Prospects for future China-Mongolia supplies of energy equipment have improved now that the head of China’s largest power distributor, the State Grid, has told Mongolian government leaders that China is ready to buy electricity from their country.

“Strengthening energy cooperation” and promoting development of a cross-border power grid to serve Northeast Asia were discussed during the recent talks in the Mongolian capital Ulaanbaatar between State Grid Chairman Liu Zhenya and the speaker of the Mongolian parliament and prime minister, according to a State Grid statement. Mongolia’s ministers of energy, environmental protection and transportation also attended the meeting. “Liu Zhenya said electricity would be an important trading product in the future,” the statement said.

Earlier this year, the Japanese telecom and energy conglomerate Softbank said it was leading an initiative for “feasibility studies on multinational power grid interconnection” involving State Grid, PJSC Rosset in Russia, and Korea Electric Power. Governments in the region including Mongolia’s are being asked to support the proposed project, for which no timetable has yet been announced.

Mongolia and China may work together to establish a regional power grid if they agree to a proposal for a jointly built and operated power plant at Shivee Ovoo. In April, the two sides agreed to study the feasibility of the USD 12 billion construction project, State Grid said, which would provide 25,000 jobs and take five years to complete.

Moreover, the statement said, without elaborating, that the Mongolian government “has proposed to establish a Mongolia-China-Russia Infrastructure Research Centre to promote cooperation in highways, railways, aviation and energy.”

Mongolia is building power plants in the hope of weaning itself from the need to import electricity from China and Russia to meet domestic demand, according to a 2015 report by the Oxford Business Group.

State Grid noted Mongolia is rich in coal, with proven reserves of 152 billion tons, that could be tapped to fuel future power stations.