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SouthGobi announces development of Ceke Logistics park project

Published by
World Coal,

SouthGobi Resources Ltd. has announced that it has entered into an investment agreement with Beijing De Rong Tai Investment Co., Ltd. (BDRT) on 10 October, 2017 in connection with the company's development of the Ceke Port Eco-friendly Bonded Logistics Park project.

Pursuant to the Investment Agreement, BDRT has agreed, subject to fulfilment of certain conditions, to invest RMB 231 million in instalments by 30 July, 2018 in return for a 30% interest in Inner Mongolia SouthGobi Energy Ltd. (IMSGE), while the Company will hold the remaining 70% interest in IMSGE. Proceeds from BDRT's equity investment will be used by IMGSE for the construction of the Ceke Logistics Park. IMSGE is the project company which holds a 100% interest in the Ceke Logistics Park.

The Ceke Logistics Park will be strategically located in the Ceke Port on the Mongolia-China border, which is the only inland port where the coal products of the company are imported from Mongolia to China. The development of the Ceke Logistics Park will facilitate compliance with the Chinese government's policy to combat pollution in the Ceke Port and strengthen the supervision of coal storage and transport in the Ceke Port. Development of the Ceke Logistics Park will also represent a strategic transformation for the company, evolving from a mining company into an integrated coal supplier and extending its downstream supply chain to reach end-customers of the company.

The Ceke Logistics Park will be an integrated bonded warehouse with completely enclosed coal storage facilities and will be connected to the railway system and the highway system. Spanning 1.44 million m2, the total coal handling capacity of the Ceke Logistics Park is projected to be 24 million tpy, encompassing an initial 12 million t in Phase 1 of the Ceke Logistics Park and an additional 12 million t in Phase 2. The construction of Phase 1 will commence in the fourth quarter of 2017 and is expected to be completed by the fourth quarter of 2018.

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