Mongolia’s reported move to modify how its coal exports to China are priced may mean higher costs for Chinese users, and Chinese industry experts said that efforts by Mongolia to change the ecosystem of cross-border coal trade may affect the outlook for Mongolian energy export to China.  Chinese coal traders at the China-Mongolia border said they had heard about the intention of the Mongolian side to sell coal at ex-border prices instead of mine-mouth prices starting from 1 February, citing an executive of Erdenes Tavan Tolgoi (ETT) JSC. Tavan Tolgoi is a massive coal mine in Mongolia about 200 kilometers from the Chinese border.

Li Xiang, a representative of Mengtong International Logistics Agency in North China’s Inner Mongolia Autonomous Region, told the Global Times on Monday that the move may reflect ETT’s goal of increasing revenue by changing the pricing. Li, a veteran familiar with the situation of cross-border shipments between China and Mongolia, said that Chinese coal buyers sending trucks to fetch coal from ETT will be affected, but “Mongolia will still be shipping coal to China even if the price rises to some extent.”

China has ramped up imports of coal from Russia and Mongolia in recent years. During the first 11 months of 2022, China imported 26.1 million tons of coal from Mongolia, accounting for 10 percent of total coal imports, data from steel industry portal Lange showed. Some 21.6 million tons were coking coal shipments bound for Chinese steel mills, and the volume accounted for 37.6 percent of China’s coking coal imports, which stood at 57.4 million tons during the period.

Experts said the prospective pricing change will slightly dent the appeal of Mongolian coal but will not affect China’s overall coal supply.

On September 9, Mongolia completed the railway section linking the Tavan Tolgoi coal mine to the Gashuun Sukhait port, opposite to the Ganqimaodu port on the Chinese side. The 233-km railway could deliver up to 30-50 million tons of coal to China annually.

China purchased 780,000 tons of coal from Mongolia in October, surging 830 percent year-on-year. In the first 11 months of 2022, Mongolia accounted for 10 percent of the total of China’s coal imports.