Red Hill Energy of Canada will extract coals from north of Mongolia. They agreed to transport the coals with Nakhodka port in Primorks of Russia. They are planning to involve Russian and Chinese experts to decrease their costs. Minarco-Mine-Consult of Australia said that the Ulaan-Ovoo coal mine has 208 million tonnes of coal reserve. This mine is planned to be used for about 21 years and the constructions are starting to be built from this year. The coal will be ready to extract in the year 2011. Mining license given from the Mongolian government is for 30 years and can be extended up to 40 years. In order the speed up the process they are to use Russian and Chinese technology and also to hire experts.
New railway system is not mentioned in the construction scheme that will be built until the year 2011. Therefore they will transport the coal to Nakhodka of Russia first. It is obvious that the coal will be delivered to China but the transportation method is still unknown as it may not be cost effective to transport directly to China. Nearest Railway port for the coal to travel to Ulaan-Baatar from Ulaan-Ovoo is 100km away.
Representatives of the Russian Railway say that Mongolian Railway needs to be involved if the coal is to be transported by Railway. It is may be possible to sell the coals up in north where it is easier to transport but countries such as Japan are reluctant to use coal as a energy resource as they are in search of new and improved energy resource such as the nuclear power plant.