THE wholly-owned subsidiary of Mongolian Mining Corporation (MMC), Mongolian Coal Corporation Limited (MCCL), has entered into a joint venture agreement with Risun Mining Co, a subsidiary company of the Risun Group. MCCL and Risun will establish a joint venture company named Tianjin Zhengcheng Import and Export Trade Co in the Tianjin Airport Economic Zone in China for the joint transportation, sale and distribution of coal products produced by MMC.
MCCL and Risun will respectively hold 51% and 49% of the total equity interest and contribute corresponding equity stakes in the JV within two years of its establishment. The primary business objective of the JV is to develop MMC's coal sales in the Chinese market, including the marketing and sale of hard coking coal to customers in the Tangshan, Baoding, Xingtai and Shijiazhuang area of Hebei province and northern Shandong province in China, as well as Risun Group's coke-chemical plants.
MMC's CEO Dr Battsengel Gotov says, "We are delighted to work with Risun Group, the largest independent coke and coal-derived chemicals producer and supplier in China. We believe our partnership will expand geographical penetration of our products to China's major coke and steel producing areas, by leveraging Risun's extensive marketing network and channels. The collaboration is also expected to strengthen our long-term relations with end-user customers by supplying our washed hard coking coal products and give us the opportunity to further expand and diversify our revenue sources."
MMC is the largest producer and exporter of high-quality hard coking coal in Mongolia. It owns and operates an open-pit coking coal mine at the Ukhaa Khudag (UHG) deposit within the Tavan Tolgoi (TT) coal formation, as well as the Baruun Naran (BN) coking coal deposit, both in the South Gobi region.
Earlier this year MMC, through its indirect subsidiary Energy Resources LLC, signed a shareholders agreement with China Shenhua Overseas Development and Investment subsidiary Lodestar Investment, Mongolian state-owned joint stock company Erdenes Tavan Tolgoi and Mongolian joint stock company Tavan Tolgoi JSC.
The agreement entails that the parties establish a joint venture to be named Gashuunsukhait Railway, to jointly develop a cross-border freight railway connecting the Gashuunsukhait port station of Mongolia and the Ganqimaodu port station of China.
Development of the cross border railway project is a component of the coal export support measures announced by the Government of Mongolia on August 16, 2013. These measures outline the importance of the immediate improvement of cross border transportation and logistics operations for coal exports from Mongolia to China.