Mongolia possesses natural resources and well-educated talent to improve the living standards of her people. After a decade of reforms, the economic growth rate over the past four years in Mongolia averages 8.15 percent. But, the country’s large size and long distance between population centers bear the burden of higher transportation costs. To secure a competitive niche and succeed at trade, Mongolia’s mining industry needs a more efficient transportation solution.
Mongolia’s mining sector currently exports coal to China along road and railway systems. Trucking mined commodities is costly and, given rising fuel prices, diminish the industry’s profitability margins. By utilizing rail, rather than trucks, mined commodities may be moved more efficiently with less detrimental impact on the environment.
To address this challenge, the Sharyn Gol Energy LLC, Mongolia’s leading mining operator (responsible for supplying 15 percent of the nation’s coal market) asked the United States Trade and Development Agency (USTDA) if they could help fund a solution that would enable Mongolia to benefit more fully from the export of coal.
A US $391,550 grant was conferred during a signing ceremony held at the U.S. Embassy in Ulaanbaatar. The Grant agreement was signed by U.S. Ambassador to Mongolia, Mark C. Minton, and Sharyn Gol Board Chairman Batkhuu Batmunkh on behalf of the U.S. government and Sharyn Gol, respectively. USTDA Director for Policy and Program, and Regional Director for East Asia, Geoffrey Jackson signed as a witness to the agreement. The proposed project aims to construct a more economical and environmentally sustainable railway from the Sharyn Gol coal mine in Shivee Ovoo, to the existing north-south Mongolian Railway.
Sharyn Gol has selected TERA International Group, Inc. of Sterling, Virginia, to conduct the feasibility study which will contain a detailed technical analysis, market survey, economic and financial analyses and environmental and development impact assessment on the implementation of this new line. In addition to the USTDA grant, TERA will provide additional resources towards the completion of the study. TERA in consultation with government officials, transportation and mining specialists, and counterpart experts from Sharyn Gol will review recommended options, develop an action plan, secure financing, and assist Sharyn Gol during the project implementation.
Mr. Mark Dunn, Senior Technical Manager of TERA International Group, Inc. commented after the signing, “The project will increase production and allow for further expansion of mining and transport services. Some 1500 new jobs will be created for Mongolians in addition to increased opportunities in support services and local industry.”
The proposed project will increase export capacity from the current 300,000 tons of coal per year from Shivee Ovoo to 1 million tons in 2011. When the transport capacity is improved through the use of more efficient mining processes and improved technology and equipment, it is expected that annual output could reach 5 million tons. The outcome of this commercial investment will not only increase the volume of exports, but also contribute to improving the quality of life for Mongolian citizens through an increase in Gross Domestic Product.
TERA successfully completed more than 400 transportation projects in 90 countries -- all on time and within budget. TERA contributed to the National Transportation Strategy for Mongolia and TERA’s expertise comprised 80 percent of the effort for the Mongolia’s railway modernization project. TERA has permanent offices in Sterling, Virginia, Honolulu, Hawaii, Beijing, China, Manilla, Philippines and project offices throughout Asia, including Ulaanbaatar, Mongolia.