RLL Container Report - 08 February 2017
From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 08 February 2017
In the bleak mid-winter, frosty wind made moan ...
Hurt by falling commodities prices, an economic slowdown in China and decreased interest from foreign investors, who were put off by Mongolia’s anti-investment laws and inconsistent policy, the government in Ulan Bator is keen to attract back investors to its natural resources sector. According to the government, land-locked Mongolia can boast an untapped mineral wealth worth about USD 3 Trillion. International investors are being offered the opportunity to mine Tavan Tolgoi, home to the world’s largest high-quality coking coal deposit used in steelmaking, with reserves estimated in 7.5 billion tonnes.
In view of the vast quantities of coal to be extracted, the successful development of the Tavan Tolgoi mine, situated in the South Gobi desert, will require significant investment in an area that is currently devoid of any major transport infrastructure. To this end, China, Mongolia and Russia have established an Economic Corridor with the aim of constructing the necessary road and rail transport links. The three partners will have to build a new rail line running west from the Mongolian capital, Ulan Batar to the Tavan Tolgoi giant mine.
From the mine, the rail line would head north over the Russian border to Kyzyl, the capital of the Republic of Tuva, which is itself devoid of any meaningful rail infrastructure. The broad-gauge line would then continue north to Kuragino, which lies some 1,000 km to the west of Irkutsk and Lake Baikal. This route offers obvious benefits to Mongolia and Russia in their efforts to open up these “forgotten” parts of their respective countries.
Never one to take a back seat in any discussion concerning major rail projects, Beijing may have a surprise up its sleeve. In addition to a line from Tavan Tolgoi running south and east to the main population centres, the Chinese plan to drive a rail line first south and then west to join up with the main population and industrial centre, Urumqi in Western China. From Urumqi, the Chinese are constructing a rail line that will eventually lead all the way to the border with Pakistan. At the same time, their Pakistani colleagues are building a line north parallel to the famous Karakorum Highway all the way to the border with China.
More surprisingly, the Chinese end of the line may be completed much sooner than we think. At the same time, a second Chinese group is forging ahead with a new rail line from the Pakistan rail junction of Quetta all the way down to the port of Gwadar on the Gulf of Arabia. The Chinese will be looking to offer their Mongolian colleagues the opportunity to export their valuable coal exports via their terminal located a short distance from the border with Iran. So, in spite of being a landlocked state, Mongolia will be in a position to export its minerals either west and north via Russia, east via China or south via the Pakistani port of Gwadar.
John Keir, Ross Learmont Ltd.
08 February 2017
Copyright ©, 2017, John Keir