Ulaanbaatar /MONTSAME/. Starting from February 1, Mongolia will sell coal at border prices instead of mine-mouth prices through commodity exchange. Pertaining to the matter, we clarified from the Government’s Special Representative for the “Erdenes Tavantolgoi” (ETT) JSC.

How is the preparation going for the trading of coal through commodity exchange?

- A joint working group was established by ETT, the Ministry of Mining and Heavy Industry, and the Mongolian Stock Exchange to make preparations for the trading of coal through commodity exchange. We are sending all the information regarding the prices of coal to the Chinese side through the stock exchange platform. For example, the price of coking coal is USD 170 per ton.

Thus, the Chinese companies will be able to register themselves on the platform to send their market offering. We will call the bid price from USD 170 and deliver the coal to the company with the highest offer. We will send the price information in one lot. It will create an expectation for the Chinese side when we can deliver the coal. In this situation, we will be responsible for announcing how much coal, for example, 500 thousand tons of coal in a week, will be delivered through Gants Mod or Gashuunsukhait border checkpoints. This online trade will start international trading of the Mongolian Stock Exchange.

Over 170 Chinese companies buy coal from ETT.

How does your company trade coal right now?

- Up until today, ETT has been selling its coal to Chinese buyers at a mine-mouth price of USD 109. If it was sold at border price, the price would’ve gone up to USD 160-170 excluding tax. The most pressing issue in the past years was the middlemen who bought coal at the mine-mouth price and sold it back at the border price. Once the commodity exchange begins full operations, we will be responsible for the coal transportation from the mine to the border, which will bring much-needed price stability. Moreover, the commodity exchange has the benefits of resolving the current issues surrounding the coal theft allegations and tackling the hidden economy.

One year after the ETT was established in 2010, the company's export activities have begun. During 12 years of operation, the company has not been able to sell its extracted coal at a border price. As a result, we lost the revenue opportunity of USD 4 billion. It means that we lost as much as USD 12 trillion at today’s foreign exchange rate.

What does the border price mean? Who set this price? Is it an international market price agreed upon between the two countries?

- The border price can be found on websites such as SХcoal. This is the price sold at Gashuunsukhait and Gants Mod border points. Specifically, the price that the Chinese companies near the border of the two countries offer.