Wednesday, June 14, 2017

Mongolia coal exports up big

Reuters:

Mongolia's coal export earnings surged nearly fivefold in the first five months of the year, according to official data, with the country taking advantage of sanctions on North Korea to boost deliveries to China, its major customer.

(snip)

But it is now reaping the benefits of a ban on exports from North Korea, which has forced China to find alternative coal suppliers. The value of Mongolia's coal exports rose to $1.01 billion in the first five months of 2017, 4.6-times higher than the same period last year.

The rise in exports contributed to a 69.5-percent increase in Mongolia's foreign trade surplus, which hit $1 billion, the country's statistics office said on Tuesday.

(snip)

Mongolia's base metal exports, including copper, also jumped 58.8 year-on-year to $41.3 million over the first five months of 2017. Total exports grew 42 percent to $2.5 billion.

Once Mongolia builds railroads to bring its coal to the Chinese border than volumes and revenues will surge. News like this just gives a glimmer of what the Mongolian economy could do under the proper policies.

7 comments:

Vik Murthy said...

Great blog. I really enjoy reading your posts.

Do you think that there's a handshake post-Presidential-election Tavan Tolgoi deal in place between the GOM and Shenhua (which would include the construction of a railroad between TT and the border)?

Or do you think that Mongolia will use IMF funds and/or other government proceeds to build rail connections on its own accord?

boubin2 said...

Yes that is exactly what I expect to happen. Quite a few members of Parliament that are in the MPP party own shares in Mongolian Mining Corp. I expect a deal to happen by this fall and I expect Mongolian Mining to soar in price. I expect to politicians, especially Mongolian politicians, to do what is best for themselves.

This deal should also include a railroad line to lower transportation costs.

Remember also that Mongolian Mining Corp. has the only significant coal washing plant in the area. This will also raise the quality of mined coal and the price they can sell it for.

Vik Murthy said...

What would cause you to change your view on MMC? A lack of a TT deal in 2017? Dramatic decline in ASP's?

boubin2 said...

Even after the bankruptcy and restructuring MMC is selling for way less than net asset value so it is ok even if they do not get a deal. I am looking for this thing to skyrocket because the fix is in. Obviously if we have a psychotic decline in the economy/markets like 2008 than all bets are off.

We need to get through the election this month and than I think we will see a deal fairly soon after.

boubin2 said...

One thing to remember is that this is Mongolia so anything can and does happen sometimes. It is always a wild ride.

Kaberi and Vik said...

In keeping with the "wild ride" theme, what did you think of Enkhbold's surprisingly-dismal showing in the first round of the Mongolian presidential election. Traders in HK are voting with their feet, as MMC shares are down 13% right now on robust volume.

It feels like an overreaction to me (since the MPP can still override a presidential veto in the event that Battulga takes office), but wanted to get your take. Perhaps Battulga can poison the foreign investment waters more significantly than I am currently considering.

boubin2 said...

The fact that Enkhbold just barely beat out Ganbaatar is disconcerting. I think Battulga ends up as President.

I am not Mongolian so I have no special insight but with the IMF bearing down on Mongolia these guys are going to have to play nice in my view.

I still stick by my thesis that there are quite a few MPP MP's that stand to make alot of money. The common theme is self interest. After the election I think a deal gets done that will end up benefiting MMC.

That is pure speculation on my part bu that is why this thing has 10:1 upside.

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