In a press release published on January 9, Aspire Mining Ltd announced that its rail subsidiary, Northern Railways LLC, received a first stage feasibility study from China Railway First Survey and Design Institute Group (FSDI) for the Erdenet to Ovoot Railway.
In August 2015, Northern Railways was granted an exclusive 30-year concession by the government to build and operate the Erdenet-Ovoot Railway. Northern Railways LLC is a subsidiary of Aspire Mining Ltd, a Mongolian metallurgical coal explorer and infrastructure company listed on the Australian Securities Exchange.
FSDI is a subsidiary of China Railways Construction Corporation and is the project’s nominated rail engineer under the concession granted to Northern Railways by the Government of Mongolia. The study concluded that the Erdenet-Ovoot railway is financially feasible and consistent with Mongolia’s mineral resource development strategy to be supported by growth in rail infrastructure. It also predicts that it will play a significant role in the promotion of regional and social development, and should be implemented as soon as possible.
In terms of costs, the study concluded that the railway, with a contingency for a 20 Mtpa capacity single line, will require an estimated 1.25 billion USD in capital at current exchange rates. This figure was presented in contrast to a 2013 pre-feasibility capital cost estimate of 1.2 billion USD for a 12 Mtpa line.
Aspire Mining reported that the final stage feasibility study will take around six months to complete from commissioning. “Funding for the final stage feasibility study is being sought, as is an extension of the time within which to complete the concession agreement conditions precedent (which include completion of the feasibility study). Discussions with the Government of Mongolia on the concession agreement conditions precedent time extension are progressing well, and the company believes that it will be agreed by the end of January 2017.”
Aspire’s Managing Director, David Paull, notes that the favorable first stage feasibility study prepared by FSDI is an important step in the acceptance of the merits of the Erdenet-Ovoot Railway. “The study reduces the risk for investors to invest in the project now to fund the second and final stage of the feasibility study and other predevelopment works and permitting.”
The final stage feasibility study will reportedly be used by China Development Bank and other Chinese policy banks in assessing an investment in the Erdenet-Ovoot Railway.