A second railway border crossing will connect China and Mongolia in the near future. Construction started on Wednesday 14 May. Once in place, it could significantly boost the latter’s coal exports. Mining is a key sector of the Mongolian economy responsible for 28% of total GDP.
The future railway itself is a relatively small project – it stretches approximately ten kilometres. However, the link between Mongolia’s Gashuunsukhait border point with China’s Ganqimaodu Port has tangible economic benefits. That is because coal exports to China could surge by 30 million tonnes. Mongolia aims to elevate its exports to 100 million tonnes by the end of 2025, and 165 million tonnes in 2026.
For the time being, much coal finds its way into China by road. That is more time-consuming and costly than putting it on trains. Moreover, it creates long queues at border crossings. With mining products nearly being Mongolia’s only export product, building the small stretch of rail seems like a worthwhile investment.
The new railway is anticipated to lower transport costs to eight US dollars per tonne, compared to 32 US dollars per tonne when delivered by truck. The annual coal sales revenue could grow by 1,5 billion US dollars.