mandated when the contract was
awarded in May 2013.
The dispute adds to a list of warning
stories for foreign investors operating
in Mongolia’s frontier environment,
where the legal and regulatory systems
are still evolving and subject to
arbitrary interpretation by local
officials.
A key objective of the new railway
investment is to reduce the cost and
time needed to deliver coal to China, as
most of it is currently trucked along the
country’s increasingly congested
highways. Apart from increasing air
pollution in the countryside, the
growing truck traffic has also been
blamed for causing accidents with other
road users and farmers in the
countryside.
Bilateral ties – and Mongolia’s
economy – suffered a brief but major
setback last year when ETT suspended
coal exports to China for several
months. Chinese aluminium firm,
Chalco, threatened to sue ETT for
allegedly failing to honour a coal sales
agreement signed in 2011. Trade
resumed in April 2013 after leaders
from both countries intervened.
Selling coal across the
border
In the latest indication of a thaw in
Sino-Mongolian relations,
Mongolian Mining Corp. said its
wholly-owned subsidiary,
Mongolian Coal Corp. Ltd (MCCL),
and Risun Mining Co. Ltd, a subsidiary
company of China’s Risun Group, will
establish a joint venture company to
transport, sell and distribute coal
in China.
With registered capital of
RMB 10 million and investments
totalling RMB 14 million, the new
company, Tianjin Zhengcheng Import
and Export Trade Co. Ltd, will operate
from the Tianjin Airport Economic
Zone in northern China.
(US$ 1 = RMB 6.2).
Tianjin Zhengcheng, which will be
51% owned by MCCL, will focus on
marketing and selling MMC’s hard
metallurgical coal to customers in
Hebei and northern Shandong
provinces, as well as Risun Group’s
coke-chemical plants.
Through this new joint venture,
MMC said it now has the potential to
expand its market in the metallurgical
coal and steel industries to Chinese
provinces and regions, while
contributing to better diplomatic
relations between the two countries.
“We are delighted to work with
Risun Group, the largest independent
coke and coal-derived chemicals
producer and supplier in China. We
believe our partnership will expand
geographical penetration of our
products to China’s major coke and
steel producing areas, by leveraging
Risun’s extensive marketing network
and channels,” Battsengel Gotov,
MMC’s CEO, said.
“The collaboration with Risun is also
expected to strengthen our long-term
relations with end-user customers by
supplying our washed hard
metallurgical coal products and give us
the opportunity to further expand and
diversify our revenue sources,” Gotov
added.
Investors will no doubt keep
watchful eyes on the MMCL–Risun
projects, as well as other projects like
it, as Mongolia looks to break the
resource curse.
14-MC-0435.MPS Rotary Breaker_WrldCoal.pdf 1 7/28/14 3:20 PM
