PM’s visit gives a big push to transit transport deals

25th of 11, 2013
G. Iderkhangai

It’s been said that with access to the ocean, Mongolia could serve the world, but without it, she will only serve her neighbours. Seaborne trade will allow Mongolia to offer her abundant natural resources in the global market and fulfil her economic potential, but for this the country needs transit transport facilities through both its neighbours.  Mongolia has been holding regular strategic talks with them to reach this goal.

Indeed, one can think even bigger. An economically profitable Asia-Europe transit links possible with the involvement of four countries--Russia, India, China, and Mongolia. This could well be the Silk Road of the 21st century.  At present, 90% of trade between Asia and Europe is over sea and takes 2-3 times longer than it would take if the land link is established.  
At a time when transport network development projects have begun to be implemented in northeast Asia under the People’s Initiative sponsored by the United Nations, it was significant that the Prime Ministers of Russia, India, and Mongolia all were in Beijing recently, but on separate visits.Reports say their talks with Chinese leaders included the issue of intra-region transport.  

There are four possible land routes to connect East Asia and Europe, and arguably the most convenient of these would go through Mongolia. China, which is keen on reaching the European market faster, knows this and therefore, it was no surprise that it treated Prime Minister N. Altankhuyag’s visit as a singularly significant event. Chinese leaders made it clear that with a 4,710-km-long shared border, Mongolia is our largest neighbour”.

They welcomed the national programme, Transit Mongolia, that Altankhuyag has initiated, and expressed their readiness to support it by helping build infrastructure such as railway, roads, communication lines etc. The wide range of agreement between the two Prime Ministers was given shape in the Strategic Partnership Middle- and Long-Term Programme and in the 10 or so documents that accompanied it.  

The partnership will cover a number of areas over the next 20 years. China will help Mongolia mine one billion tons of coal and erect a brown coal gasification plant here.Both the coal and the gas thus produced would be sold to Chinese companies. To facilitate increased trade,
the two Prime Ministers also agreed to cooperate on increasing the capacity of border ports and crossings such as Shiveekhuren-Sekhee, Gashuunsukhait-Gantsmod, Bichigt-Zuun Hatavch, and Sumber-Rashaant.  

Steps will also be taken to move things faster and easier to these posts. For instance, a memorandum of understanding was signed between the State-owned Shenhua Group on the one hand and Mongolian Railways, Erdenes Tavan Tolgoi, Tavan Tolgoi, and Energy Resources on the other to build a railroad from Gashuunsukhait to Gantsmod in China. Once built, the railway will be turned over to the Mongolian national railroad company Mongolian Railway.

Two existing bilateral agreements will be reactivated after modifications that bring them up to date. The first of these was made in 1991 on transit transport facilities, and the other, on border railroad, dates from 1995.  The former, providing internationally mandatory facilities to landlocked neighbouring countries, allows Mongolia to use only the Tianjin  port in China, but the expected modifications will provide Mongolia access to seven Chinese ports including Dandong, Jinzhou, Qinhuangdao, Tianjin, and Huanghua.    

In keeping with the sense of urgency that marked the Prime Minister’s visit, it was agreed to set up task groups to review existing agreements on areas such as transit transport, railroad ports, freight fees and costs,and border customs practices and then to recommend changes to make them of more mutual benefit. With their customary promptitude, the Chinese were set to begin work at once, and our side would also not wish to lose any time. As a matter of fact, the Ministry of Transport is already at work on the partnership proposals it will present to the Chinese.

A refrain in Prime Minister Altankhuyag’s speeches in China was that as neighbours in strategic partnership, it is very important for our two countries to work together in a mutually beneficial way. This promises to be the guiding principle in sorting out issues related to the transit transport network.

The eastern vertical railroad

Mongolia sees an operational eastern vertical railroad as a transport system that will benefit not just itself but both its neighbours as well. At present, their bilateral trade route skirts Mongolian territory, but the eastern vertical line will change that. It will give us the means to move goods to Russia and China and, then, through their ports, to the world beyond, and at the same time provide a better link between our northern and southern neighbours.

