MONGOLIA wants a US$1.3 billion loan from the Export-Import Bank of China to complete a stalled railway connecting China to the Tavan Tolgoi coal fields, reports Bloomberg News.
After the project stalled for lack of funds, Mongolian SOSC railway officials have been meeting in China with lenders, said, Idesh Ivshin, the railway's project chief in Ulaanbaatar.
The 240-kilometre (150-mile) railway will increase export volumes and lower the cost of transporting coal to Mongolia's biggest customer at a time when weak prices are tightening margins.
Coal is Mongolia's second biggest export earner, accounting for $556 million last year.
The Ministry of Finance may also offer a government guarantee, said Manduul Nyamdeleg, Head of Financial Markets and Insurance Division. The proposal would need to be ratified by the cabinet.
"We hope to conclude agreements in the next few weeks because the construction season starts in spring," said Mr Idesh, adding the railway could be completed by 2018 if work begins this year.
According to terms under discussion, the Export-Import Bank would appoint a Chinese contractor to construct the railway, Mr Idesh said.
That would replace the existing agreement with South Korea's Samsung C&T, which has stalled over a debt of more than $30 million that the railway says it can't pay.
State-owned Erdenes Tavan Tolgoi JSC and Tavantolgoi JSC, and Hong Kong-listed Mongolian Mining Corp operate in the Tavan Tolgoi basin, located 540 kilometres south of Ulaanbaatar in the Gobi Desert.
Source : HKSG.