North Korea's ports Mongolia's gateway

Beijing: Mongolia sees North Korea's ports as the gateway for shipping its mineral resources, taking advantage of "very good relations" between the two countries, Prime Minister Sukhbaatar Batbold said.

"We will keep the channel warm with North Korea," Batbold said in an interview with Bloomberg Television in Beijing yesterday.

"We could have further cooperation in the access to the sea and seaports."

Landlocked Mongolia needs to secure access to the sea as it pursues mining projects, he said. Aside from its main exports of coal and copper, the country also has oil, potash, iron ore and uranium resources, as well as rare earths used in electronics, wind turbines and smart bombs.

North Korea was put under tougher United Nations sanctions banning arms trade and restricting financial transactions after its second nuclear test in May 2009. Six-party talks on the country's nuclear-weapons programme, hosted by China and also involving Japan, South Korea, Russia and the US, haven't convened since December 2008.

"Basically we are trying to engage North Korea, keep them engaged with other countries. We don't want them to be isolated," Batbold said yesterday at the end of his visit to China. "We would like peace, stability and security in our region."

China last year accounted for 83 per cent of North Korea's $4.2 billion (Dh15.44 billion) of trade as Kim Jong-Il's regime became increasingly isolated. North Korean dependence on China will grow as long as global sanctions are in place, the Seoul-based Korea Trade-Investment Promotion Agency, or Kotra, said on May 27 in releasing the figures. North Korea doesn't publish its own data.

Balance of interests

Mongolia is trying to seek a "balance of interests" in its relations with neighbours such as Russia and China and Western countries, Batbold said.

"This balance has to be kept not by squeezing somebody, but increasing" the opportunities for cooperation, he said.

Kim's trip last month to China, his main ally and benefactor, was his third in the past year and may have been aimed at extracting more aid and trade to shore up an economy beset by the sanctions aimed at halting the regime's nuclear-weapons programme, crop failures and livestock disease.

Mongolia may also supply North Korea with meat and foodstuffs, Batbold said. The two countries could cooperate in agriculture because of Mongolia's "vast land," he said.

Mongolia is opening up its resource riches to mining as prices for coal surge on demand from Asian steelmakers. The nation is seeking to develop the Tavan Tolgoi coal basin, which is one of the world's largest unexploited reserves of coking coal, a key material in making steel.

Rail network

Peabody Energy Corp., a Shenhua Group Corp.-Mitsui & Co. venture, Vale SA, a Russia-Japan-South Korea group, ArcelorMittal and Xstrata Plc have been shortlisted to develop the basin. Batbold said that three or four bidders may be asked to form a single group to work on the project.

Mongolia aims to quadruple its rail network to send coal, copper and rare earths to nations such as Japan and South Korea under a plan to reduce reliance on the Chinese market and boost economic development.

Construction is scheduled to start this year on a 400-kilometre link from Tavan Tolgoi and the Oyu Tolgoi copper deposit, another of the world's biggest untapped resources, to an existing rail line running north to Russia and south to China.

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