Mongolia is ramping up its efforts to supply raw material such as coking coal and copper to China in 2022 after a lackluster trade in 2021, as it expands its mining sector and boosts its transport network, said O.Batnairamdal, Vice-Minister at Mongolia’s Mining and Heavy Industry Ministry.

Mongolia is a key metallurgical coal and copper concentrates suppliers to China, with most of the trade happening through trucks. Mongolian truck suppliers in 2021 faced severe logistics issues in hauling shipments from land ports to China due to the pandemic-led restrictions at border crossings.

Mongolia is looking to launch three railway lines this year, which will bring the country’s mining sector to a whole new level, O.Batnairamdal said in an interview with S&P Global Commodity Insights.

Railway shipments will be much convenient, cost-effective, and safer with less human contact amid COVID-19 border restrictions compared to trucks, once the rail networks come online, O.Batnairamdal added.

Suppliers will use the new railway lines to ship coking coal and copper concentrates.

The Tavantolgoi-Gashuunsukhait railway line will come online in July, with 75% of the project complete so far. Meanwhile, construction on Zuunbayan-Khangi/Mandal railway lines started in March, and the country is aiming to start their operations later this year.

Transportation of Mongolia’s Erdenet copper concentrate through China’s Erenhot rail port was disrupted through December 2021 to January, due to China’s zero-COVID control policy. Despite transportation challenges, Mongolia still managed to export 335,000 mt of copper concentrates to China in the first quarter of this year, already meeting 25.6% of its annual target.

Mongolia exported 1.2 million mt of copper concentrates to China in 2021, accounting for 5.1% of China’s copper concentrate purchases, the minister said.

Mongolia is advancing its mining industry capabilities and the country has the potential to become the world’s fifth-largest copper player by 2030, O.Batnairamdal said. This is expected to happen following a major ramp-up of the Oyu Tolgoi mine, as full production is expected to reach in the next few years.

Oyu Tolgoi, in the South Gobi region of Mongolia, is one of the largest known copper and gold deposits in the world and it is expected to be the world’s fourth largest copper mine. Oyu Tolgoi is expected to produce around 500,000 mt of copper per year on an average from 2028 to 2036 from the open pit and underground operations, according to Rio Tinto. An average of around 350,000 mt of copper is expected to be produced from the operations for further five years. The mine produced 163,000 mt in 2021.

Mongolia is looking to export 36.7 million mt of coking coal to China this year.

If realized, Mongolian shipments in 2022 would post a 161% jump from 2021 level. The country exported 14.04 million mt of coking coal to China in 2021, accounting for a quarter of China’s total imports.

Source: Platts