Mongolia to produce 35 Million tonnes of coal by 2015

Jan 30 • Business, Economy, Mining, News • 834 Views • No Comments on Mongolia to produce 35 Million tonnes of coal by 2015

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Mongolia delivered about 17 million tonnes of coal in 2012 and will double to 35 million by 2015 and 42 million tonnes a year by 2020, according to the latest estimation of UBS commodities.

Prices for Australian metallurgical coal are set to benefit from uncertainty over future production from the emerging markets of Mozambique and Mongolia.

Rio Tinto’s shock $US3 billion write-down of its Mozambique coal assets 10 days ago has dimmed expectations of a fast ramp-up of its mines there. Rio bought the assets from Riversdale Mining in late 2011 and paid $US4.2 billion after a bidding war. Rio has reportedly given assurances to the government of Mozambique that it will not sell out of the country, but its plans are up in the air.

UBS commodities analyst Tom Price said yields from Mozambique’s coal seams were about 50 per cent lower because of their high clay load. He expects metallurgical coal prices, currently about $US165 a tonne, will fall from an average of $US168 in 2013 to $US160 a tonne in 2014 as supply grows from Mozambique and Mongolia and as production recovers in the Bowen Basin. UBS has a long-term nominal met coal forecast of $US150 per tonne to 2017-18.

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