With its resources, Mongolia calls the shots

T.Naran, Director of The Coal Association of Mongolia, speaks in this interview about the visit in January of a group of Mongolian coal companies to Tianjin in China, and the needs and hopes of the coal sector for its development. 

I take it the visit was to study the suitability of the Chinese port as an export point for Mongolian coal.
Tianjin is the only sea port that the Governments of both countries have agreed to use for these exports. Last year coal alone accounted for 30% of our export revenue, replacing copper concentrate as the country’s leading export. Our coal will now go to new areas in China and also beyond China, and Tianjin will play a role in this trade. Our Association took part in the 5th meeting of a working group in Ulaanbaatar on December 13, 2010 on development of Mongolia-Tianjin trade and economic cooperation. There I suggested a meeting with coal as priority, and the way Tianjin can be used for its export in a way most satisfactory to both countries. This is how the business meeting of private coal sectors and officials of our two countries came to be  organised in Tianjin in January.

Around a dozen Mongolian companies exporting coal attended the meeting on behalf of the Coal Association, while the Government representatives were from the Fuel Policy Department of the Ministry of Mineral Resources and Energy, and the Coal Division of MRAM. The Chinese side comprised representatives of Tianjin Development Committee, the Tianjin port administration and the Tianjin Coal Association. The Mongolian private companies were Energy Resources LLC, MAK, Tavan Tolgoi LLC, Erdenes Tavan Tolgoi LLC, Hunnu Coal LLC and some new companies getting ready to begin exporting coal.

Which facilities at the port did you visit?
We visited the commodity exchange market that has been functioning for ten years, and serves traders from south and east China, and also countries such as Japan, Australia, India, Indonesia and Korea. This is an international market and will allow Mongolian exporters to get market prices for their coal. At present, our trade ends at the China border. Inner Mongolian companies buy all the coal and then offer it at the Tianjin market at world prices, making a 200%-300% profit. The port administration said it last year received over 30 million tons of coal from Inner Mongolia in 2010. At least half of it was from Mongolia. Our companies lose a substantial amount of money because they are now unable to carry the coal to Tianjin and have to sell to border traders.

If Inner Mongolia could manage to transport 30 million tons, why shouldn’t we be able to carry, say, 10 million tons along the same railway and road routes? We cannot sell at the global price if we don’t offer our  output at the world market. The Tianjin market has an attached transport and logistics center, where coal is loaded and unloaded, separated according to type and grade, weighed and stored. At the moment, we sell all coal directly from the pit, at a flat rate as we do not have gradation and classification facilities. Each country can have its own standards of classification, but we do not have any. The Tianjin center separates the coal not only according to its use, but also by its ash, moisture and calories content according to Chinese standards. The quality determines the price. The center unloads and classifies coal from around 2,000 wagons per day, yet the whole place is so clean.  The next meeting of the working group will be in March, and there we shall explore means to carry our coal to Tianjin.

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