Name of the Project
Erdenet to Ovoot railway project.

Location
Mongolia.

Client
Aspire Mining.

Project Description
The Erdenet to Ovoot railway is a critical component of the development of the Ovoot coking coal project, which hosts 255-million tonnes of coal reserve and can sustain production of ten-million tonnes a year over 21 years.

A first-stage feasibility study has concluded that the project is financially feasible. The study also includes provision for two locomotive service centres and depots, as well as 11 bypass loops for the single-line track to provide network capacity of 20-million tonnes a year.

There are also 10 km of tunnels across seven separate tunnels.

The rail design includes minimum curvatures at 800 m and maximum gradients at 0.9%, which adds 2 km to bring the total rail distance to 549 km. The target speed is 80 km/h based on three diesel locomotive train sets hauling 10 000 t per consist. Locomotive depots are to be located at Erdenet and Ovoot.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
Not stated.

Value
The capital cost to build the railway has been estimated at $1.25-billion for a 20-million-tonne-a-year-capacity single line at current exchange rates.

Duration
The project is expected to take five years to complete.

Latest Developments
Aspire Mining and its rail subsidiary Northern Railways have entered into a memorandum of understanding (MoU) with China Gezhouba Group International Engineering Company (CGGC) to advance the Erdenet to Ovoot rail project.

The parties have agreed to work quickly to finalise the feasibility study for the proposed rail project, with CGGC considering funding the remaining predevelopment work. This will be subject to receiving a guarantee that there will be sufficient capacity to carry additional freight on the rail line, and there being sufficient time to complete the remaining predevelopment work and conditions precedent.

As part of the agreement, Northern Railways has committed to enter into a lump sum turnkey engineering, procurement and construction (EPC) contract for the project by the end of November.

The EPC contract will be subject to construction funding being available, which will indicatively allow for first production to start in 2019.
 

The freight forecast for the Erdenet to Ovoot railway does not include additional freight volumes from Russia’s Elegest coking coal basin or any trans-Eurasian trade, with Aspire noting that the feasibility of rail links into Russia would require further feasibility studies.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Aspire Mining, tel +61 8 9287 4555 or fax +61 8 9353 6974.