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Cross-border railway to start operating in 2014

2013-09-06 By Bao Chang in Ordos, Inner Mongolia (China Daily)

Shenhua Group Corp Ltd, the world's largest coal distributor, is accelerating the pace of construction of a cross-border railway project as an independent transportation passageway to further explore international resource opportunities.

"Constructed by Shenhua Group, the Ganquan railway linking the Sino-Mongolian border port to Baotou city in the Inner Mongolia autonomous region will start operating in January 2014," Wang Xingzhong, president of Shenhua's Baoshen Railway Co Ltd, told China Daily.

Total investment in the Ganquan railway by Shenhua is around 7.5 billion yuan ($1.22 billion). The project was defined as one of main drivers of economic and trade cooperation between China and Mongolia.

"With a length of 355 kilometers and a transport capacity of more than 30 million tons a year, the Ganquan railway will be the most convenient export passage for mineral resources in Mongolia," said Wang.

As a State-owned energy conglomerate with businesses ranging from coal exploration, electrical power, railways, ports and shipping to coal-to-oil and coal chemicals, Shenhua Group has been stepping up its overseas expansion.

Apart from owning coal mines in Australia, the company is bidding for the exploration rights of Mongolia's Tavan Tolgoi coal field.

In addition, Aluminum Corp of China is also seeking business opportunities in the Oyu Tolgoi mining project along Mongolia's border with China.

After starting operations next year, the Ganquan railway will act as the main international logistic channel on the Sino-Mongolian border and play a crucial role in the transportation of resources from the Tavan Tolgoi and Oyu Tolgoi mines from Mongolia to China, according to the Shenhua Group.

"The construction of the Ganquan railway is one of our major efforts to provide infrastructure support for the mineral resources cooperation between China and Mongolia and it will become an international transportation artery," said Li Youtian, vice-president of Baoshen Railway.

"The new railway will boost the transportation capacity of the Ganqimaodu border port and reduce transportation costs of the industrial zone along the border, promoting the sustainable development of Shenhua Group," Li said.

Railway construction projects have become a major way for Shenhua Group to decrease costs and increase profitability in recent years.

"Although coal prices have been decreasing, we maintain stable profits at the group thanks to the booming development of business sectors including coal chemicals, railway and ports," said Meng Jian, spokesman for the Shenhua Group.

By the end of 2012, the length of the group's railways in operation totaled 1,765 km and total freight volume reached 340 million tons per year.

In the first half of the year, Shenhua's revenues generated by the railway sector were at 14.42 billion yuan, up 17.1 percent year-on-year. The total profits of the sector reached 6.95 billion yuan, an increase of 32.6 percent from the same period a year earlier, according to company's financial report.

To promote mineral resource cooperation between China and Russia, Shenhua is also building a railway linking Manchuria to Jinzhou port in Liaoning province. With an overall length of 1,200 km, this is a bigger project than the Ganquan railway and the investment is higher, according to Li.

"Mineral resource cooperation with Russia has always been one of Shenhua's focus targets," said Wang at Baoshen Railway.

Hu Angang, director of the Center for China Studies at Tsinghua University, said that building cross-border transportation channels is crucial for Chinese companies' globalization drive, as undeveloped infrastructure is one of the biggest problems of countries with rich reserves of mineral resources.

baochang@chinadaily.com.cn

(China Daily 09/06/2013 page17)