UPDATE 1-Mongolia coal exports to hit 25 mln T this year -official

Tue Jun 21, 2011 2:54am EDT

* Total exports seen reaching 50 mln T by 2015

* Infrastructure costs seen at minimum $3.5 billion -official (Adds production forecasts, details)

By Fayen Wong

ULAN BATOR, June 21 (Reuters) - Mongolia's coal exports are expected to keep posting exponential gains and reach some 50 million tonnes by 2015, a government official said on Tuesday, though infrastructure constraints are seen remaining a hurdle for the country's booming mining sector.

Total coal exports are expected to jump 50 percent from a year ago to 25 million tonnes this year and rise further to between 30-35 million tonnes in 2012, A. Erdenepurev, general-director of the fuel policy department at Mongolian's Ministry of Mineral Resources and Energy, told Reuters on the sidelines of an industry conference.

Mongolia's coal exports are expected to reach 50 million tonnes as the eastern section of the huge Tavan Tolgoi mine comes onstream by 2014 to 2015, he said.

"Looking at our production growth over the past few years, these short-term forecasts can be quite conservative," Erdenepurev said.

Mongolia's coal sector, which accounts for a third of the country's earnings, has grown rapidly in the past few years to become an important coking coal supplier to China.

However, a severe lack of roads, rail lines, electricity, water and skilled workers in the impoverished nation of 2.7 million people pose formidable challenges to Mongolia's mining boom.

"There are 5,000 trucks per day on the road linking the southern Gobi region to the Chinese border right now and that number is going to grow and cause congestion," Erdenepurev said.

"There is a serious need for new infrastructure but it also demands huge investments."

Estimated costs to build proposed railways, road, water and power stations were at least $3.5 billion -- accounting for more than half of the country's gross domestic product, Erdenepurev said.

TAVAN TOLGOI BID RESULTS SOON

Separately, Erdenepurev said bid results for developing the the western section of the Tavan Tolgoi deposit are expected to be released by July 1, before the spring session of the parliament ends.

The government has already shortlisted six bidders out of a list of 15 to develop the mine, including ArcelorMittal , Vale , Xstrata , U.S. Peabody and a consortium of Chinese energy firm Shenhua and Japan's Mitsui & Co.

Another consortium, led by South Korean state body Korea Resources and including POSCO , utility KEPCO , trading firm LG Corp, Daewoo International, Russian Railways, and Japanese trading houses Itochu Corp, Sumitomo Corp, Marubeni Corp and Sojitz Corp, is also in the running.

The government had said in April it would select more than one winner, possibly three to four bidders, to develop Tavan Tolgoi. (Editing by Jacqueline Wong and Jonathan Hopfner)

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