Thursday, April 21, 2011

Mongolia halts coal exports to China – mining group

Mongolia has halted truck deliveries of coal from the South Gobi region to China, with the ban expected to last about two days, after China closed a part of the border on Tuesday citing a technical glitch, a lobby group for the Mongolian mining sector said. The South Gobi region is the location of the Tavan Tolgoi property, one of the world’s biggest coal deposits. Mongolia has yet to build railway infrastructure in the region and exporters continue to depend on trucks.“The Chinese side said they had some problems (at the border crossing of Zamyn Uuud) with their computer software registering the vehicles,” said Baasanjav Enkhbaatar, chairman of the Mongolian Mining Club.

“It affected all the traders in Mongolia and so the Mongolian government is taking countermeasures.”

Official Chinese news agency Xinhua said Mongolia suspended coal deliveries following a spate of accidents on a dirt road running from Tavan Tolgoi.

Citing local media, it said 23 people were killed in 31 road accidents on the Tavan Tolgoi highway in 2010, with another three fatalities in the first quarter of 2011.

Officials at the Mongolian Mining Corp were not immediately available for comment.

“The Mongolian government does close off shipments for a day or two when there has been an accident — sometimes there is so much dust caused by the trucks and local herds or herdsmen are hit,” said Jim Reichert, senior infrastructure specialist with the World Bank in Ulan Bator.

“They need to build a railway as soon as possible to transport the coal — there are any number of reasons to do that,” he said.

Private financing was available to build railways south to China, but the Mongolian government blocked construction in order to concentrate on a cross-country rail network that would link Tavan Tolgoi with Russia and the Pacific coast.

The Tavan Tolgoi project is estimated to contain 6 billion tonnes of coal reserves and its eastern block is scheduled to be listed on an overseas stock exchange within a year.

The government is currently assessing bids for the western block of the project from ArcelorMittal , Vale and Xstrata , among others. [ID:nL3E7FD0IE]

China imported 16.59 million tonnes of coal from Mongolia in 2010, up 176 percent on the year and behind only Indonesia, Australia and Vietnam.

Mongolia hopes to become China’s biggest foreign supplier, but its transportation infrastructure is already creaking under the strain.

The Mongolian Mining Corp and South Gobi Resources also have mining operations in the South Gobi region.

David Bartel, vice-president in charge of Mongolian operations at South Gobi Resources, said deliveries from the company’s mine were not affected.

“The block is just from the Tavan Tolgoi area — they have not stopped shipments from our mine,” he said.

The mine is about 400 km from Tavan Tolgoi and 45 km from China and the company is currently building a dedicated road to the border, he said. (Reporting by David Stanway; Editing by Ken Wills and Vinu Pilakkott)

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