SouthGobi to spend $800m on coal in Mongolia

Toronto-based SouthGobi Energy Resources plans to invest US$800 million over the next three years to develop coal resources in Mongolia for export to the Chinese market, Bloomberg reported. The company wants to increase coal production in the Gobi desert by six times to 8 million metric tons. SouthGobi, which is 79% owned by Invanhoe Mines, plans to upgrade its operations at the Ovoot Tolgoi mine, which is roughly the size of Paris, located 950 kilometers south of the Mongolian capital of Ulan Bator. SouthGobi says it Ovoot Tolgoi mine has 114.1 million tons of reserves. However, the company says it also needs to construct a 40km rail link from the mine to the Chinese border. Alisher Djumanov, managing partner of Singapore-based Eurasia Capital Management, which holds SouthGobi stock, said that "Mongolia is a new frontier for coal. I have not seen other figures, but the [Mongolian] government estimates the country may have 100 billion tons of coal."