N. TSERENSAMBUU: MONGOLIAN COAL IS BECOMING MORE COMPETITIVE

By A. Khaliun

We spoke with N. Tserensambuu, Acting Chief Executive Officer of Erdenes Tavan Tolgoi JSC, about the company's operations and the outlook for the coal market.

A conveyor belt system transporting coal from Erdenes Tavan Tolgoi's mine to its coal processing plant has recently been officially commissioned by the state authorities. How is the launch of this facility expected to improve productivity?

With the goal of producing higher value- added products, Erdenes Tavan Tolgoi (ETT) began building its coal processing plant in recent years and brought the facility into operation last year. As part of this, construction of the conveyor system linking the mine to the processing plant also began last year.

A state commission working group has completed its inspection of the coal feed conveyor, crusher, and loading facilities at Erdenes Tavan Tolgoi's coal processing plant and approved them for permanent operation as of January 26. The project includes Mongolia's longest conveyor system, measuring 12.6 kilometers, as well as a crusher and coal loading facilities- all of which were commissioned within an 18-month period.

With the conveyor system now in operation, the processing plant will, at full capacity, wash up to 10 million tonnes of coal annually, and produce higher value-added final products. The significance of the processing plant lies not only in upgrading raw coal to increase its unit price, but also in enabling the commercial utilization of all types of coal mined by ETT.

By blending higher-ash coal with medium- and higher-quality coal, overall quality can be balanced and improved. This represents a major step forward, as it allows the company to market all types of coal without selective extraction, in compliance with the Law on Minerals, and significantly enhances the commercial utilization of the deposit.

Where do coal prices currently stand in the global market?

The year 2025 has been challenging for the coal market. In the first half of the year- especially in May and June-China's coal purchase prices fell to their lowest level in the past five to six years. At the Gantsmod border crossing in Inner Mongolia, Mongolia's main coal export gateway to China, the price of hard coking coal known as "No. 5" declined to around 700 yuan per tonne, excluding taxes, or roughly $100.

Prices began to recover in the second half of the year. Currently, hard coking coal prices at Gantsmod stand at around 1,000 yuan per tonne, or roughly $140.

How much coal did Erdenes Tavan Tolgoi export in 2025? Did the company meet its annual goals?

Erdenes Tavan Tolgoi (ETT) accounts for roughly 30% of Mongolia's total coal exports. In 2025, the company exported 28.7 million tonnes of coal. Of this total, 27.3 million tonnes were shipped through the Gashuunsukhait-Gantsmod border crossing, while 1.4 million tonnes were exported via the Khangi-Mandal crossing.

Amid a decline in coal prices, exports reached 11.9 million tonnes in the first half of the year, compared with 16.7 million tonnes in the second half, including 9 million tonnes in the fourth quarter alone. A notable milestone was achieved in December 2025, when ETT exported 4 million tonnes of coal in a single month for the first time in the company's history, setting a new record. The previous highest monthly export volume had stood at 3.2 million tonnes.

Capacity constraints at the Khangi-Mandal border crossing affect both road and rail transport. To address this, the company is working to increase export volumes by making greater use of underutilized border crossings wherever possible. As a result, 846,000 tonnes of coal were exported through Khangi-Mandal in November and December 2025.

In December 2025, ETT conducted exports using 1,144 vehicles per day. An important indicator of market performance is the volume of coal sold through the exchange under delivery terms, in accordance with the Law on the Mining Products Exchange. In December, exchange-based sales accounted for 49% of total exports.

Selling coal through the exchange has resulted in higher prices compared with traditional mine- mouth contract terms. For instance, in January 2026, hard coking coal was offered at a starting price of $111 per tonne and traded at an average of around $120 per tonne.

What is the transportation cost per itself? Does yourcompany handle coaltransportation ton?

ETT manages coal transportation under delivery terms, handling logistics internally.

Transport providers are selected through a general framework agreement in accordance with the Law on Procurement of Goods, Works, and Services with State and Local Government Assets. Competitive tenders are held among logistics companies, and the selection of coal transport providers is conducted transparently. 

As a result of this process, in 2025 ETT delivered coal to the Gantsmod border crossing at an average cost of $10.5 per tonne-the lowest rate achieved to date. By comparison, coal transportation tariffs exceeded $100 per tonne in 2021 and 2022.

By reducing transportation costs for coal sold through the exchange, the company was able to navigate the price declines of 2025 successfully.

However, when transport fees were high, as noted earlier, many Mongolians bought coal transport trucks on credit. This created an oversupply of vehicles in the market and led to challenging conditions, including heavy loan burdens. It is also important to highlight that miners, truck drivers, and transport workers are the unsung everyday heroes who sustain this industry.

