February 22, 2011 / 12:47 AM / 9 years ago

Mongolia to build railway link to Russian port

BEIJING, Feb 22 (Reuters) - Land-locked Mongolia will build a 1,000 km (620 mile) railway to enable it to export its vast but largely untapped mineral wealth via a Russian port, China’s Xinhua news agency reported late on Monday, citing local media.

Construction of the rail link will begin in the first half of this year and take 2-3 years, at a cost of $2-2.5 billion.

It will connect Dalanzadgad in the southern province of Omnogobi with Choibalsan in Dornod province in the east.

Analysts say Mongolia’s government plans to build the Russian route because it is worried about overdependence on China, its southern neighbour and a huge market for Mongolia’s resources. But Mongolia’s plan to diversify its exports will also incur significant costs that will cut into its export earnings.

The southern Gobi desert, close to the Chinese border, is home to what many regard as the world’s biggest untapped copper deposit at Oyu Tolgoi and the biggest coking coal mine at Tavan Tolgoi — capable of producing 50 million tonnes per year.

China offers a guaranteed market for both.

Three quarters of Mongolia’s exports went to China in 2009, with millions of tonnes of coal heading south through an already overwhelmed rail link, and foreign investors say their future could depend on easing the bottleneck. [ID:nTOE68607M]

The link will be built by the state-owned Mongolian Railway company, the Xinhua report said.

Reporting by Tom Miles; Editing by Ken Wills

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