SouthGobi Resources has entered into an investment agreement with Beijing De Rong Tai Investment Co Ltd (BDRT) in connection with development of the Ceke Port Eco-friendly Bonded Logistics Park project. Proceeds from BDRT’s equity investment will be used to construct the park, which will be located at the Ceke inland port on the Mongolia-China border.
BDRT has agreed, subject to fulfilment of certain conditions, to invest RMB 231 million in instalments by July 30, 2018 in return for a 30% interest in Inner Mongolia SouthGobi Energy Ltd (IMSGE), while SouthGobi will hold the remaining 70% interest.
IMSGE is the project company which holds a 100% interest in the Ceke Logistics Park. Ceke is the only inland port where the coal products of SouthGobi are imported from Mongolia to China.
Development of the Ceke Logistics Park will facilitate compliance with the Chinese government's policy to combat pollution in the Ceke port and strengthen the supervision of coal storage and transport in the port.
Development of the logistics park will also represent a strategic transformation for SouthGobi, evolving from a mining company into an integrated coal supplier and extending its downstream supply chain to reach end-customers.
The Ceke Logistics Park will be an integrated bonded warehouse with completely enclosed coal storage facilities and will be connected to the railway system and the highway system.
Spanning 1.44 million square metres, the total annual coal handling capacity of the park is projected to be 24 million tonnes, encompassing an initial 12 million tonnes in Phase 1 and an additional 12 million tonnes in Phase 2.
The construction of Phase 1 will commence in the fourth quarter of 2017 and is expected to be completed by the fourth quarter of 2018.
SouthGobi is listed on the Toronto and Hong Kong stock exchanges. It owns and operates its flagship Ovoot Tolgoi coal mine in Mongolia, and also holds the mining licences of its other metallurgical and thermal coal deposits in South Gobi Region of Mongolia.