ASPIRE Mining’s Mongolian rail subsidiary Northern Railways LLC has signed two recent agreements that are likely to enhance the economic potential of the Erdenet to Ovoot Railway, which will form part of the proposed Northern Rail Corridor in Mongolia’s north.
|The Erdenet to Ovoot Railway will form part of the Northern Rail Corridor in northern Mongolia.|
One MoU was signed with MTGT LLC, the owner of the Huren Chuulut Iron Ore Project, and concerns MTGT’s use and involvement in the Erdenet to Ovoot Railway.
Huren Chuulut is a large iron ore deposit about 50km northwest of the Khuvsgul capital of Moron and 60km north of the approved rail alignment. The project needs rail to Erdenet to be able to connect to customers in China along the Trans Mongolian Railway.
The MoU covers the sharing of development progress, mutual support in funding activities and the provisional allocation of 5 million tonnes of annual freight capacity as soon as the rail line has been extended to the proposed connection point about two thirds along the total 549km Erdenet to Ovoot Railway.
It focuses on sharing information and coordinate planning to lay the groundwork for a formal rail haulage services agreement.
Huren Chuulut is potentially the first major user of the railway as it could access the rail line before construction is completed through to Aspire’s Ovoot Coking Coal Project.
Northern Railways also recently signed an MoU with Ulaanbaatar Railways JSC (UBTZ) to cooperate on a number of matters to progress commercialisation of the Erdenet to Ovoot Railway.
The MoU will progress a number of key commercial agreements required to support construction funding of the railway, including the commercial terms upon which railway users can access the UBTZ line to move freight through to end markets in Mongolia, south to China or north to Russia.
This would encompass a capacity nomination regime and long-term tariff structures. It is expected that the Erdenet to Ovoot Rail users will become the largest users of UBTZ rail services over time.
Commercial agreement will also be needed in respect of UBTZ’s traffic management and line maintenance capabilities as well as cooperating on rehabilitation of the Erdenet to Salkhit spur line that connects to the main line. This is a 164km line that has limited capacity availability to absorb the substantially higher capacity that will be required to service Erdenet to Ovoot Railway users.