The authorities of Sukhbaatar aimag and the Chinese have signed a memorandum to work in partnership to facilitate transit transport into northeast China. Once the Chinese railroad is connected to the Bichigt post – and this is expected to be soon – that network and the Choibalsan railroad will eventually reach Russia along the proposed eastern vertical railroad. The Mongolian Government plans to finance the $400-million project from its bond sales, and some bank loans to the implementing company. Other investors may also be roped in.

New roads to the ocean

The Prime Minister visited Liaoning in the northeast of China.  Jinzhou, the seaport here, is the closest to Mongolia, just 1,000 km from the Bichigt-Zuun Hatavch border, which waits to be developed into a fully functioning international transit port like Zamiin Uud. The future railway connecting Russia and China, and finally Europe and Asia, will run through the Bichigt port.

The authorities of Liaoning expressed their interest in participating in building the railroad, investing to their ability, and offered to make their sea ports available to Mongolia. Right now, the choice is limited to the ports at Jinzhou and Dandong, both of which can be connected by rail.

The 2010 Government railway policy also envisions this, thus complementing the infrastructure development policy of Liaoning.  The Chinese have already built a railroad all the way to Rashaant, only 70 km from Bichigt.  This remaining phase will be completed in 2015. On our part, we have to lay the tracks from Baruun Urt, Sukhbaatar to Shenyang, Liaoning.

Liaoning, on our eastern border, has close ties with Sukhbaatar. It is also a very large industrial centre, and was once called the “Eldest Son” of China, because of its contributions to that country’s development. In recent years, the Chinese government has taken up plans to revive the industrial strength of its northeast that includes the provinces of Liaoning, Jilin, and Heilongjiang. Once that is achieved, Jinzhou seaport will be a crucial exit point for the external trade of both Russia and Mongolia. It has the capacity to increase its present handling capacity of 72 million tons.

Dandong, the other port available to Mongolia, is the only port on China’s northern coastline that remains open in winter.  The Chinese government is hard at work upgrading its capacity and facilities so that it can connect Russia, Japan, South Korea and Mongolia. Its cargo handling capacity is projected to reach 200 million tons before 2016.
These are all developments to look forward to, as we set our eyes on expansion of trade, but it is necessary to note that other options, too, were explored during the Prime Minister’s visit, particularly keeping in mind that at the moment, Mongolia primarily exports ore and other raw material of huge volume.

Two other ports could suit Mongolia’s needs. Qinhuangdao specialises in handling voluminous raw material, and is the major coal handling port in China, with a capacity surpassing that of four Russian ports combined, including Vladivostok, Vanino, and Nakhodka-. Another choice could be Huanghua. Now it is for the task groups to study the comparative advantages and disadvantages of each of these ports, with reference to the nature of what Mongolia has to export.  

The “New Railway Project” will be implemented within Mongolia. The railway route for the Project is as follows:

The north-south choice

At a recent meeting, officials of our northern neighbor once again made a forceful case to our Parliament members and others to choose their Far Eastern ports for export to Japan and South Korea. The Prime Minister’s visit to China, which wants us to use its ports for the same purpose,  reaffirms the vital need for Mongolia to decide on its transit transport policy.

Vadim Morozov, Vice President of Russian Railroad, recently reminded us that Chinese exports to Europe will not go through Mongolia as long as there is no substantial upgrading of the capacity of Ulaanbaatar Railway, a Russian-Mongolian joint venture. The two partners have set up Infrastructure Development, a company that will build the tracks from Tavan Tolgoi to Sainshand.Trade between Russia and China currently amounts to $80 billion, but could reach $200 billion if a transit network is built, with Mongolia as corridor. Construction of the Ulaan Uud-Naushki-Ereen-Jining line will help Russia transport 100 million tons of freight per year.  

China has said it is ready to help with building double tracks and other upgrading programmes of Ulaanbaatar Railway, as part of the Strategic Medium and Long-Term Partnership Programme with Mongolia. The future does seem favourable for the three-party agreement on transit transport.

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