the first half of 2017 
compared with a year ago.  urn:newsml:reuters.com:*:nL4N1KM2Y7  
    Battsengel said his company aims to produce 9 million to 10 
million tonnes of coking coal next year, more than double this 
year's output of the raw material for steel.  
    Energy Resources sold 2.3 million tonnes of washed hard 
coking coal in the first half of 2017, up from 600,000 tonnes in 
the same period last year.  
    "Our factory next year will run on full capacity because of 
market conditions," Battsengel said, referring to the company's 
coal washing plant at its Ukhaa Khudag mine.  
    Erdenes Tavan Tolgoi, the state company running Mongolia's 
giant Tavan Tolgoi coking coal mine, is also ramping up output. 
It has already revised its 2017 export target to 11.5 million 
tonnes from 10.7 million tonnes, up from 7.5 million tonnes 
shipped out last year.  
    Battsengel warned, though, that there were still limits to 
growth, with a rail link to China unfinished and road deliveries 
vulnerable to long border delays.  
    A backlog at the Gashuun Sukhait-Gants Mod land port brought 
trade to a standstill in July.  urn:newsml:reuters.com:*:nL4N1L92RA  
    Jamiyan Ganbat, director general of mining policy at the 
Ministry of Mining and Heavy Industry, said officials were also 
being instructed to make more thorough inspections after Chinese 
customs discovered irregularities in shipments.  
    Ganbat also said the government planned to revive a railway 
line project from the Gobi coal region to the Chinese border, 
aiming to get $400 million in financing from China.  urn:newsml:reuters.com:*:nL3N1JG3JQ 
      
 
 (Reporting by Terrence Edwards; Editing by David Stanway and 
Tom Hogue) 
 ((david.stanway@thomsonreuters.com; +86 21 6104 1799; Reuters 
Messaging: david.stanway.thomsonreuters.com@reuters.net)) 
 
Keywords: MONGOLIA COAL/