Canada-based Prophecy Coal has signed two binding coal sale export agreements to sell 30,000t of coal from the company's Ulaan Ovoo mine to a buyer in Russia.
The buyer is a major coal trader with annual volume turnover of more than 2 million tons in Russia’s Buryatia region which has an annual consumption of 6 million tons of thermal coal.
The region is currently facing supply shortage with declining coal production due to aging of its local mines. Prophecy’s new contracts will address the regional demand by providing an un-interrupted supply of Ulaan Ovoo coal.
Under the off-take deals, 5,000t of coal per month will be exported through Northern Mongolia’s Sukhbaatar rail station, with fresh-coal deliveries expected to begin in November 2013 when mining operations are anticipated to resume at the Ulaan Ovoo mine.
The new non-binding memorandum of understanding (MOU) considers potential rise in monthly coal sales volume to 30,000t at Sukhbaatar, subject to wagon availability and market conditions.
Prophecy previously exported coal to Russia in 2011 and 2012.
According to Ulaan Ovoo’s management, the new off-take agreements and potential additional coal sales contemplated by the MOU will help establish the long term viability and stability of the mining and logistical operations at the mine.
In addition to exporting coal to Russia through Sukhbaatar, Prophecy is engaging Mongolian and Russian officials to work towards the re-opening of the Zeltura border crossing between Mongolia and Russia, which is currently closed.