Matthew Wood, chairman of Australia-listed Hunnu Coal,
has echoed the warning of Ivanhoe Mines Chairman Robert Friedland that Mongolia
could kill the Australian coal industry. He said the warning could become
reality as South and Middle Gobi coking and thermal coal begin shipped to Japan
and Korea within a few years. The company is presently advancing several
promising Mongolian thermal and coking coal projects with minimal start up costs.

Wood sees some shocks ahead for Australia’s leading
export industry. “I think Australia is going to find it hard to compete with
coal 600 kilometers from Beijing with labor at tenth of the price,” he has
said. “Mongolia has a highly supportive government and has abolished the stupid
taxes Australia is now contemplating. Australia has got some problems.”

He noted some other advantages of mining coal in
Mongolia. “Australian mines are getting deeper and older. The easy, cheaper
coal is gone. These deposits in Mongolia are open cut from surface – they
haven’t even been developed yet, the best years are still coming.”

The Mongolian government is working hard to expand the
coal industry and announced major railway investment plans last month. Wood
said one of the plans was a link from the giant Tavan Tolgoi coking coal field
in the South Gobi province, where Hunnu Coal has projects, all the way up to
northern Mongolia where it can link up to Russia’s Trans Siberian railway line.
From there, the coal is railed out for export through Vladivostok on the east
coast of Russia. “That’s a very short boat ride to Korea and Japan,” Wood said.

The Japanese and Koreans are extremely keen to get access
to Mongolian coal “so it’s not just about China; Mongolian coal will be seaborne
and that is a real threat to Australia”. Wood said, “These things aren’t going
to happen next month, they are not going to happen next year but people in
Queensland will be competing against Mongolian coal well and truly in five to
ten years.”