Aspire Mining (ASX:AKM) is the largest coal tenement holder in Mongolia’s Northern provinces, and the key to unlocking the deposit is infrastructure.
Aspire has now, through its rail subsidiary, Northern Railways LLC, entered into a Memorandum of Understanding (MoU) with MTGT LLC, the 100% owner of the Huren Chuulut Iron Ore Project.
Huren Chuulut is a large iron ore deposit located 50 kilometres to the north west of the Khuvsgul capital of Moron and 60 kilometres north of the approved rail alignment for the Erdenet to Ovoot Railway.
This project needs rail to Erdenet to be able to connect to customers in China.
Mongolia currently exports iron ore to Chinese customers along the Trans Mongolian Railway.
The importance of the nearby iron ore deposit is that this increases the number of other large users of rail services other than Ovoot.
If the owners of these deposits grow in confidence that infrastructure will be in place, then this could be a catalyst for development capital to flow to these projects.
MoU details
The MoU covers the sharing of development progress, mutual support in funding activities and the provisional allocation of 5 Mtpa of freight capacity.
This would be as soon as the rail line has been extended to the proposed connection point, which is around two thirds along the total 549 kilometre Erdenet to Ovoot Railway.
It is expected that the Northern Rail Corridor will see significant demand for its freight capacity of at least 15Mtpa, growing to 30Mtpa in the long term.
David Paull, managing director for Aspire, said that the MoU demonstrated that the Erdenet to Ovoot Railway will not only benefit Mongolia’s coking coal industry.
"Once completed, the Northern Rail Corridor, of which the Erdenet to Ovoot Railway is an important part, will see transport of a range of resources, agriculture and manufactured goods."
Production from the Ovoot Project can coincide with the commissioning of the Erdenet to Ovoot Railway.