For
companies developing Mongolia”s raft of mining projects that will start coming
on line next year, the biggest problem is not finding the coal and other
minerals, but getting them to the markets of Russia and China, as Mongolia is
about as far away from anywhere in the world as it”s possible to be, says a
report in Business News Europe..

Currently, the only major rail route that runs through the country is the
Irkutsk-Beijing spur of the legendary Trans-Siberian express. Even so,
Mongolians, terrified of becoming little more than a raw materials appendage to
China, have been resisting Chinese proposals to build a rail line straight
south over the border to China”s underdeveloped northeast districts. Instead,
they have plumped for a longer route across the country towards Russia”s
Vladivostok in the Far East, which has a spur that turns back into China from
Russia.

In June, Mongolia”s parliament said priority would be given to a rail link from
the 40-year-old Tavan Tolgoi coalmine to an as-yet uncompleted industrial park
in Sainshand, where the coal can be processed before being shipped north to
Russia. The proposed route makes little economic sense, as the direct route
south to China”s hungry markets is far cheaper. However, the longer route hands
Mongolia invaluable geopolitical choices: like building expensive oil and gas
pipelines, rail links suffer from the same problem that once they are finished,
you can only cut off your customers by cutting off your revenues. The Russian
route allows the government in Ulaanbaatar to play the two emerging superpowers
off against each other.