Mining contractor giant Leighton Holdings has now joined
others in asserting that Mongolia is emerging as a major competitor to
Australian coal exports due to its vast untapped reserves, cost efficiency and
close proximity to China. Mongolia has at least 10 to 15 billion tons of
extractable coal that could be supplied to China for less than USD100 per ton,
according to Leighton chief executive Wal King. Leighton Asia is the only
international miner in Mongolia, where it operates three coal mines, including
the Ukhaakhudag Coal Mine in the South Gobi region, 200 km from the Chinese
border.

“There is no doubt the coal mining market in
Mongolia is going to give Australia a lot of competition,”  King has said, adding, “It is very close
to the Chinese border, it has huge reserves of coking coal and thermal coal and
it is very cost efficient.” He estimated the state-owned Tavantolgoi
deposit, near Ukhaakhudag, could supply coal to China for less than USD100 a
ton. “That is competing with coal from Australia at USD220 a ton,” he
said.

Leighton would increase output from Ukhaakhudag to 15
million tons a year by January 2013. The company also operates the Khushuut
coal mine in Western Mongolia and a third mine close to the Russian border.
“We are in the process of building a railway line to the Chinese border
and I dare say the Ukhaakhudag mine will expand even further. Within two years
our coal output in Mongolia will be 30 to 40 million tons a year,” he
said, adding that its remote location, undeveloped infrastructure and
transportation of imports and exports remained important issues in Mongolia.