Friday, August 6, 2010

[cpsnewswire] Hunnu Coal comment on Mongolian Coal

Dear Subscribers,

Below is an article quoting Matthew Wood, Chairman of Hunnu Coal regarding the threat of Mongolian coal to that of Australia and commenting on Robert Friedland's statement that Mongolia could kill Australia's coal industry.

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Mongolian threat to Australian coal

Blair Price
Friday, 6 August 2010

BILLIONAIRE mining executive Robert Friedland is warning that Mongolia could kill the Australian coal industry, a view shared by Hunnu Coal chairman Matthew Wood as South and Middle Gobi coking and thermal coal could be shipped to Japan and Korea within a few years.'s_robert_friedland.jpg


Ivanhoe Mine's Robert Friedland

Friedland chairs Toronto stock exchange-listed miner Ivanhoe Mines which owns 79% of South Gobi Energy Resources which currently achieves the most export sales out of the Mongolian coal producers.

The tax on mining profits in Mongolia was 25% compared to Australia’s proposed 30% mining tax, Friedland said.

Mongolia had a clear advantage in that it neighboured its Chinese customers.

“They’re closer to China than your lucky island,” Friedland told the Diggers & Dealers Mining Forum late yesterday.

Australia-listed Hunnu Coal is busy advancing several promising Mongolian thermal and coking coal projects with minimal start up costs.

Wood can see some shocks ahead for Australia’s leading export industry.

“I think Australia is going to find it hard to compete with coal 600 kilometres from Beijing with labour at tenth of the price,” he told

“Mongolia has a highly supportive government and has abolished the stupid taxes Australia is now contemplating. Australia has got some problems.”

He noted some other advantages of mining coal in Mongolia.

“Australian mines are getting deeper and older. The easy, cheaper coal is gone.

“These deposits in Mongolia are open cut from surface – they haven’t even been developed yet, the best years are still coming.”

The Mongolian government is working hard to expand the coal industry and announced major railway investment plans last month.

Wood said one of the plans was a link from the giant Tavan Tolgoi coking coal field in the South Gobi province, where Hunnu Coal has projects, all the way up to northern Mongolia where it can link up to Russia’s Tran Siberian railway line.

From there, the coal is railed out for export through Vladivostok port on the east coast of Russia.

“That’s a very short boat ride to Korea and Japan,” Wood said.

He said the Koreans, Japanese and Russians were keen to invest in Mongolian rail.

Wood said the Japanese and Koreans were extremely keen to get access to Mongolian coal “so it’s not just about China; Mongolian coal will be seaborne and that is a real threat to Australia”.

“That’s why Friedland is saying these things.

“These things aren’t going to happen next month, they are not going to happen next year but people are making investment decisions in Queensland based upon five to ten years.

“In five to ten years they will be competing against Mongolian coal well and truly.”

While at Diggers, Friedland also said the Oyu Tolgoi gold and copper mining joint venture between Ivanhoe Mines and Rio Tinto in Mongolia contained at least $US1 trillion ($A1.1 trillion) worth of ore.


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