Coal exporting companies that operate at Tavan Tolgoi mine and transport their coal through the Gashuunsukhait-Gants Mod border crossing have taken a hit in their stocks following a move by the Ministry of Mining to ban the export of coal through the border crossing indefinitely. A 100-kilometer queue of trucks carrying coal from Tavan Tolgoi persisting since July and steadily increasing to 130 kilometers forced the ministry to take action.
The National Statistics Office reported recently that Mongolia had exported 31.3 million tons of coal in the first 11 months of 2017, a dramatic 40 percent surge in volume. This was indirectly supported by a UN sanctioned sanction on North Korea, which caused China to ban the import of coal from the country, allowing Mongolia to step in and benefit from the gap that the ban had left.
It was seeming like coal exports to China would increase to an unprecedented level right until July, less than a month after the 2017 presidential election. It was then that the Chinese side started doubling-down on security at the Gashuunsukhait-Gants Mod border crossing, where 53 percent of Mongolia’s coal is exported through. Chinese officials cited security concerns, specifically arms and drugs smuggling, as a reason for the delay in passage of trucks.
This caused a long line of trucks to accumulate since July, reaching 130 kilometers at its peak. With no sign of any improvement and the harshest period of winter approaching, Minister of Mining D.Sumiyabazar decided to suspend the transport of coal from Tavan Tolgoi.
Mongolian Mining Corporation (MMC), listed on the Hong Kong Stock Exchange, has observed a fall in their stock value. In August 2017, the company’s stock had reached 0.33 HKD, its highest this year. Currently, the stock of MMC is at 0.19 HKD.
Mongolia Energy Corporation stock is currently at 0.19 HKD, a decrease from the 0.31 HKD it was a year ago. The last two months have seen the most dramatic decrease in its stock.
SouthGobi Resources has seen a hit in its stock as well with the current valuation at 0.18 CAD on the Toronto Stock Exchange. In February, the company’s stock was valued at 0.46 CAD. The arrest of SouthGobi’s former chairman Aminbuhe played a major role in the company’s stock devaluation but the suspension is likely to aggravate the situation further.
Prophecy Development, which explores coal at the Ulaan Ovoo mine, has taken a hit, with its stock pricing at 4.25 CAD as of this week. In January, the company’s stock was 6.65 CAD.
Terracom, operating at the Baruun Noyon Uulcoking coal mine saw its stock price also decrease on the Australian Securities Exchange, with the stock currently valued at 0.18 AUD.