Shenhua Group Corp, the world’s largest coal distributor, is accelerating the pace of construction of a cross-border railway project as an independent transportation passageway to further explore international resource opportunities. “Constructed by Shenhua Group, the Ganquan railway linking the Sino-Mongolian border port to Baotou city in the Inner Mongolia autonomous region will start operating in January 2014,” Wang Xingzhong, President of Shenhua’s Baoshen Railway, told China Daily.
Total investment in the Ganquan railway by Shenhua is around $1.22 billion. The project was defined as one of main drivers of economic and trade cooperation between China and Mongolia. “With a length of 355 km and a transport capacity of more than 30 Mt/y, the Ganquan railway will be the most convenient export passage for mineral resources in Mongolia,” Wang added. Apart from owning coal mines in Australia, the company is bidding for the exploration rights of Mongolia’s Tavan Tolgoi coal field.
In addition, Aluminum Corp of China is also seeking business opportunities in the Oyu Tolgoi mining project along Mongolia’s border with China. After starting operations next year, the Ganquan railway will act as the main international logistic channel on the Sino-Mongolian border and play a crucial role in the transportation of resources from the Tavan Tolgoi and Oyu Tolgoi mines from Mongolia to China, according to the Shenhua Group. “The construction of the Ganquan railway is one of our major efforts to provide infrastructure support for the mineral resources cooperation between China and Mongolia and it will become an international transportation artery,” Li Youtian, Vice-President of Baoshen Railway, told China Daily. “The new railway will boost the transportation capacity of the Ganqimaodu border port and reduce transportation costs of the industrial zone along the border, promoting the sustainable development of Shenhua Group.”
Railway construction projects have become a major way for Shenhua Group to decrease costs and increase profitability in recent years. “Although coal prices have been decreasing, we maintain stable profits at the group thanks to the booming development of business sectors including coal chemicals, railway and ports,” said Meng Jian, spokesman for Shenhua. By the end of 2012, the length of the group’s railways in operation totaled 1,765 km and total freight volume reached 340 Mt. In the first half of the year, Shenhua’s revenues generated by the railway sector were at 14.42 billion yuan, up 17.1% year-on-year.
To promote mineral resource cooperation between China and Russia, Shenhua is also building a railway linking Manchuria to Jinzhou port in Liaoning province. With an overall length of 1,200 km, this is a bigger project than the Ganquan railway and the investment is higher, according to Li. “Mineral resource cooperation with Russia has always been one of Shenhua’s focus targets,” said Wang.