Aspire Mining’s Mongolian rail infrastructure subsidiary Northern Railways LLC has received approval of the final alignment and rail connection point for the Erdenet to Ovoot Railway in northern Mongolia.
Northern Railways announced on December 1, 2015, that it had received its construction licence for the railway from the Mongolian Government. It subsequently entered into negotiations with the Government, and in particular the Ministry of Roads and Transportation, to establish two commissions to deal with outstanding alignment matters.
The negotiations included some re-design and re-engineering by Northern Railways to accommodate a rail route into the city of Erdenet that would avoid significant relocation of established infrastructure and competing land uses.
They also included amendments to the rail alignment to take into account the road and power line requirements of the Egin Golin Hydro Power Project which was also recently approved by the Government. The paths for the railway and the power project both require access through a 40km-long valley system west of Erdenet.
The rail route and point of connection to the UTBZ Railway at Erdenet have now been agreed between UTBZ, the Ministry of Roads and Transportation and Northern Railways. UTBZ is the Mongolian Russian joint venture which owns and manages existing rail services in Mongolia.
The newly agreed route into Erdenet avoids existing infrastructure and provides a buffer of at least 1km from existing housing.
Amendments to the design of the railway to deal with the competing needs of the power project took additional time but have now been resolved by a joint Government and Northern Rail Commission with a relatively minor change to the railway alignment.
Northern Railways received the signed rail concession in September 2015. However, in order to fix the alignment path for detailed design, the specific alignment and connection point with the UTBZ Railway needed to be approved. Given the delays in receiving the construction licence and then the alignment and connection point approval and given the difficulties of operating during the Mongolian winter, there is little benefit in pressing on with additional interim rail feasibility studies for package of work with China Railways Corporation’s subsidiary, First Design Institute, at this time. Northern Railways is therefore not expecting to drawdown on the loan facility provided by Signum Resource Corporation for that purpose.
During recent weeks Northern Railways has been active in searching for funding sources that would complete both the rail bankable feasibility studies and other environmental permitting activities. These negotiations have included Chinese and Russian contractors and potential investors, and are ongoing.
The rail project spans 547km and forms part of Mongolia’s rail policy to provide rail access to its northern provinces through the extension of its existing rail network from Erdenet to the Russian/Mongolian border at Arts Suuri with a Russian connection planned to Kyzyl. The rail line would provide a route to markets for coal from Aspire’s projects in northern Mongolia.