Aspire says rail­way ex­ten­sion is vi­able

The UB Post - - Business & Economics -

Aspire Min­ing, a Mon­go­lian met­al­lur­gi­cal coal and in­fra­struc­ture com­pany listed on the Aus­tralian Se­cu­ri­ties Ex­change (ASX), an­nounced that it has re­ceived a Pre­lim­i­nary Eco­nomic As­sess­ment (PEA) that in­di­cates that a rail link be­tween the com­pany’s Ovoot project the Mon­go­lia-Rus­sian bor­der port of Arts Su­uri is vi­able.

The PEA was con­ducted by Per­fect Road Project LLC, a Mon­go­lian rail de­sign and engi­neer­ing group. Per­fect Road Project LLC con­cluded that the fa­vored route for con­struc­tion of the Ovoot -- Arts Su­uri rail link would see a 238.6 km ex­ten­sion from the Ovoot rail­way head­ing west/ north-west to the Mon­go­lian bor­der port at a cur­rent es­ti­mated cap­i­tal cost of 581.82 mil­lion USD (ex­clud­ing con­tin­gen­cies) or ap­prox­i­mately 2.44 mil­lion USD per kilo­me­ter.

The com­pany said this con­firms the cap­i­tal cost is in the range es­ti­mated by an ear­lier scop­ing study com­pleted in 2015 and com­pa­ra­ble to the Er­denet to Ovoot Fea­si­bil­ity Study, re­cently com­pleted by North­ern Rail­way con­sor­tium part­ner China Gezhouba Group In­ter­na­tional Lim­ited.

Aspire’s in­fra­struc­ture sub­sidiary North­ern Rail­ways LLC was granted an ex­clu­sive 30 year con­ces­sion by the govern­ment to build and op­er­ate the Er­denet to Ovoot rail­way in 2015.

The ex­ecu­tor of the PEA ap­plied Mon­go­lian class 2 rail­way de­sign stan­dards to en­sure com­pat­i­bil­ity with the Er­denet-Ovoot rail project. In ad­di­tion, the rail­way was es­ti­mated to have up to 15Mtpa ca­pac­ity with ad­di­tional ca­pac­ity able to be later added to meet de­mand growth. Aspire un­der­lined that op­por­tu­nity to fur­ther re­duce con­struc­tion costs have also been iden­ti­fied in the PEA. The PEA as­sumed a mul­ti­task freight ser­vice with two way trans­port of con­tainer freight, cok­ing coal and other re­source and agri­cul­tural com­modi­ties.

Aspire be­lieves that the de­vel­op­ment of the Ovoot-Arts Su­uri rail ex­ten­sion – and con­nec­tion to the mar­kets be­yond -- would yield ma­te­rial long-term ben­e­fits in ex­pan­sion and di­ver­si­fi­ca­tion of both rail ser­vices and ex­port mar­kets and add sig­nif­i­cant value to the Er­denet to Ovoot Rail­way.

“De­vel­op­ment of the Ovoot-Arts Su­uri rail would link with planned rail de­vel­op­ment in the Tuva re­gion in south­ern Rus­sia. As per Aspire’s ASX an­nounce­ment March 22, 2018, Rus­sian rail­way de­sign in­sti­tute Mos­gipro­trans, is to com­plete a sim­i­lar PEA on a rail­way to link Kyzyl to Arts Su­uri to ex­tend the Kuragino to Kyzyl rail line. That ex­ten­sion is cur­rently tar­geted for com­ple­tion in 2022,” Aspire said in a state­ment.

The com­pany high­lighted that the new eco­nomic cor­ri­dor could po­ten­tially cre­ate the fastest and low­est cost rail path link­ing North Eastern China, Mon­go­lia, Rus­sia and Europe, and play an in­te­gral part in re­gional de­vel­op­ment. The cor­ri­dor has broad sup­port from re­gional and fed­eral gov­ern­ments in Rus­sia and sits within China’s One Belt, One Road ini­tia­tive and would sub­stan­tially en­hance trade and eco­nomic ties be­tween the re­gions. The Mon­go­lian govern­ment has in­cluded the Er­denet-Ovoot-Arts Su­uri rail cor­ri­dor in its na­tional rail­way pol­icy and iden­ti­fied the Er­denet to Ovoot rail­way as a pri­or­ity project.

In 2016, the North­ern Rail Cor­ri­dor was con­firmed by Ger­man lo­gis­tics com­pany, Tran­scare, as a cost and time ad­van­ta­geous cor­ri­dor link­ing China and Europe that would sat­isfy the grow­ing de­mand for freight ser­vices in the re­gion once com­pleted.

“The de­liv­ery of this PEA pro­vides fur­ther con­fir­ma­tion of the vi­a­bil­ity of the North­ern Rail Cor­ri­dor,” noted Aspire’s Ex­ec­u­tive Chair­man David Paull.

The com­pany as­sured its share­hold­ers in a state­ment that link­ing the Er­denet-Ovoot Rail­way into the North­ern Rail Cor­ri­dor sub­stan­tially im­proves eco­nom­ics for all stake­hold­ers. The re­cently com­pleted fea­si­bil­ity study for the Er­denet-Ovoot rail­way as­sumed Mon­go­lian-only do­mes­tic freight vol­umes of up to 16 Mtpa with a ca­pac­ity of up to 30 Mtpa. By uti­liz­ing more of the 30Mtpa ca­pac­ity, the fi­nan­cial ro­bust­ness of the Er­denet-Ovoot rail­way in­creases sig­nif­i­cantly, Aspire said.

Aspire has pro­vided the PEA to the Min­istry of Roads and Trans­port and Mon­go­lian rail op­er­a­tor UBTZ Rail­ways JSC to pro­vide fur­ther jus­ti­fi­ca­tion to pro­ceed to im­ple­ment­ing the Ovoot to Arts Su­uri rail project as part of the North­ern Rail Cor­ri­dor.

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