Introduction
Mongolia’s parliament has recently approved a landmark agreement with China to construct a 19.5 km railway extension connecting Gashuunsukhait in Mongolia to Gantsmod in China. This cross-border project marks a significant step in enhancing the coal export capacity of Mongolia, a country rich in natural resources, particularly coking coal.
Main Body
The new railway is an extension of an existing network that previously required trucks to complete deliveries across the border, a less efficient and costlier method. Once operational, the railway is expected to increase coal transport capacity by 30 million tons per year, directly supporting the expansion of the Tavan Tolgoi coal mine, one of the largest untapped coking coal deposits in the world. According to the Mongolian government, this will generate an additional $1.5 billion in annual coal sales revenue, contributing to a 0.8% annual increase in economic growth, helping sustain growth above 6% and keep inflation at around 5%.
First proposed in 2009, the project faced numerous delays but gained momentum after being listed among the 14 ‘Mega-Projects’ in the Mongolian government’s 2024-28 action plan. Construction will be managed by Mongolia’s state-owned Erdenes-Tavantolgoi JSC and China Energy along with its subsidiaries. If additional border crossings like Khangi-Mandal and Shiveekhuren-Sekhen are connected, Mongolia’s coal export capacity could reach 120 million tons by 2030.
From an analytical perspective, this partnership aligns with global trends of increasing demand for coal, particularly in China, which remains the world’s largest consumer of coal for energy and industrial purposes. However, questions arise about the environmental impact of such large-scale coal expansion. How will Mongolia balance economic growth with sustainability commitments under international climate agreements? Additionally, the heavy reliance on coal exports to China could pose economic risks if global energy transitions accelerate away from fossil fuels. The project also highlights China’s growing influence in Mongolia’s resource sector, raising concerns about economic dependency.
Opinion
While the railway is a clear win for short-term economic growth and job creation in Mongolia, it is critical to assess long-term implications. The government’s enthusiasm, as voiced by Prime Minister L. Oyun-Erdne and Minister Tuvaan Tsevegdorj, underscores a vision of transforming Mongolia into a key player in the global critical minerals market. Yet, diversification of export markets and investment in renewable energy infrastructure should be prioritized to mitigate risks associated with over-reliance on coal and a single trade partner.
