Mongolia seeks to boost coal exports to China with new rail link

Mongolia plans to press China next week to approve a new railway link that could boost an already growing coal trade between the two countries.

Mongolian Prime Minister Oyun-Erdene Luvsannamsrai will travel to China Feb. 13 and plans to sign an agreement with officials there to build a cross-border line and expand coal production from the Tavan Tolgoi coal mine, a government spokesperson told Bloomberg.

China Foreign Ministry Spokesman Guo Jiakun declined to comment on the specific exchange, but said the two countries are committed to deepening cooperation in a variety of fields.

Mongolia was China’s fourth-largest supplier of foreign coal last year, and provided 60% of coking coal imports for the nation’s massive steel mills. Increasing the trade would mean more revenue for Mongolia, while Chinese buyers may need to find replacements for some US and Russian cargoes because of tariffs and trade sanctions.

The land-locked nation’s parliament has already approved the railway connection and authorized 976 billion tugrik ($283 million) in financing for state-owned miner Erdenes Tavan Tolgoi JSC to build it, Ikon News reported, citing a Ministry of Industry and Mineral Resources press conference. The deal with China is also expected to include coal sales and purchase agreements, Ikon reported.

Coal shipments from Mongolia to China jumped to nearly 83 million tons last year from 70 million in 2023 and just 31 million in 2022, when the country built a 240-kilometer (149-mile) railway line to China from the Tavan Tolgoi mine. The tracks stopped just short of the border, however, requiring trucks to complete the trip.

Completing the rail connection won’t solve all the transportation headaches. Mongolia uses Russian standard rail gauges that differ from those used in China.

Read More: China may seek more coal from Mongolia as Russia’s share shrinks