Aspire Mining granted 18-month extension on Erdenet to Ovoot railway
Aspire Mining announced that it has been granted an 18-month extension to complete conditions relating to the Erdenet to Ovoot railway through its rail subsidiary Northern Railways LLC.
The concession agreement amendment extends the date for completion of the conditions precedent to February 20, 2020, from August 20, 2018.
The metallurgical coal explorer and infrastructure company announced in June that its rail subsidiary, Northern Railways LLC, completed its review of the Erdenet to Ovoot Rail Feasibility Study. The total construction cost before contingencies is 11 percent less than the first feasibility study completed in January 2017 in RMB terms. However, due to fluctuations in the exchange rate, the total cost of the railway remains at 1.25 billion USD.
This 547.7-km railway will extend from Erdenet west to Ovoot where Aspire has coal properties, including the world-class Ovoot Coking Coal Project. Once complete, the railway will form the first part of the Northern Rail Corridor extending from Erdenet to Kyzyl in Russia.
In addition, the company said that after request from the government, the rail design was upgraded to Mongolian Class II with capability to move up to 30 Mtpa of freight to take account of expected transit freight demand.
The amendment is executed by the parties to the concession agreement as varied, the government of Mongolia, represented by its National Development Agency, Northern Railways LLC, China Gezhouba Group International Engineering Co Ltd, China Railway 20 Bureau Group Corporation and China Railway First Survey & Design Institute Group Co Ltd.
Aspire underlined that while the recently completed Rail Feasibility Study is an important milestone, remaining important conditions include:
• Definitive Environmental Impact Assessment and Management Plan;
• Land Use Agreements; and
• Funding availability
The company is targeting June 2019 to complete the outstanding conditions precedent.
Regarding the Rail Feasibility Study, Aspire said the review has been completed and translation into Mongolian has commenced.
“Consistent with Mongolian government expectations, modifications have been made to the design to ensure compliance with Mongolian Class II rail standards so that it is capable of delivering up to 30 Mtpa. This reflects an expectation of significant transit freight demand. This will result in a marginal increase in construction cost but it sits well within the 10 percent contingency range. While engineered to carry up to 30 Mtpa, the Rail Feasibility Study has not assumed any benefit from transit freight volumes,” Aspire said.
Previously, dependent on certain factors, Aspire said it would be able to commence construction of the Erdenet to Ovoot Railway in the spring of 2019 if it manages to secure funding.