Mongolia’s coal sector will see robust production growth over the coming years said Fitch Solution. The growth will be driven by rising prices, a solid project pipeline and competitive operating costs. They forecasted Mongolia’s production to increase to 107 million tonnes by 2027 from a mere 30 million tonnes in 2018. Growth in Mongolia’s coal sector will be largely driven by coking coal projects as the country boasts high quality reserves of the steel-making ingredient. As an example, in H118, revenues of the state-owned Erdenes Tavan Tolgoi (ETT) surged due to higher coal prices and a big jump in coal exports, raising prospects for a planned initial public offering (IPO). The project exported 6.9 million tonnes of coal in H118, up 28% compared to H117, while net profits increased 31% y-o-y to reach USD152 million. The government plans to list 30% of ETT through a combined domestic and overseas offering, the proposal of which is now under debate in parliament. If the Parliament approves the bill by the end of September 2018, the preparatory works of the IPO are set to be completed within 180 days.

Along with the overseas IPO of ETT, the government is also aiming to attract more foreign investment into the coal sector, according to the Mongolian Minister of Mining and Heavy Industry, Dolgorsuren Sumiyabaza, during the 8th Coal Mongolia International Conference. To this effect the government is looking to introduce more advanced technology to coal mining operations in order to improve the competitiveness of Mongolian coal exports. (Fitch Solution)