Mongolian coal miner Sharyn Gol has commissioned its new coal wash plant next to its producing coal mine in Sharyn Gol city, Darkhan province. The plant, which has the capacity to annually wash 600,000 tonnes of raw coal, enables Sharyn Gol to produce an export grade coal, as well as a premium coal product for the domestic industrial market.

The plant is Mongolia’s second operating coal wash plant and the only one that has the potential to supply the domestic market.

Sharyn Gol’s chairman Batmunkh B said, “We are delighted that Sharyn Gol’s team has succeeded in beginning coal washing operations. This investment by Sharyn Gol is consistent with the Mongolian government’s policy of encouraging Mongolian mining companies to invest in mineral processing technology. The wash plant opens a new chapter in the history of Sharyn Gol, which is celebrating its 50th year of operations.”

The company has also signed a deal with a shipping company to deliver its coal via Russia to Rason port in North Korea. The new strategy forms part of the landlocked nation’s efforts to find new ways to reach overseas markets such as Japan and South Korea.

Sharyn Gol has signed a binding agreement with Mongol Sammok Logistics to ship its coal to Rason, where Mongolia already has an agreement with North Korea that gives its exporters preferential treatment at the port.

Mongolia ships the bulk of its mostly resource-based exports to China, leaving its economy dependent on its powerful southern neighbour and putting it at a disadvantage when it comes to negotiating prices.

James Passin, who controls Sharyn Gol through the New York-based Firebird Mongolia Fund, said Sharyn Gol had no sales agreements in place with any potential overseas buyers.

Mongolia once planned to connect the massive Tavan Tolgoi coal project to a rail network that would allow coal to be delivered to Asian customers through Far East Russia’s Pacific ports but a 2010 World Bank study said the transport costs would stand at about $95/tonne, compared to $33 for delivery into China.

South Korea has at least twice in the past year taken deliveries of Russian coal from Rason, with steelmaker POSCO one of the regular buyers, according to a company spokesman.

Mongolian Mining Association executive director Namgar Algaa said opening up new markets would allow Mongolian miners to manage the risk of slowing Chinese growth. China’s weakening growth this year has meant its coal imports from Mongolia fell 6.9% across the first four months of the year to 5.2 million tonnes.

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