Mongolia is emerging as a major competitor to Australian coal exports due to its vast untapped reserves, cost efficiency and close proximity to China.
Mining giant Leighton Holdings Ltd says Mongolia has at least has 10 to 15 billion tonnes of recoverable coal that could be supplied to China for less than US$100 per tonne.
Leighton Asia is the only international miner in Mongolia, where it operates three coal mines, including the Ukhaakhudag Coal Mine in the South Gobi region, 200 km from the Chinese border.
“There is no doubt the coal mining market in Mongolia is going to give Australia a lot of competition,” Leighton chief executive Wal King said.
“It is very close to the Chinese border, it has huge reserves of coking coal and thermal coal and it is very cost efficient.”
Mr King made the comments on the same day that Leighton delivered a 39 per cent rise in annual net profit to $611.9 million.
He estimated the state-owned Tavan Tolgoi deposit, near Ukhaakhudag, could supply coal to China for less than US$100 a tonne.
“That is competing with coal from Gladstone or Mackay in Australia at US$220 a tonne,” he said.
Mr King said Leighton would increase output from Ukhaakhudag to 15 million tonnes a year by January 2013.
The company also operates the Khushuut coal mine in Western Mongolia and a third mine close to the Russian border, he said.
“We are in the process of building a railway line to the Chinese border and I dare say the Ukhaakhudag mine will expand even further.”
“Within two years our coal product in Mongolia will be 30 to 40 million tonne a year.”
The remote location, undeveloped infrastructure and transportation of imports and exports remained important issues in Mongolia, Leighton said.
Source: Sydney Morning Herald