China-Mongolia Investment

It seems that the China-Mongolia border is set to be getting a coal processing project which will “better use coal imports from the Republic of Mongolia.” China’s biggest coal producer – China Shenhua Energy Co – has just set out plans at an estimated cost of 10 billion yuan for this venture. Construction has already started in the Ganqimaodu Customs Processing Park.
Ganqimaodu Customs is a major energy imports gateway between China and the Republic of Mongolia, handling a staggering 7.71 million tons of coal imports in 2010. In addition, it has been said that the Shenhua project is set to have a “coal washing ability of 6 million tons per year, coking capacity of 2.4 million tons a year and an annual capacity of producing 4.8 million tons of methanol and 30,000 tons of tar, respectively” by 2012.

Major Mongolian Economic Reform

This new investment project doesn’t stand alone vis-à-vis economic reform in the Republic of Mongolia. Economically, the region is set to undertake significant change over the next ten years, especially vis-à-vis the mining field with its huge reserves and potential for a “mining mania” and Mongolia’s reaction to it all. The recent Mongolia Economic Reform focused on how best to cope with this transition. What remains to be seen is how the country will deal with it all and how its other industries – most notably agriculture (its largest industry) will cope with “a strengthening currency and Chinese competitiveness is squeezing even this most basic of industries.”

So while there is good news for Mongolia vis-à-vis the coal processing project with China, there is always more to the story. Mongolia has other issues with which to deal that are impacting its region on a day-to-day basis.