According to AAP, Albanese told an investors’ conference in Sydney that coal exports from Mongolia to China were expanding and probably doubling every two years.
He reportedly suspects Mongolian coal could get to seaborne markets at a lower delivered price than Australian coal, and problems at the Port of Newcastle are unhelpful.
Albanese also said Rio was moving towards a long-term take-or-pay arrangement at the port.
Rio’s main involvement in Mongolia is through its joint venture with Canada’s Ivanhoe Mines for the massive Oyu Tolgoi copper-gold project which finally reached an investment agreement with the Mongolian government last month.
Mongolian coal development
In a report on Mongolian mining projects, Austrade noted the climate of the country was one of the biggest challenges, saying Mongolia was effectively frozen for six months of the year.
Lack of transport infrastructure and scarcity of water were other significant issues.
MAK Corporation’s Eldev coal mine currently produces 500,000 tonnes annually while Austrade detailed the more significant future coal projects and ramp-ups.
Tavan Tolgoi’s namesake mine is planning to start full production in mid-2010 at 15-30 million tonnes of thermal coal.
The coal requires a concentrator to reduce ash to less than 10% and has average calorific values between 4800-5000 kilocalories per kilogram.
The Mongolian government-led project has attracted bidding interest from a host of companies, including Peabody Energy and Vale, along with Chinese companies, a Japanese consortium and a Korean consortium.
The project has 900.5 million tonnes of measured and indicated coking coal and 881Mt of inferred coking coal.
It also has 634Mt of measured and indicated thermal coal and 4 billion tonnes of inferred thermal coal.
Meanwhile, Ivanhoe Mines’ Ovoot Tolgoi mine, which started open cut operations last year, will also develop an underground mine according to Austrade.
Production for 2009 is forecast to be 1.5Mt of thermal coal and 3Mt in 2010, 4Mt in 2011 and 5Mt from 2012 onwards.
Resources total 188Mt with 168Mt measured and indicated and 25Mt inferred.
Quality is good, estimated at 7527-7778 kcal/kg with low ash and sulfur content.
Redhill Energy is seeking investment for its Ulaan Ovoo project, 17km from the Russian border.
Final feasibility studies are underway for the potential 6Mt open cut operation which has 208Mt of measured thermal coal resources with 12.46% ash and 0.4% sulfur, and an estimated value of 5092 kcal/kg.
Energy Resources LLC also has the Ukhaa Khudag open cut coking coal mine, which is expected to produce 60,000t this year and 1.75Mt in 2010.
Back in May, Peabody took control of half of Peabody-Polo Resources, a joint venture with substantial coal interests in Mongolia, for $US23 million.
The JV holds coal licenses throughout Mongolia, with licenses in the South Gobi region.