Mongolia is one of the major coking coal producers
By the end of 2011 total global proved recoverable coal reserves stood at 982,744 million tons. Europe (30.8%) and North America (27.5%) held the major recoverable coal reserves. At the country level, USA, Russia, China, Australia and India held the largest coal reserves and,in aggregate, held around 72.4% of the world’s total recoverable reserves. Mongolia has also proven to possess vast resources of coal. According to the Mineral Resources Authority of Mongolia, coal deposits can be found throughout the country.
Steam coal is the major coal type produced globally with an output volume much higher than coking coal and brown coal. China is the largest producer of steam coal and coking coal with a production of 3,450 million tons and 562 million tons respectively. Indonesia was the fourth largest producer of steam coal with a production of 485 million tons in 2012. Mongolia is the seventh largest producer of coking coal.
Mongolia recorded rapid growth on coal production in recent years
Mongolia only began to tap its vast coal reserves in the past five years. Before 2008, the annual coal production of Mongolia was less than 10 million tons, although continuous growth was recorded. However, significant year-on-year changes were recorded for three consecutive years from 2009 and production reached a record high at 32 million tons in 2011.
In Mongolia, the consumption of coal has only recorded moderate growth during the past decade. The volume of consumption increased from 5.2 million tons in 2004 to 7.4 million tons in 2012, with a 4.51% compound annual growth rate. In 2012, around 24.7% of coal produced was consumed domestically. It is reported that the vast majority (79.0%) of domestic coal consumption in Mongolia is due to “Thermal power stations”. The “Utility services, household consumption” and “Manufacturing &construction” sectors accounted for 9.4% and 3.0% of consumption respectively.
China is the most important destination for Mongolian coal
According to the National Statistical Office of Mongolia, the coal export volume of Mongolia was as low as 3.3 million tons in 2007 and increased rapidly in few years to reach 21.3 million tons in 2011. Mongolia was also the tenth largest coal exporter in 2011. It is reported that Mongolia exported 20.9 million tons of coal in 2012, accounting for around 70% of its production in the same year. In 2013, the volume of exports further increased to 25 million tons. It is projected that the export volume will be 35 million tons by the end of 2015 and will reach 55 million tons by 2020.
Currently, China is the largest buyer of Mongolian coal and Mongolia has become one of the largest suppliers of coking coal to China. In 2012, Mongolia exported around 2.0 million tons of coking coal to China, following Australia which exported around 2.5 million tons. Lower prices is a key reason that China imported a huge amount of Mongolian coal. For example, the average import price of Mongolia Mining Corporation’s (MMC) washed coking coal was USD155/ton in 2012, USD60 less than the Chinese domestic price and USD114 less than imported coking from other countries.