March 2013
The first issue of the Mongolian Mining Journal was published in 2008 when the price of high grade coking coal was $300 per ton. Every subsequent issue of the magazine has contained reports and comments on global trends in coking and thermal coal prices.
In 2008, Vietnam headed the list of the top five coal exporters to China. It was followed by Australia, Indonesia and South Korea, with Mongolia at No.5. Five years later, Mongolia has become the country exporting most coal to China.
That way, Mongolia has achieved a breakthrough in relation to a country, which offers all nations a chance to expand their trade and businesses. But our country’s position at the top is never secure. Other countries are in hot pursuit, among them Russia. The Mongolian section of this issue highlights this topic.
Another article in our very first issue was on the railway route, bearing the headline “Mongolian coal’s competitiveness will directly depend on the transportation cost”. This was before the adoption of the State policy on railway and the start of the World Bank study on the role of the railway in developing Mongolian mining. Five years later, we are back to the topic, seeking an explanation for why the competitiveness of Mongolian coal is under threat.
We do not have to go far in our search. Export of our natural resources is still to find its right road. The State policy has failed to take off, and no railway for mining has been built, keeping Mongolia waiting. The country has lost five precious years, in debates that lead to no decision. Suggestions keep cropping up, including one to take the railway to Siberia. In the meantime, coking coal price has fallen from $300 in 2008 to $155-$170, lower even than in the days of the economic crisis in 2009. The next two years – 2010 and 2011 – were the golden years for us, enshrining us as the top coking coal exporter to China. But the success is likely to be short-lived. Despite being right next to the world’s biggest market Mongolian coal is being gradually pushed out of the competition.
The biggest (non) achievement of the last five years is the marginalisation of the Tavan Tolgoi deposit. One of the world’s largest deposits, and also one with the best grade coking coal, it is now operating at a loss and is kept running with money from the bond sale. The responsibility for this sorry state of affairs lies squarely with some politicians who inflamed society with the so-called State policy on railway and steered the country’s economy into a headlong plunge. The manipulated fall of Tavan Tolgoi at a time when everything should have gone right for it is a black chapter in the history of Mongolia’s natural resources development.
Some landmarks in this history come to mind. In 2009, work on the railway was forcibly stopped as a result of the corrupt political game, though we didn’t have any other means to transport the coal. In 2012, the work was restored, but was again discontinued, for the second time. The consequences of such political machinations are now for all to see, and mourn. It will take time for the extent of the loss to be assessed more precisely. For the moment, we have random recollections of the sad story of Tsagaan Khad, of the damage to the Gobi environment, of the national debt and the people’s frustration. Some crafty politicians are trying to shift to mining companies all blame for the state of affairs. It is the bounden duty of journalists to expose the players of this corrupt game.“How could I live with myself if I didn’t write the truth?” asked the well-known Russian journalist Anna Politkovskaya.
MMJ wrote five years ago that mining cannot be developed without a railway, and that the country’s economy will be at risk unless the most appropriate route is chosen for the railway. Both remain valid, five years of bitter truths later. The State policy on railway will be reviewed in the Spring Session of the State Great Khural beginning on April 5.