Source: MiningNews.net                    Date: 10 August, 2010

Hunnu Coal chairman Matthew Wood has echoed the warning of Ivanhoe Mines Chairman Robert Friedland that Mongolia could kill the Australian coal industry. He said the warning could become reality as South and Middle Gobi coking and thermal coal begin shipped to Japan and Korea within a few years. Australia-listed Hunnu Coal is busy advancing several promising Mongolian thermal and coking coal projects with minimal start up costs.

Mr. Wood can see some shocks ahead for Australia’s leading export industry. “I think Australia is going to find it hard to compete with coal 600 kilometers from Beijing with labor at tenth of the price,” he has said. “Mongolia has a highly supportive government and has abolished the stupid taxes Australia is now contemplating. Australia has got some problems.”

He noted some other advantages of mining coal in Mongolia. “Australian mines are getting deeper and older. The easy, cheaper coal is gone. These deposits in Mongolia are open cut from surface – they haven’t even been developed yet, the best years are still coming.”

The Mongolian government is working hard to expand the coal industry and announced major railway investment plans last month. Mr. Wood said one of the plans was a link from the giant Tavan Tolgoi coking coal field in the South Gobi province, where Hunnu Coal has projects, all the way up to northern Mongolia where it can link up to Russia’s Trans Siberian railway line. From there, the coal is railed out for export through Vladivostok on the east coast of Russia. “That’s a very short boat ride to Korea and Japan,” Mr. Wood said.

The Japanese and Koreans are extremely keen to get access to Mongolian coal “so it’s not just about China; Mongolian coal will be seaborne and that is a real threat to Australia”. Mr. Wood said, “These things aren’t going to happen next month, they are not going to happen next year but people in Queensland will be competing against Mongolian coal well and truly in five to ten years.”