Mongolia to issue tenders for new railway to boost coking coal exports to China

Mongolia aims to open tenders by the end of March to start the construction of a second railway, which is expected to nearly double the transport of coking coal to China, the Mongolian government said March 17.

China and Mongolia signed the agreement Feb. 14 to establish a cross-border railway connecting Mongolia's Gashuun Sukhait port with China's Ganqimaodu port, dubbed the Gashuun Sukhait-Ganqimaodu port cross-border railway.

Ganqimaodu is a key port in the China-Mongolia coal trade.

"I am confident that the agreement will be ratified at the beginning of the spring session of the State Great Khural (Parliament), allowing for the timely commencement of construction work," Mongolian Prime Minister Luvsannamsrain Oyun-Erdene said as the session began March 17.

"After the agreement is ratified, contracts between the companies will be signed, and work will officially begin as specified in the agreement," he said, expecting to announce the first tenders by the end of March.

The new railway is anticipated to nearly double Mongolia's port capacity, increasing coal exports from an average of 83 million mt/year to 165 million mt/year, according to data from the Mongolian government. This expansion is expected to boost annual coal sales revenue by $1.5 billion. Government estimates indicate that the railway will take about 2 1/2 years to complete, with construction slated to begin in April 2025.

The Gashuun Sukhait-Ganqimaodu railway will complement the Tavantolgoi-Gashuun Sukhait rail link, which started up in September 2022.

Platts, part of S&P Global Commodity Insights, assessed premium low-vol hard coking coal $3/mt lower from the previous session at $171/mt FOB Australia on March 17. Premium low-vol CFR China was assessed $1/mt lower at $175/mt.