Over the past year, a total of MNT 1.7 trillion in taxes and fees was collected for state and local budgets. In December 2025 alone, Erdenes Tavan Tolgoi (ETT) paid MNT 330 billion in taxes and contributed MNT 200 billion to the Savings Fund. In 2024 and 2025 combined, ETT contributed MNT 500 billion to the Savings Fund.

Trading on the exchange intensified during the last quarter of the year. In 2025, Erdenes Tavan Tolgoi sold 12.6 million tonnes of coal through the exchange. Of this, 5.5 million tonnes-worth $390 million- were traded in the fourth quarter and delivered to the Chinese Gantsmod and Mandal border crossings.

The increase in exchange trading has boosted efficiency. Do you expect this level of trading to continue in the future?

Erdenes Tavan Tolgoi has placed special emphasis on  increasing the share of coal sold through the exchange. At the start of 2025, 30% of the company's coal was traded via the exchange. This share dropped to 8.3% in June but rebounded to rising, reaching 33% in September, 41% in 19% in July and 27% in August. It continued October, 44% in November, and 49.04% in December-meaning that nearly half of the total coal exported was sold through the exchange.

As of January 26. 2026, a total of 3 million tonnes of coal have been shipped from the mine, with 55% of this volume traded through the exchange. In other words, the volume of loading and exports under the long-term mine-gate (ex-mine) contracts concluded by Erdenes Tavan Tolgoi JSC in 2011 and 2020-2021 has declined to some extent.

Since the start of the new year, 912,000 tonnes of coal worth $90 million have been including washed non-coking coal, washed successfully sold. Through the exchange, the company sells 7-8 types of products, one-third coking coal, washed hard coking coal, and washed thermal coal.

Erdenes Tavan Tolgoi has introduced a new coal coding system, classifying coal by ash content for sale and distribution. Information on stockpile management is made transparently available to buyers. By organizing transportation more efficiently,the company is working to optimize cargo turnover and reduce unit costs.

How much coal is planned for export in 2026?

In 2026, Erdenes Tavan Tolgoi aims to produce 35 million tonnes of coal, of which 7 million tonnes will be processed at the beneficiation plant to generate higher value- added products for export. The company also plans to increase the volume of coal sold through the exchange under delivery terms and to sell all types of coal without selective extraction from the deposit.

In particular, ETT plans to expand exchange trading of low-ash, high-quality one-third coking coal extracted from the newly opened area in the northern part of the Tsankhi West Mine, which began operations in 2025. The company is also working to partially process lower-quality stockpiles at the beneficiation plant and price and sell coal based on quality parameters in line with the coal coding system. Coal will be delivered to the Gashuunsukhait and Gantsmod border crossings and sold through short-term trading.

At the end of 2025, coal was delivered to an internationally connected deepwater port in China. What is the significance of this?

In October 2025, for the first time, 6,400 tonnes of Erdenes Tavan Tolgoi's washed coking coal were sold through the Mongolian stock exchange with delivery to a deepwater port in China. This marks an important step toward reaching end consumers directly through ports connected to international markets, enabling the company to penetrate deeper into global markets.

ETT is actively exploring opportunities to sell coal to third-country markets. Major Indian steel producers, both state-owned and private, have expressed interest in purchasing the company's processed products. Meetings have been held to discuss transport and logistics feasibility, as well as whether ETT's coal meets the quality standards required by Indian steel mills.

How would you assess the competitiveness of Mongolian coal?

The main challenge to Mongolia's coal competitiveness has been transport and logistics. High transportation costs historically forced the country to sell coal at lower prices. Since the implementation of the Law on Mining Products Exchange, transportation costs have been reduced from inflated levels to more realistic rates. As a result, coal can now be sold at higher prices, which has strengthened Mongolia's overall coal competitiveness.

What are your expectations for coal market prices in 2026, and how do you see the overall market outlook?

I expect coal demand in China, Mongolia's main consumer market, to grow until 2030. After that, demand is likely to gradually decline. Coal will remain part of consumption, but market expansion is expected to be limited beyond 2030. As long as steel mills continue to operate, demand for coking coal should remain steady.

Mongolia currently supplies about 50% of the coking coal imported by China. However, compared to China's total consumption, this represents a relatively small share. China consumes around 1.2 billion tonnes of coal annually, of which roughly 120-130 million tonnes are imported. Mongolia provides about half of these imports, primarily from the Tavantolgoi and Nariinsukhait coal deposits.

In connection with policies aimed at reducing greenhouse gas emissions, global demand for thermal coal may decline to some extent. However, ETT's main product is coking coal. We do not expect prices to rise significantly in 2026, but they are likely to remain around the levels seen at the end of 2025 and the beginning of 2026.

According to researchers, prices may fluctuate by roughly 5-10%, up or down. At the beginning of 2026, Indonesia announced a reduction in coal production by 200 million tonnes, which could lead to a modest increase in thermal coal prices.