ASPIRE Mining has signed two non-binding Memoranda of Understanding (MoU) with large Russian buyers for up to 1.3 million tonnes of coking coal annually from its Ovoot Coking Coal Project in northern Mongolia. These deals bring the company’s annual coking coal MoUs to 6.9 million tonnes, well above the 5 million tonne capacity under its low capital development option.
The ASX-listed company has also signed a non-binding MoU to annually transport up to 2 million tonnes of Ovoot coking coal through Russian rail systems and reloading of coal at the Russian Far East coast at competitive tariffs. This follows it reaching agreements in September to access port capacity in the Black Sea and the Far East.
The MoUs with Russian end users cover an initial commitment to potentially purchase up to 1.3 million tonnes of coking coal annually, over a minimum of five years. Additional interest received from other Russian and Eastern European users indicates that Ovoot coking coal will have a significant customer base in the blast and foundry furnace steel making industries outside China.
Russia is a key market for Ovoot coal given its proximity and relatively lower transfer and logistics costs in delivering coal to markets. Superior blending properties see it classified as a ‘Fat Coking Coal’ which is in demand as blending feedstock for coke plants in Russia and compliments many coals from Russia’s ageing Kuzbass Basin where fluidity and caking properties are declining due to increasing mining depth.
The Russian interest follows recent negotiations between Mongolia, Russia and China to fund and construct upgrades to road, rail and pipeline infrastructure in Mongolia, creating a significant corridor between Russia and China. Proposed changes include upgrading annual Trans-Mongolian Railway capacity to 100 million tonnes.
This investment will allow the transport of oil and gas from Russia into China, delivery of Mongolian coal, iron ore and other commodities into China, as well as the delivery of Chinese and Mongolian exports into Russia and thus to Eastern Europe.
“We are pleased with the initial interest received in Ovoot coking coal, given the relatively short time that preliminary marketing has been undertaken,” Aspire’s managing director David Paull says. “We are pleased that we have been able to also generate buying interest in Russia which has a significant steel making industry.”
Russia is an important transit country for Aspire with the agreement to access 2 million tonnes of annual rail and port capacity through the Russian Far East at competitive tariffs highlighting this. Previous agreements included an access agreement with Taman Port on the Black Sea, which has generated additional interest from users, particularly in Eastern Europe, as well as an agreement with a terminal operator at Nakhodka on Russia’s Far East coast for north Asian exports.