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(Bloomberg) -- Mongolia is aiming to increase its coal exports to China by almost a fifth this year, as it seeks to expand energy cooperation with its resource-hungry neighbor.
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The central Asian nation forecasts that exports of the power and steelmaking fuel will rise to 100 million tons in 2025, Mongolian Prime Minister Oyun-Erdene Luvsannamsrai said in an interview on Monday. The two nations reached a deal on Friday for a new cross-border rail link that will increase capacity by 30 million tons.
It’s one of several rail connections Oyun-Erdene is hoping to create, eventually boosting the nation’s coal export capacity to China to 165 million tons, nearly double the almost 84 million tons it sent last year. He also wants to cooperate with China and other nations across energy sectors, from green power generation to hydrogen production and natural gas transit.
“Mongolia has vast land capable of producing energy,” Oyun-Erdene said. ”We can sell the energy to China and also other Asian superpowers.”
China posted record coal imports last year, which were driven by big increases from Australia and Mongolia, with the latter accounting for 60% of its southern neighbor’s coking coal imports for steelmaking.
Although China’s steel industry is struggling and its demand for coal generally is flattening, Mongolia is well placed to hold or even grow its market share at the expense of supplies from Russia, which have become increasingly expensive.
Trilateral Talks
Mongolia’s government also plans to push for trilateral negotiations with China and Russia over the Power of Siberia 2 pipeline, a massive proposed natural gas conduit that has stalled over price negotiations. Mongolia is ready to move forward with it if an agreement can ever be reached, Oyun-Erdene said.
The Mongolian Prime Minister has proposed to Chinese Premier Li Qiang to host a trilateral meeting in Ulaanbaatar to push the gas deal after talking to President Vladimir Putin. “The Mongolian government is ready to sign the agreement and move forward with this project when the purchase agreement is concluded between” Russian and Chinese state-owned firms, he said.
The nation also wants to use its coal reserves to produce hydrogen, which has been touted as a fuel of the future for heavy industries like steelmaking. Oyun-Erdene said Mongolia has been in talks with countries in the Middle East about potentially exporting its hydrogen to them.