Aspire says railway extension is viable
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.