Export-driven railroad expansion


Mongolia, which had a single railway port into its Southern neighbor Zamyn-Uud, will have three entry routes this year. The second railway connection to China via the TavantolgoiGashuunsukhait route will soon open, while the construction of the ZuunbayanKhangi route railroad will be connected to Mandal, creating the third export route for the country. The first rail transport to the southern neighbor via the Zamyn-Uud port was made back in 1956, and after 66 years, rail freight transport will be dispatched via Gashuunsukhait in July, and via Khangi in November. The construction of the TavantolgoiGashuunsukhait railway is nearing an end after a long and complicated history. As for the Zuunbayan-Khangi route, the decision was made in a very short time and the construction seems to be faster than the decision. But it will be important to look ahead and address issues without wasting time arguing as we did in the past.

The reduced time and cost for the latter railroad connection were significant progress for the country. The rapid development of an environmentally-friendly and clean infrastructure that can transport people and freight at the lowest possible cost gives a tremendous value and such is the significance of railroad projects. The above-mentioned two projects are crucial for expanding the exports of Mongolia’s mineral products to the Chinese market and are two strategic routes pivotal to the future of the country’s economy. The Tavantolgoi-Gashuunsukhait main road will be commissioned in July. Udaanjargal.N, the CEO of Tavan Tolgoi Railway LLC, informed us that transportation can commence as soon as it is commissioned. Our country has a broad-gauge railway system, therefore, gauges conversion points that will connect with the narrow gauge railway system of China. Terminals will be developed for both sides. Negotiations are underway on the management, investment, and development of the terminals. The Zuunbayan-Khangi railway will be connected to the Baotou steelmaking region through the Chinese port of Mandal. Baotou is the industrial center of the Inner Mongolia Autonomous Region of China. On the other hand, it is one of the most important railway hubs of mainland China that connects to the northern and northwestern regions.This is Mongolia’s key market for mining commodities and is the most competitive and dominant target region.

Discussions surrounding direct transportation of mining products to this region went on for many years as the cheapest and most profitable option. This is the greatest significance of the railway. In its March issue, the Mining Insight Magazine highlighted the ZuunbayanKhangi railway project and published the position of Bayarjargal.B, the Director of the concession company responsible for the project. The owner of the railway constructionoperation-transfer concession is “Mongolian Trans Line’’ LLC and “Mongolian Trans Logistics” LLC, the subsidiaries of “Boldtumur Yeruu Gol” LLC. In 2009, the team built the 115 km Bayangol railway and its ancillary facilities in Selenge province within two years. This was the first time in Mongolia that a private company built its railway infrastructure. Ten years later, in 2019, a 12 km wide-gauge railway “Sain Us” was put into operation in Altanshiree soum of Dornogovi province. In addition, companies with experience in the field are responsible for the logistics of transporting iron ore by rail from the Bayangol mine. The concessionaires have promised to build the Zuunbayan-Khangi railway within six months with their funds and bank loans, with the condition that it will be transferred to the state in 20 years. The export potential of the railways, which will open this year, will not be limited to Gashuunsukhait and Khangi. To take Tavan Tolgoi, which does not have a railway, as an example, three routes will be available for coal transport. The third route is the 416.1 km project of the Tavantolgoi-Zuunbayan railway.

Of the new railway projects, the one that started in 2019 will be the first to be commissioned. The two-year construction of the railway, which was funded by local sources, is almost complete, and transportation will begin this month. The first cargo, 3,200 tons of copper concentrate, left Oyu Tolgoi and arrived at the Zamyn-Uud port. Mining Insight is highlighting the course of actions that will expand the potential of Mongolia’s mining sector and address the factors that limited the supply of Mongolian mining products, such as railway infrastructure, transportation logistics, and port penetration. In recent years, the ESG indicators for the environment, society, and governance are coming under increased public scrutiny. ESG reporting has become an integral part of any business and an important measure of environmental attitudes, social responsibility, and governance capacity. In addition to raising funds and attracting investment, mining companies are prioritizing ESG as social approvals for their operations depend on establishing and maintaining ESG standards. Read more about this in the new issue.