June 13, 2012 on: International, Mining

MONGOLIA is looming as a serious competitor for Australian mineral exports to northern Asia.

But there is also the looming threat that a new railway could mean Mongolian coal can be supplied more cheaply and quickly to our large markets in Japan and South Korea. It takes a bulk carrier up to 17 days to haul coal from Newcastle to a South Korean port. Once a proposed new Mongolian rail line is built it will take just three days to transport coal to ports in Siberia and just a few days sailing across the Sea of Japan. Everybody, it seems, wants a piece of the Mongolian resources action. The latest mover is Singapore state investment agency Temasek, which has taken a 5.5 per cent stake in Canada's Ivanhoe Mines, 66 per cent owner of the huge Oyu Tolgoi copper-gold mine. Just weeks earlier, the Steel Authority of India inked a deal to gain access to coking coal and iron ore projects in Mongolia. Standard Chartered says China is likely to seek increasing supplies of coking coal from its northern neighbour given its prices are cheaper (by about $US25 a tonne) than from the seaborne trade. We've been overtaken by Indonesia as the largest supplier of thermal coals to China. Indonesia has used its closer proximity to Chinese ports to account for 35 per cent of China's thermal imports, leaving Australia in second place. Mongolia is coming up fast, with Standard Chartered expecting almost all of Mongolia's thermal coal output to be transported by rail to Chinese power stations. But the biggest of all the projects is the plan to build a 1100km railway from the Tavan Tolgoi deposit in the southern Gobi desert to the Siberian coast to access the Japanese and South Korean markets. This deposit contains six billion tonnes of coal, 1.6bn tonnes of which are high-calorie coking coal. Meanwhile, an Australian company, Aspire Mining, which claims to have the third largest coking coal resource in Mongolia, is to benefit from the new 406km Erdenet-Moron railway, which will carry the coal to the main trans-Mongolia line. The top 10 deposits in Mongolia are said to have a combined minerals value of $US2.75 trillion. But even smaller projects have been of interest in the big foreign players. The Japanese, for example, have been very active in trying to nail down rare earths projects in the country. Nuclear alternatives BACK in Japan, meanwhile, there has been a lot of effort to lessen the demand of industries for expensive raw materials. With the closure of all the country's nuclear reactors, Japanese companies are firing ahead with plans for alternatives to buying more imported liquefied natural gas and coal to provide electricity. The Nikkei news service reports that Nippon Telegraph and Telephone Corp is getting into the solar power business. It plans to build what are being called megasolar farms on idle sites and sell the output to utilities. The initial six plants, to be completed by January, will have a combined generating capacity of 11 megawatts. Altogether, about 40 large companies have announced plans to generate electricity. Kyocera, the diversified giant making products from document imaging equipment to cutting tools, is involved in building a 70MW solar plant in Kagoshima prefecture while train operator Kintetsu (which also runs shipping companies and sells real estate) is building a 20MW solar plant on idle land along one of its railway lines. Mitsui Chemicals is also getting into solar generation while convenience store giant Lawson will have solar panels on 1000 of its stores by February. On the metals side, the advanced materials section of Tohoku University has come up with a lithium-ion battery (used in hybrid and electric vehicles) that has dispensed with nickel and cobalt, making them a good deal cheaper to manufacture. Japanese companies have been mounting a massive effort to reduce the reliance on rare earths. Hitachi has just unveiled an electric motor containing no rare earths and Mitsubishi is aiming to produce hybrid cars that no longer rely heavily on several rare earth metals. Red hot futures WHILE we're all down in the mouth on everything from copper to oil, India's National Commodity and Derivatives Exchange is a place you can still get a bit of action. Chilli futures prices hit their daily upper limit this week on strong export demand, traders were scooping up oilseed and soy oil contracts due to a shortage of soybeans while barley prices jumped 2 per cent on Tuesday thanks to strong demand from breweries and cattle feed makers. Things weren't quite so rosy for turmeric and pepper sellers, with futures slumping on weak demand. Still, you can't win 'em all.

SOURCE OF THIS ARTICLE : the australian

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