Mongolian coal railway proved to be viable, with cost savings identified

As Aspire Mining’s Ovoot metallurgical coal project in Mongolia makes strides toward commercialisation, the company has received a boost following a field inspection of its planned Northern Rail Line.

The company is looking to extend the existing Trans-Mongolian railway, which currently spans approximately 406 km from Erdenet to Moron, by a further 222 km. The rail line would connect the Ovoot coal project with Erdenet.

The field inspection focused on the constructability of the rail extension from the point of view of construction logistics, geotechnical, hydrology, environmental, river crossings and railway operations.

The report from the field inspection confirmed that the project is viable from an engineering and railway operational aspect, as well as identifying potential cost savings.

The reduced capital cost could support further infrastructure development for the Ovoot project.

Field inspection

Key findings from the field inspection included:

• The logging of 14 potential quarry sites for ballast across the 547 km alignment. The spacing of these potential quarry sites is such that distances from the rail line are no more than 30 km.
• The length of rail line that could potentially be affected by permafrost conditions is 139 km, which is substantially less than the 200 km previously assumed. No frozen ground conditions were encountered during the field visit.
• The field visit identified 12 locations where changing the alignment of the line slightly should result in the reduction of three large bridge structures, reduce the length of a number of large bridges, avoiding swampy ground and route around a congested industrial zone of Erdenet city, where the Northern Rail Line will connect and rail yards will need to be constructed.

During the inspection, the field team “encountered nothing that would prevent the railway from being built, nor anything that would add to the estimated cost,” the company said.

It was also noted that “permafrost, while still a potential hazard, appears to be receding and will probably prove to be not as significant an issue as anticipated and budgeted for.”

Viable project

Aspire’s managing director, David Paull, commented that “This study further confirms the Northern Railways Erdenet to Ovoot rail project as a viable and efficient solution to bring Ovoot metallurgical coal, and other resource and agricultural products from northern Mongolia to world markets. The company continues to engage with the Government of Mongolia in its evaluation of the benefits of this rail project to the country.”

A revision to the original rail pre-feasibility study identified a lower US$ 1.3 billion capital expenditure for the northern rail line. This figure represents US$ 200 million in savings, without taking into account likely operating costs.

Aspire’s project has the potential to export coal to Eastern Europe, Russia, and also China. The reduced cost for the northern rail line will support the company’s claim it has the potential to be a competitive coal export company to these regions.

Last week, Aspire signed off-take agreements for coal sale export contracts with a company in Russia. In the agreement, 5000 tpm of coal would be exported via rail to Russia. 

Edited from various sources by Sam Dodson

Read the article online at: https://www.worldcoal.com/coal/20092013/mongolian_coal_railway_given_bost_63/