Interview: Mongolia eyes ramp-up of coking coal, copper exports to China in 2022: minister

Extra rail traces to return on-line in 2022

Oyu Tolgoi copper mine to hit full-scale manufacturing in few years

Mongolia plans to open copper smelting traces

Coking coal shipments seen 161% increased on 12 months in 2022

Mongolia is ramping up its efforts to produce uncooked materials corresponding to coking coal and copper to China in 2022 after a lackluster commerce in 2021, because it expands its mining sector and boosts its transport community, mentioned Batnairamdal Otgonshar, Vice-Minister at Mongolia’s Mining and Heavy Business Ministry.

Mongolia is a key metallurgical coal and copper concentrates suppliers to China, with a lot of the commerce occurring by vans. Mongolian truck suppliers in 2021 confronted extreme logistics points in hauling shipments from land ports to China as a result of pandemic-led restrictions at border crossings.

Mongolia is trying to launch three railway traces this 12 months, which can deliver the nation’s mining sector to a complete new degree, Otgonshar mentioned in an interview with S&P World Commodity Insights.

Railway shipments will likely be a lot handy, cost-effective, and safer with much less human contact amid COVID-19 border restrictions in comparison with vans, as soon as the rail networks come on-line, Otgonshar mentioned.

Suppliers will use the brand new railway traces to ship coking coal and copper concentrates.

The Tavantolgoi-Gashuunsukhait railway line will come on-line in July, with 75% of the venture full thus far, the minister mentioned.

In the meantime, development on Zuunbayan-Khangi/Mandal railway traces began in March, and the nation is aiming to begin their operations later this 12 months, Otgonshar mentioned.

Copper concentrates

Transportation of Mongolia’s Erdenet copper focus by China’s Erenhot rail port was disrupted by December 2021 to January, on account of China’s zero-COVID management coverage.

Mongolian authorities is watching the logistics problem intently, Otgonshar mentioned.

Regardless of transportation challenges, Mongolia nonetheless managed to export 335,000 mt of copper concentrates to China within the first quarter of this 12 months, already assembly 25.6% of its annual goal, he mentioned.

Mongolia would simply deal with China market as transportation prices for different markets are very excessive, and China’s market is sufficiently big to soak up Mongolia’s rising manufacturing, the minister added.

Copper focus from the Oyu Tolgoi mine was bought to Japanese and Korean smelters beforehand as a trial, in accordance with market sources.

Mongolia exported 1.2 million mt of copper concentrates to China in 2021, accounting for five.1% of China’s copper focus purchases, the minister mentioned.

Mongolia is advancing its mining trade capabilities and the nation has the potential to develop into the world’s fifth-largest copper participant by 2030, Otgonshar mentioned.

That is anticipated to occur following a significant ramp-up of the Oyu Tolgoi mine, as full manufacturing is predicted to succeed in within the subsequent few years, Otgonshar added.

Oyu Tolgoi, within the South Gobi area of Mongolia, is among the largest identified copper and gold deposits on the earth and it’s anticipated to be the world’s fourth largest copper mine.

Mongolia has developed abilities in working mines over the previous 30 years and now it’s time to transfer to the subsequent degree, going to extra value-added processing, Otgonshar mentioned.

The federal government is planning to construct up a copper smelter in Erdenet mine by 2025-2026 whereas one other copper smelter on the Oyu Tolgoi mine can also be below dialogue, the minister mentioned.

Overcoming previous hurdles, the Mongolian authorities reached an settlement with Rio Tinto and Oyu Tolgoi in January to begin underground mining operation.

As the federal government and Rio Tinto has resolved binding constraints, they’ll deal with manufacturing, processing concentrates, and produce extra value-added merchandise, Otgonshar mentioned.

Oyu Tolgoi is predicted to provide round 500,000 mt of copper per 12 months on a median from 2028 to 2036 from the open pit and underground operations, in accordance with Rio Tinto. A mean of round 350,000 mt of copper is predicted to be produced from the operations for additional 5 years. The mine produced 163,000 mt in 2021.

Coking coal

China’s coking coal provides had been strained final 12 months at a time of big demand as Mongolian provides struggled on account of border restrictions.

In the meantime, shipments from Australia — China’s conventional coal provider — remained largely absent in 2021 on account of an unofficial ban, sparking volatility in coking coal costs for many a part of the 12 months.

Platts assessed premium low-vol laborious coking coal CFR China greater than doubled to $615/mt in October 2021 from January 2021 degree, in accordance with S&P World Commodity Insights knowledge.

Given the value enhance in coking coal, it reveals extra demand for the product in China, Otgonshar mentioned.

Mongolia is aiming to make an enormous comeback in China’s coking coal markets in 2022.

There was sufficient demand for Mongolia’s coking coal from China and plenty of patrons confirmed rising pursuits to purchase extra coking coal and thermal coal, though the border problem points remained, Otgonshar mentioned.

Mongolia is able to export as a lot as they may to fulfill the demand in China, and hopefully the border points will enhance over the time, the minister added.

Transportation of Mongolian coking coal to China slowed down considerably from greater than 2,000 vans per day in 2020 to present 200-300 vans per day.

Mongolia is trying to export 36.7 million mt of coking coal to China this 12 months, Otgonshar mentioned.

If realized, Mongolian shipments in 2022 would put up a 161% bounce from 2021 degree. The nation exported 14.04 million mt of coking coal to China in 2021, accounting for 1 / 4 of China’s whole imports.