Erdenet to Ovoot Railway construction to move forward

2017-02-21 13:31:07

Ulaanbaatar /MONTSAME/ On February 17, Ulaanbaatar Railways JSC (UBTZ) and Northern Railways LLC signed a memorandum of understanding to progress a number of key commercial agreements required to support construction funding of the Erdenet to Ovoot Railway. These include the commercial terms upon which the Erdenet to Ovoot Railway users can access the UBTZ line to move freight through to end markets in Mongolia, south to China or north to Russia.

This would encompass a capacity nomination regime and long term tariff structures. It is expected that the Erdenet to Ovoot Railway users will become the largest users of UBTZ rail services over time.

Commercial agreement will also be needed in respect of UBTZ’s traffic management and line maintenance capabilities as well as cooperating on the rehabilitation of the Erdenet to Salkhit spur line that connects onto the main line. This is a 164 km line that has limited capacity availability to absorb the substantially higher capacity that will be required to service the Erdenet to Ovoot Railway users and will require significant rehabilitation over time.

In August 2015, Northern Railways LLC was granted an exclusive 30 year concession by the Mongolian Government to build and operate the Erdenet to Ovoot Railway. Northern Railways LLC is a Mongolian registered rail infrastructure company, mandated to pursue the development of the Erdenet to Ovoot Railway, and is supported by a consortium consisting of Aspire Mining, and subsidiaries of fortune 500 listed China Railway Construction Corporation.

The Erdenet to Ovoot Railway extends 549 km between the town of Erdenet to Aspire Mining company’s Ovoot Project, which connects northern Mongolia to China and international markets. In accordance with Mongolian National Rail Policy, the Erdenet to Ovoot Railway is a multi-user rail line and will be available for the transport of bulk materials, agricultural and general freight from the region to export markets including China, Russia and seaborne markets.

Northern Railways LLC is progressing funding negotiations for the completion of a bankable feasibility study and other studies to support applications for licenses, permits and approvals, as well as progressing negotiations for the EPC contract and financing of the railway construction.

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