China imposed a ban on coal exports from Australia late last year. Amidst talk of reducing the carbon footprint, Canada, the US, Russia, and Indonesia expressed their interest to replace its market share. Yet, it was Mongolia that became the leader of the race. The vice president of one of the country's largest mining companies, MAK (Mongolyn Alt), spoke on where the profits from coal sales would go to.
Relations between the Middle Kingdom and Australia had been strained even before the pandemic started. The government of the latter openly criticised Chinese domestic policies — for instance, as to how they treated the Uyghurs or the Australian journalist Cheng Lei, who was detained in China a year ago. Finally, after Canberra followed Washington in demanding an "independent" investigation into the origin of the coronavirus, China interpreted the move as improper interference in its affairs. Thereupon it banned coal and copper exports.
So far, Australia's losses have been estimated at $20 bln, with experts projecting them to reach $80 bln a year. For this country, China was the second-largest importer of coal after Japan. Australia, in turn, was the largest supplier to China, providing it with 70 mln tonnes of coal annually. By comparison, Russia exported less than 40 mln tonnes in 2020. China imported 304 mln tonnes of the raw material last year altogether.
Everything changed as a result of the confrontation between the two states.
Let us take coking coal – essential for use in steel manufacture – as an example. In the first quarter of 2021, the volumes of shipments from Canada and the US reached their highest levels since 2013. Canada's exports grew to 1.3 mln tonnes in March, thus doubling year-on-year. As for America, it increased its supplies almost fivefold, to 663 thousand tonnes, in the same period. Additionally, Russian companies shipped 1.4 mln tonnes of coking coal to China in January–March, thereby increasing the supplies by 8.3%.
Mongolia was the quickest to act upon the situation, though. The country shipped 2.17 mln tonnes in March and 6.08 mln tonnes in the first quarter, a 123% year-on-year increase in exports. Therefore it became the primary contender for the top spot amongst the exporting countries. However, is it at all surprising?
"China accounts for more than 50% of global coal consumption, and our country is the closest neighbour to this enormous energy market. 250 km from the Chinese border, there is one of the world's largest coal deposits, Tavan Tolgoi, with an estimated resource of almost 6.5 bln tonnes. About 40% of that is high-calorific coking coal. This raw material owes its current growth in exports to an increasing number of dump trucks. When we had a spike in COVID-19 cases this spring, truck drivers, who transported the raw material, were the first to be vaccinated against the coronavirus. Still, this is not an option if we want a large-scale increase in supply.
The main issue is that Mongolia's transport system is in principle unable to deliver more coal to the border with China. And because we cannot transport larger quantities, it constrains the full-fledged development of the deposit. The single-track railway allowing for a maximum of eight freight trains travelling over it at a time is clearly not enough to increase export volumes. Hence the top-priority task for the government is now to build a new railway line of about 400 km and a power plant," says Gantulga Ganbayar, Vice President at MAK.
The Tavan Tolgoi–Züünbayan railway is currently under active construction. It is expected that the works will be completed in 2022. The authorities are also looking into leasing port areas in Russia.
"MAK was established in 1993 as a gold-mining company. But in the early 90s, a strategic decision to diversify the business and expand into coal mining was made by the conglomerate's executives. Back then, it was already evident that energy would become a highly topical issue. We have several mining-engineering universities in my country, but there is a particular need for qualified generalists. Russian education is still of high value here, so the company announced a competition, the winners of which could leave to study at St. Petersburg Mining University. The choice of a university is hardly coincidental. Both Punsalmaagiin Ochirbat, the first president of Mongolia, and Nyamtaishir Byambaa, founder of MAK, graduated from Mining University," recalls Gantulga Ganbayar.
His uncle also studied at Mining University and suggested that he participate in the contest, Gantulga notes. Since he got a high score on the tests, he was admitted to the Department of Mine Surveying.
"I am fortunate to have been a student of the programme where I learnt a lot beyond the basics. In addition to field-specific disciplines, we were also taught economics, as well as numerous other subjects. I interned at Boroo Gold, a subsidiary of OZD Group, and Erdenet Mining Corporation, Mongolia's largest mine and mill. Mining University's students have excellent technical competencies. Accordingly, they quickly move up the career ladder, advancing to either managerial positions or becoming in-demand field experts. MAK chooses the most talented high-school graduates every year and sponsors their education at Mining University. Due to the nature of my job, I often meet foreign partners and take part in various international events, and I have always felt that my professional skills are up to global standards," admits Gantulga Ganbayar.
After graduating, Gantulga returned to his home country and took a job as a surveyor in the technical-engineering department of MAK. He was responsible for performing surveying activities at all of the company's mines. Two years from then, his main line of work was to take care of coal mines. Afterwards, he was promoted first to mining engineer with 150 subordinates, then chief engineer managing 600 employees, deputy director and director of the department, before finally becoming vice president.
"Mining is one of the dominant industries in Mongolia. Coal makes up about 40% of our exports, plus we have copper and molybdenum. Coal also accounts for 90% of Mongolia's total domestic energy consumption, with wind and solar power accounting for the remaining 10%. This explains why all mining-related specialities are of high prestige here, even though globally, there is a lot of controversy surrounding coal usage. At the US-hosted Leaders Summit on Climat, which took place in April, dozens of countries and organisations talked about green energy and reducing emissions. In fact, even China promised to limit coal consumption. It pledged to achieve peak emissions of CO2 before 2030 and reach carbon neutrality by 2060. Of course, we understand that this is the direction the world is headed in. Still, we are sure that the consumption of fossil fuels will last for at least several decades more. Our company is currently upgrading its coal facilities and developing the rest of its assets with the money earned from coal sales," says Mining University's graduate
Gantulga Ganbayar was appointed vice president two years ago. Since then, he has been developing MAK's new business area — sales of construction products, such as concrete, cement, and others. These goods are mostly made from limestone, which the company extracts itself. Aside from this rock, MAK is involved in mining lignite, hard and coking coal, copper-molybdenum ores, and gold prospecting.
A new coal preparation plant is being built in Mongolia, with the project completion date set for the end of this year. Modern, sophisticated technologies will be used at the plant, by taking advantage of which the sulphur content of coal will be lowered to 0.85% and the ash content to 18%. This will help reduce the overall level of air pollution.