Russia’s FESCO Transportation Group and Erdenes Tavan Tolgoi (ETT), the operator of Mongolia’s largest coalfield, have agreed to jointly construct a coal export terminal at the Russian Pacific harbour of Zarubino.
The first phases, offering capacity of 6 Mtpa, is scheduled for construction between 2020 and 2023. However, the preliminary technical and economic feasibility study suggests capacity would later be increased to 10 Mtpa.
FESCO and ETT will set up a joint venture to carry out the project, which will be registered as a resident of Russia’s Free Port of Vladivostok, thereby granting it all the relevant preferences and tax exemptions.
Before reaching its agreement with ETT, FESCO, which runs the port of Zarubino, presented its terminal construction plan to the Mongolian Government. Ulaanbaatar accepted the idea as it will provide the landlocked nation with access to the Pacific Ocean and the possibility to export Mongolian coal to Asia-Pacific markets.
The terminal construction cost is estimated at around US$260M, according to FESCO’s president and board chairman Aleksandrs Isurins. However, further investment is likely to be required for additional works such as deepening the harbour’s navigation channel and water area, as well as to developing relevant utilities and infrastructure.
Furthermore, since the Tavan Tolgoi (TT) coal deposit has no railway connection, the launch of new terminal would need to be synchronised with the completion of the 440 km-long rail line linking Mongolian coalfield with the Chinese border.
This year, Russian president Vladimir Putin proposed a US$1.5B loan to his Mongolian counterpart Battulga Khaltmaa for the construction of new and upgrading of the existing Mongolian railways.
It is believed that Ulaanbaatar would earmark part of the borrowed funds for the completion of the TT- Chinese border rail line, as well as the upgrading of the Trans-Mongolian Railway.