Mongolia bans coal exports to help contain virus

Beginning February 10, Mongolia has stopped exporting coal to China via its four key gateways on the Sino-Mongolian border in an effort to help prevent the spread of Novel Coronavirus Pneumonia (NCP) from China, according to a Mongolian government release on Monday. The ban will last until March 3, the government noted.

The four gateways, comprising the Gashuun Sukhait, Shivee Khuren, Bichigt and Bulgan border ports, handle most of the country’s coal exports to China. Among them, Gashuun Sukhait in South Gobi province in South Mongolia, bordering Ganqimaodu (Gandsmod) in Bayanuur North China’s Inner Mongolia, is Mongolia’s largest conduit for coal exports and most of the coal delivered through the checkpoint is coking coal.

In fact, beginning last month Mongolia has urged its citizens in those areas in China with a serious epidemic situation to return home and began restricting cross-border movement since early February, Mysteel Global understands from Mongolian government web posts. However, as of then coal deliveries via the border ports mentioned above had not been affected.

“What has driven the Mongolian government to tighten the restriction was the emergence of confirmed NCP cases close to the Mongolian border,” said a Shanghai-based analyst. On February 8, two NCP cases were confirmed at Urad Middle Banner in Bayanuur city, where the Ganqimaodu checkpoint is located, according to official information.

On February 10, Urad Middle Banner also banned the entry of all vehicles and blocked all entrances to areas under its jurisdiction.

Mongolia is China’s largest foreign supplier of coking coal, and most of that country’s coal is exported as raw coal to Chinese stock yards at the border for washing prior to delivery to Chinese coal users.

Mongolian coal export volumes are usually low over January-February because of the slowdown of operations at border Customs offices during the Chinese New Year break.

During 2019, Mongolia exported 36.6 million tonnes of coal, or 1% more on year, among which almost all coal was sold to China, according to Mongolia’s official data.

“The suspension of coal deliveries to China will tighten the country’s coking coal supply, since China’s domestic coking coal miners have not fully resumed work and transportation (of coal) has been seriously impacted by the outbreak of NCP,” remarked another Shanghai-based analyst.

The impact that the halt in deliveries of coal will have on the operation of Chinese coal wash plants at the border remains unclear, as due to the NCP, some coal wash plants have also delayed restarting operations, Mysteel Global notes.

On February 11, Mysteel’s price for Mongolian coking coal with 11% ash, 25% volatile matter and 0.7% sulphur increased by Yuan 20/tonne ($2.9/t) from January 23 to reach Yuan 1,100/t including the 13% VAT.

Written by Sean Xie, xiepy@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com