It has been a fairly opportunistic year for coal companies. Coal demand picked up considerably as Russia’s natural gas supply to Europe slumped due to the Russia-Ukraine war. On top of that, the lifespan of coal-fired power plants is unimaginably extending. Some European countries have already announced plans to reopen coal-fired power plants, while Japan and South Korea are planning to increase coal purchases. These caused coal mines to focus on increasing output. Now that investment opportunities are back on the table for coal, investment picks up for new coal projects. However, it is difficult to predict how long the heightened price of coal will persist and whether the so-called “coal recovery” to continue. So, can the “grace” period create opportunities for the Mongolian coal business?
The price of coking coal continued to rise throughout the year and reached USD 332 per ton in May, which is currently the highest price for this year. However, the price started to decline just as the country found some ways to relax border restrictions and restart supply. In a way, Mongolian coal exporters are still unable to take full advantage of the short boom that is helping coal producers. Transport logistics and border checkpoint accesses have been undermining the coal supply for over a decade, and we, at Mining Insight, do not want to reutter the same issue all over again. However, we talked with coal exporters about the current situation, ongoing works, problems, future opportunities, and strategies to throw light on what is to come. Read more about these from the interviews of coal exporters, including “Energy Resources”, “Tavantolgoi”, “Usukh Zoos”, “Southgobi Sands”, and “MoEnCo”, that are transporting coal via the key export ports Gashuunsukhait, Shiveekhuren, and Bulgan. Countries were rapidly shying away from coal to widely shift towards renewable energy-based green technologies and coal producers were desperately trying to survive just a few months ago. But geopolitical tensions and over-optimistic expectations have made room for a new limited opportunity for coal.
The increased demand has created exponential advantages, especially for Mongolian thermal coal, shooting up prices. Readers may be interested in the discussion with Ch.Chinbat, Chairman of “Usukh Zoos” LLC, and B.Batmunkh, CEO of “Big Mogul Fund” LLC, regarding the golden opportunity for thermal coal producers. Also in our new issue, we are highlighting the infrastructure for Mongolian coal to the target market. We’ve interviewed the CEO of “Mongolian Railways” SOE P.Gankhuu, the CEO of “Zuunbayan Railway” LLC D.Banzragch, and the CEO of “Tavantolgoi Railway” LLC N.Udaanjargal to provide a comprehensive view on the new railway projects that will boost the potential of coal export. In addition, important news for Mongolian coal companies was announced in August, which was the revision of Mongolian coal classification standards. There were 10 subcategories of three types of coal before. The government is now categorizing five types of coal into 22 subcategories.
Although coal companies did not welcome this change, they see it as progress. As the classification of coal becomes more precise, it will make price calculations easier, and the price will be different at each border crossing with a benchmark price. Thus, Mining Insight has prepared an issue focused on the coal sector in anticipation of the Coal Mongolia 2022 conference, the largest gathering of coal business people.
