Starting from February, Mongolia’s largest state-owned coal enterprises, Erdenes-Tavantolgoi JSC, will stop signing direct sales agreement with Chinese buyers. Instead, the company’s coal will be auctioned on the Mongolia Stock Exchange, which will increase transparency and ultimately bring higher returns to the country.
The move to sell coal through the exchange comes in response to the protest against widespread fraud in the coal industry, where much of the theft was allegedly conducted by off-the-books coal sales with Chinese buyers at the border.
Therefore, “Erdenes Tavantolgoi” company is planning to launch online trading of coal on the exchange between 8-10 February. Therefore, a tender for transportation of coal from mine to the border has been announced. It is expected that over 200 companies will participated in the tender.
There are 55 Chinese companies which expressing their willingness to buy coal through the exchange, according to Special Representative of the Government in “Erdenes Tavantolgoi” J.Ganbat.
Earlier this month, the stock exchange organized a trial run trade to test the new system — 12,800 tonnes of coking coal was auctioned to a Singapore-based coal transporter. The final call price had increased 12.2 percent above the original asking price, from 1,150 yuan/tonnes to 1,290 yuan/tonnes.
The company is planning to sell about 200,000 tons of coal on the exchange in the first phase. “Erdenes Tavantolgoi” JSC plans to export 23 million tons of coal this year.
The Mongolian government promised to end years of shady coal deals after people staged a massive anti-corruption protest in Ulaanbaatar last December. The company’s CEO B.Gankhuyag and several associates as well as family members have been arrested and face trial on charges of embezzling billions of dollars in coal revenue.
Mongolia is one of key significant coal suppliers for China, especially for coking coal used for steel making. Mongolia’s coal exports came in at 31.69 million tonnes in 2022, surging 101.72 percent or 15.98 million tonnes year on year, showed data from the Mongolian Customs General Administration. A total of 29.77 million tonnes were exported to China, soaring 104.50 percent year on year, representing 94 percent of the total.