Mongolia Approves Rail Gauge Compatible With China To Cut Costs

Posted by EM_Equity ⋅ October 28, 2014 ⋅ Leave a comment

Filed Under Asia, China, Coal, EM, Eurasia, FM, Mongolia

Photo courtesy Getty Images/Ian Waldie

Following years of discussion, Mongolia’s parliament approved for the first time to adopt a rail gauge that is compatible with China for the construction of a 240-kilometer railway to link the Tavan Tolgoi coal basin with China, according to Bloomberg.

The new rail link will help to ease transportation of the nation’s second biggest export, coal, to its largest client, China, the world’s largest energy consumer.

Using the standard gauge rail that China uses, Mongolia will cut the cost of transporting coal to China by $2 a ton to $4 a ton, Bloomberg reports, citing a project chief.

In May 2013, South Korea’s Samsung C&T Corp. won a $483 million contract to construct the tracks, another $337 million is expected in order to secure power and build signaling and maintenance depots, Bloomberg reports.