Saturday, September 9, 2017

Mongolian Miners plan to increase coal output due to Chinese demand

Reuters:

Mongolia’s coal miners are looking to ramp up production to meet growing demand from top buyer China, but longstanding transportation issues continue to hold back sales, industry executives said at a conference.

(snip)

Mongolian producers have been taking advantage of stricter environmental regulations that have closed hundreds of small-scale mines in China, their biggest market.

“As domestic production (in China) goes down, China buys from Australia and Mongolia to close the gap,” said Gotov Battsengel, chief executive of Energy Resources, a subsidiary of the Mongolian Mining Corporation (MMC).

The miners have also sought to fill a supply shortage opened up by sanctions and China’s ban on imports from North Korea.

If the Mongolians would build a railroad to the Chinese border the economy go nuts. Transporting by trucks is eating up alot of margin and is limiting exports.

I am not holding my breath on the railroad as successive governments in Mongolia have not demonstrted they are interested in taking advantage of their compartive advantage.

Nevertheless I am still bullish on MMC and Mongolia Growth Group.

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