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Erdenet-to-Ovoot railway concession approved

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World Coal,

The Mongolian Cabinet has approved the execution of a concession agreement with Northern Railways, a subsidiary of Aspire Mining, allowing the development and operation of the Erdenet-to-Ovoot railway in northern Mongolia. The railway will link the country’s national rail network to Aspire’s Ovoot metallurgical coal project.

The agreement will last for 30 yr after which the railway will be transferred to government ownership. A prefeasibility study has been completed, putting an estimated capital cost of US$1.2 billion on the project.

“The concession agreement represents a major milestone in the future development of the Ovoot project as it now has a defined path to market by rail,” said the company in a statement. Northern Railways will now work with partners China Railway 20 Bureau Group Corp. and China Railway First Survey & Design Institute – both subsidiaries of China’s largest rail construction organization, China Railways – to complete the bankable feasibility study.

According to Aspire Mining, the rail project will play an important part in the establishment of an economic corridor through Mongolia, which was the subject of a recent agreement between the presidents of China, Russia and Mongolia and aims to improve trade between the three countries.

The Ovoot project is planned to produce 5 million tpa initially, increasing to 10 million tpa of high-quality metallurgical coal over a 21 yr life of mine.

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