Mongolia Energy Corporation (MEC, an energy and resources developer, is forging strongly ahead with its plans to begin mining its premium coking coal at its Khushuut Mine in Khovd Province, western Mongolia in 2009, despite the global financial crisis hurting the global mining industry. A case of the right product for the right market.
MEC is strongly committed to meeting the coking coal demands of the PRC’s Xinjiang Uyghur Autonomous Region’s (Xinjiang) steel manufacturers. MEC plans to commence 3 million tonnes per annum production expanding to 8 million tonnes per annum in or around 2012. The strategically located Khushuut Mine is a quarter of the distance by road to Xinjiang’s steel producers compared with Shanxi Province where current limited supplies of premium coking coal are predominantly based.
“Exploration of 600 out of its 330,000 hectares of coal, ferrous and non-ferrous metal concession areas in western Mongolia has demonstrated 150 million tonnes of surface mineable *JORC (international) compliant in-place coking coal resources,” said MEC Chief Executive Officer, Mr. James Schaeffer Jr., an industry veteran.
“Coking coal of the grade in Khushuut, western Mongolia, is a commodity with established demand. The initial coking coal market is Xinjiang, in the People’s Republic of China (PRC), where it does not have a significant local supply of coking coal. Xinjiang’s coal deposits are predominantly thermal and of lower quality than available coals from Khushuut,” he said.
Coking coal is a much more valuable form of coal because of its limited supply and higher economic value in steel production. Thermal coal, used in electricity production at thermal power plants, is a relatively cheaper resource, because of its abundant supply.
The Xinjiang steel demand for coking coal was identified by Shanxi Fenwei Energy Consulting when it carried out an independent market study for MEC’s “Khushuut coal”.
The wider significance of MEC’s project is that it will be complementary to the PRC's “Go West” Policy to develop Xinjiang. As the PRC’s RMB4 trillion (US$586 billion) economic stimulus package is rolled out, a major portion of it will be used for infrastructure development requiring steel production and hence boost coking coal demand - an essential ingredient to steel production.
After obtaining its coal, ferrous and non-ferrous metal concession areas in western Mongolia, the exploration process entailed MEC bringing together Chinese exploration companies, local Mongolian labor and John T Boyd Company, a leading international mining audit and consultancy firm, to provide support and supervision for the project. This international collaboration - focused, professional and realistic working of the project - has earned MEC a pre-eminent position in western Mongolia, second to none.
In addition to commencement and mine development at Khushuut, MEC will explore for further coal resources in the vicinity of Khushuut, located in Darvi Soum, Khovd Province, western Mongolia and other prospective areas, and continue exploring for gold, copper and other mineral deposits.
Commenting on Khushuut Mine’s future potential, Mr. Schaeffer, said: “Our mine at Khushuut will be in operation for between 20-30 years, and will provide valuable and critical resources to the Chinese steel manufacturing industry. We will repeat our efforts in order for our other projects to continue to grow.”
“MEC’s internal assessment, based on comparative markets indicates favorable outlook for our Khushuut project and we are confident of the project’s success to meet the anticipated growing steel production demands in Xinjiang,” he said.
Source: Press Release
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