Aspire eyes cost cuts as Ovoot coking coal project startup is delayed to 2017

August 14 09:07 2013 Print This Article

www.platts.com  13Aug2013

Australia’s Aspire Mining plans to delay start of production at its Ovoot coking coal project in Mongolia as it has come up with a more cost-effective startup plan, Managing Director David Paull said Tuesday.

Production from Ovoot was expected to begin in 2016 at 6 million mt/year, but Aspire is now targeting initial output at 5 million mt/year in 2017.

The revised plan cuts capital costs to $144 million from $459 million through the use of contractors where possible, he explained.

Ovoot has the potential to be expanded to 10 million mt/year and Paull said he expects this will happen by 2020.

Last month, Aspire signed non-binding memorandums of understanding for coal sales of up to 5.6 million mt/year from Ovoot with mostly Chinese customers. There is also interest from Russia and it is cheaper to deliver coal there, Paull added.

The new schedule is dependent on the extension to the existing Trans-Mongolian railway of around 595 km that Aspire plans to build. The extension from the current terminus at Erdenet will run through the Ovoot project site. The line will carry coking coal to export markets including China and Russia.

The extension, known as the Northern Rail Line, will be built by Aspire’s wholly owned subsidiary Northern Railways, and is expected to be commissioned in 2017. Northern Railways was in discussions with the Mongolian government regarding permits, Paull said.

Aspire plans to start construction of the railway in June next year if permits are granted by the end of this year.

Operating costs excluding royalties for the first three years of Ovoot’s operation are expected to be between $83/mt and $93/mt FOR China border depending on rail tariffs, and $72/mt FOR Russian border, Aspire said in a statement Tuesday.

–Marnie Hobson, marnie.hobson@platts.com

–Edited by E Shailaja Nair, shailaja.nair@platts.com

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Saranchimeg Enkhee
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