Opinion
Coal’s come back year
2017-06-28
N.Ariuntuya
The first five months of the year saw Mongolia exporting 15 million tonnes of coal and earning $1 billion from it, taking us back to the heady days of 2011 when more coal than ever before was exported. Then, as now, the export success gave a boost to a national economy in crisis.
The 2011 export figure of 21.1 million tonnes was surpassed in 2016 when 25.8 million tonnes were exported. However, the lower prices prevailing in 2016 kept the export revenue for that year at $973 million, substantially less than the $2.25 billion earned in 2011. Coal export revenue in the first five months of this year is already higher than that in 2016 as a whole. Additionally, in these five months, coal has outperformed copper in terms of earning, again something that was first seen in 2011. That was a year when coal prices skyrocketed but then they started falling, and from the next year until now, copper has again been on top. This could well be coal’s comeback year.
The increase in exports is not all due to the way the market has moved but credit also goes to Mongolian coal miners’ success in improving productivity. S.Bold-Erdene’s report in Mongolian in this issue details the hard work put in for this by major miners such as Erdenes Tavan Tolgoi, Energy Resources, the smaller Tavan Tolgoi, Mongolyn Alt, Chinhua MAK Narynsukhait, SouthGobi Sands, MoEnCo, and Usukh Zoos.
Exports perked up late last year, even if it only temporarily, with Mongolian miners grabbing the opportunity to export more as also to sell for a higher price. Now if prices hold in the coming months, Mongolian coal exporters will definitely be in a good position. The amended 2017 budget projects that 25.8 million tonnes of coal will be exported, putting MNT299.4 billion into the state budget. As the first five months have accounted for more than 60 percent of the anticipated volume for the whole year, it is safe to presume that the final results at the end of 2017 will be substantially much better than what has been projected.
Another topic we cover in depth in the Mongolian section in this issue is the likely effect on the Mongolian economy of the Extended Fund Facility (EFF) programme of the IMF. The government is confident of its successful implementation, with progress in mega projects, including Tavan Tolgoi, OT second phase, and Gatsuurt. This is now seen as the most important way to revive our economy, and nothing should be allowed to obstruct the development of these projects. Otherwise, all the money from the IMF programme would not be seen as having been effectively utilised.
China seeks to rebuild the ancient Silk Road connecting the western and eastern worlds under the new name One Belt, One Road. Some $5 trillion is to be spent on the ambitious project, which will allow Chinese President Xi Jinping to present a positive and powerful image of China. The success of his initiative will make dramatic changes to the global economy, and is expected to bring cheer to the global mineral commodity sector. B.Tugsbilegt’s analysis of how realistic such expectations are can be read in the Mongolian section.
It was decided in 2014 that the state will not hold any shares in the Tsagaansuvarga project and MMJ had lauded this decision. A few MPs, however, took certain steps to stall the fate of the project, and for almost three years, the project was in limbo. G.Tsogt, Deputy Director responsible for Production and Project Implementation at Mongolyn Alt, gives MMJ the good news that the project is now back on track.