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The coal sector, which brings in one third of funds for the state budget and 40 percent of the nation's exports, is still in decline.
As of first two months of 2015, exports of the coal sector decreased by 17.4 percent. Mongolia has exported 1.7 million tons of coal since the start of the new year.
Specialists in the coal sector have stressed that there are no indications that suggest an increase in the export of coal. According to industry forecasts, the price of coal in the Chinese coal market is expected to decrease in the future. China is the main market for Mongolia's mineral resources. In regards to coal, it can be said that it is the nation's sole market.
In November of last year, China has made the decision to increase taxes on imported coal, after which, the price of Mongolian coal fell. As of today, the price of coking coal per ton is 50,000 MNT (25 USD).
Specialists in the coal sector have noted that transportation costs have influenced the falling price of coal. For example if the price of coal per ton is 25 USD, 17 USD is spent on transportation costs.
After the start of the new year, coal companies decreased the amount of exports.
Executive Director of the Mongolian Coal Association T.Naran has stressed that in order to protect the market, coal companies are continuing to export coal in small amounts despite the sector facing losses
The Mineral Resources Authority has reported that in the first two months 2015, coal export plans reached only 25 percent of their projected goals.
There is some hope for the coal sector with the launch of the Tavan Tolgoi project. According to specialists in the sector, if the Tavan Tolgoi project begins, there are some expectations that the coal sector will move forward.
However, if this project falls flat, the coal sector may not recover for a long time.
Australia is still the main player in the Chinese market as their main supplier of coal. However, last year it exported only 1.64 million tons of coking coal, a 61.5 percent decline in comparison with the previous year.
Competition in the Chinese coal market is increasing dramatically. The amount of Canadian and Russian coal export to China has increased. Mongolia is now in 2nd place, but last year Mongolia was in 5th place.
