Khangi border checkpoint will be able to handle 50 percent of rail freight

The Mongol Messenger
2022-05-16 09:09:51

Ulaanbaatar /MONTSAME/. The Cabinet made the decision to have a 226-km railroad be constructed en route Zuunbayan-Khangi through a concession agreement on February 23 this year. Prime Minister L.Oyun-Erdene highlighted that the project is being implemented in the framework of the government’s ‘New Revival Policy’ due to how there has come to be disruptions in the “blood flow” of the country’s economy.

“Without resolving the pressing issue being faced at border checkpoints, one cannot imagine the country’s development to “crawl”, let alone jump. Thus, works are being carried out to transform the Khangi border checkpoint, one of Mongolia’s checkpoints on the southern border, into a second Zamiin-Uud checkpoint by making it possible to have about 50 percent of freight pass through the checkpoint. 

With the new railroad, the distance to the border checkpoint will decrease by 318 km, cutting transportation costs by USD 8.

Aside from the transport of products being exported and imported into the country, this also creates the opportunity to increase the annual capacity for transporting freight between Europe and Asia to 20 million tons. Furthermore, investments made in railroad construction projects are often considered as a “multiplier” for the economy. Similarly, the investment made in the Zuunbayan-Khangi railroad is estimated to serve as a x1.5 multiplier for Mongolia’s economy.” 

How profitable will the new railroad be?

With residential areas along the railroad, 1,485 new job opportunities are expected to be created. On top of this, according to the feasibility study, it is possible to export 15.6 million tons of freight from the Sainshand route, and 6 million tons of coking coal from the Tavantolgoi route, bringing total capacity to 21.6 million tons. 

The construction of the 226 km railroad officially started on March 12. By putting the Zuunbayan-Khangi railroad and the Khangi railroad border checkpoint into operation, transportation costs for exporting coal, iron ore, and copper concentrate will reduce and competitiveness will increase. As the location of Khangi border checkpoint is close to the plants and factories near Bugat and Ordos, it also creates favorable conditions for competition through more opportunities to export mining products. 

The project for the construction of the 226 km railroad en route Zuunbayan-Khangi, which is being carried out in the framework of the ‘New Revival Policy’ of the Government of Mongolia, is deemed to be of high significance due to how Khangi border checkpoint is located between the border checkpoints of Gashuunsukhait and Zamiin-Uud.

The railroad will be put into operation in November 2022.

Aside from handling 50 percent of the current load and reducing transportation costs by USD 8 per ton, the new route’s connection to the Khangi border checkpoint will open a new pathway for export. 

Zuunbayan-Khangi railroad to be built through a concession agreement 

The Government made the decision to establish a concession agreement for the Zuunbayan-Khangi railroad construction project through its Resolution No.28 dated January 12, 2022. In its framework, the State Procurement Agency was given the rights to establish the agreement with ‘Mongolian Trans Line’ LLC and ‘Mongolian Trans Logistics’ LLC based on the conditions of developing blueprints for the project, carrying out construction, using the railway, and transferring it.

With the new railroad, the 1,722 km distance between Yuruu station and China’s Bugat station (Zamiin-Uud-Erlian) will be reduced by 306 km to 1,404 km (Khangi-Mandal), which is estimated to bring down transportation costs for iron ore by USD 4-8.

The project will not only bring the competitiveness of Mongolian iron ore closer to those of China and Australia, but also increase the capacity of the total amount of freight being transported in the country and create some 1,600 job opportunities. Through the project’s implementation, Mongolia’s railroad transportation capacity will increase by a historical amount. It should also be noted how such a big objective is planned to be reached in just half a year. 

Out of the 42 border checkpoints on land, there are currently only three border checkpoints connected to rail: Sukhbaatar, Ereentsav, and Zamiin-Uud. While about 50 percent of Mongolia’s main export products such as copper and coking coal pass through the checkpoint at Gashuunsukhait, over 70 percent of imported goods and products pass through Zamiin-Uud border checkpoint. 

180 entities and some 3,500 construction workers will be involved in the Zuunbayan-Khangi railroad project, with around 1,300 permanent job opportunities created as a result.

By N.Saranchimeg

The article was published in the Mongol Messenger weekly newspaper on May 13.