Mongolia and Russia have signed an intergovernmental agreement on the terms for rail freight transit. The agreement allows for Mongolian sourced freight to enjoy tariff discount on transit transport for its exports through Russia for 25 years. The agreement was signed during the ‘Mongolian-Russian Initiative – 2018’ which was held last week.

The landmark agreement will now enable Mongolia to confidently export its high-quality coal via the sea-ports in the Russian Far East, such as Vladivostok and Vostochny. Previously, Mongolia had faced two obstacles to export by sea: firstly, the fact that the Chinese rail network often faces congestion in the Beijing-Tianjin area and that Russian tariff agreements were subject to frequent change. The latter problem is now, clearly, solved.

Mongolian coal exports will receive a 66.4% discount and container transport a 52% discount on the Russian rail system. The agreement from the Mongolian Government side will also facilitate trans-shipment discounts for Russian exports south from the city of Kyzyl to connect with the Erdenet – Ovoot Railway once the Northern Transport Corridor is completed.