China's increasing demand for coal is noticeably shaking up the global coal industry, significantly impacting Russia and Mongolia, both of whom hold vast coal reserves. Their capability to handle this accelerated coal demand could reshape these economies while posing certain challenges. This new market dynamic has currents that extend beyond commerce, with deep repercussions in politico-economic domains.

Economic Opportunities: Fueling Strategic Economic Growth

Mining and trading coal to satisfy China's growing demand can present worthwhile opportunities for both Russia and Mongolia. For Russia, increased coal trade with China could serve as an economic palliative against the sting of Western sanctions imposed due to its conflict in Ukraine.

Mongolia, improving its economy after 2008 which is considered as the global financial meltdown, has been leveraging this development as a critical shot in the arm. As per the International Monetary Fund's (IMF) report, following a brief slump, the Mongolian economy posted robust growth rates averaging 9.2% per year from 2010 to 2013, owing to a mining boom and strategic investments like Oyu Tolgoi. Despite challenges constituted by the COVID-19 pandemic and restrictions on trade with China, Mongolia's primary trading partner, its economy rallied in 2022, posting a growth rate of 4.7% driven by mining production and coal & copper exports.

Ashok Lavasa, Vice President of the Asian Development Bank during his visit to Mongolia this year, has said: "ADB will support Mongolia in its development vision (Vision 2050) to become a “dynamic and modern economy with a thriving middle class by 2050."

Navigating Economic and Environmental Hurdles

Scaling up coal exports to meet China's demand isn't without formidable challenges. Overreliance on single-resource exports could chafe against the very fibers of economic diversification while creating unfair income disparities.

Moreover, this paradigm shift occurs within a broader context of global commitment to climate change benchmarks. With China still largely dependent on coal to fuel its energy mix—55-65% in the years from 2020-23—increased coal supply from Russia and Mongolia could be interpreted as contrarian to the objectives set forth in the Paris Agreement.

Furthermore, transitioning to a coal-centric export model isn't merely an issue of extraction and shipment. Essential infrastructural updates, such as reviewing the capacity of Russia’s Siberian railway network and addressing issues at Mongolia-China border crossings—where different rail gauges cause logistical consternation—need to be addressed.

Geopolitical implications to consider include the evolving China-Russia energy relationship, which could affect Mongolia as it delicately balances its links with both powers.

The easing of sanctions on Russia might be tied to an increase in coal exports which could reinforce the political alignment between China and Russia. This can cause a shift in the balance of power in the region and create challenges for Mongolia to find its footing in the coal export market amidst strong competition.

To tackle environmental challenges, regulations such as carbon pricing and emissions caps can be implemented, helping reduce the negative impacts of increased coal production and consumption.

Countering Arguments and Offering Recommendations

It's crucial to counterbalance viewpoints and proactively address challenges that may emerge. As Russia faces global criticism over its war with Ukraine, the international community could consider implementing a ban on Russian coal exports. How this influences the shared coal export market with Mongolia warrants detailed exploration.

Simultaneously, Russia’s deepening ties with China, underscored by increased energy exports, may dictate a recalibration in Mongolia's coal export strategy, requiring innovative approaches to safeguard its interests.

Concrete policy suggestions encompass a range of factors, from infrastructural investments to comprehensive resource distribution strategies that are fair and socio-economically sustainable. To truly understand the human side of these challenges, perspectives from civil society groups or local communities that are impacted must be included.

There's no disputing the significant economic opportunity for Russia and Mongolia as they fuel China's rising coal demand. However, to make the most of this upward trend, they need to address the complicated challenges head-on and balance immediate gains with long-term sustainability. Sound, strategic planning can then enable them to optimally navigate the shifting currents of global coal trade.

BY

Guest author bio: Abdul Rafay Afzal is from Lahore, Pakistan currently a law student at Liverpool John Moores University, UK. He writes perceptive columns on geopolitics, international relations, and legal affairs etc. providing unique insights into the global landscape in different Pakistani and International Newspapers and Media outlets in English & Urdu languages.

Bronze Medalist of the World Championships and Honored Athlete of Mongolia, B. Chinzorig, took home the gold in the men's 57-63.5 kg weight class of the boxing competition at the Hangzhou 2022 Asian Games.

Chinzorig faced off against Taiwanese boxer Lai Chu-en in the championship bout and defeated Lai with a score of 5:0, clinching Team Mongolia's first gold medal at the Asian Games 2022.

Building a successful career, he won a silver medal at the Jakarta Palembang 2018 Asian Games. Four years later, he stood atop the podium, proudly listening to the National Anthem of Mongolia.

Furthermore, B. Chinzorig became the 25th gold medalist among Mongolian athletes who competed in the Asian Games and the third Mongolian gold medalist in the boxing competition at the Asian Games.

In addition, Mongolia claimed the silver medal in esports competition. As of October 5, 2023, Mongolia stands at 22nd of the medal tally with 13 medals, including one gold, four silver, and eight bronze medals.

Mongolia's foreign exchange (forex) reserves have exceeded 4 billion U.S. dollars again, Minister of Economy and Development Chimed Khurelbaatar said Tuesday.

The country's forex reserves stood at 4.124 billion dollars at the end of September, the third straight monthly rise.

Due to the deepening of a current account deficit caused by external and internal economic conditions, the country's forex reserves had shrunk to 2.695 billion dollars at the end of August 2022, hitting the lowest level since 2017, according to the country's central bank.

The country's forex reserves hit an all-time high of 4.892 billion dollars at the end of April 2021.

Chinese authorities have banned a Mongolian theatre production by shutting down the power to the Ulaan Theatre in Hohhot, in China's northern region of Inner Mongolia, where the production was due to be staged.

In addition to shutting down the power, Chinese authorities also blocked 130 production staff from entering the theatre and put the cast under constant surveillance.

Thousands of theatergoers who had purchased tickets to the performance were sent away without any valid reason for doing so. All this played out just 30 minutes before the first performance was set to begin.

The production, titled "The Mongol Khan," is scheduled to open at the London Coliseum next month. The latest ban is part of a growing trend of cultural suppression by the Chinese government.

In recent years, Beijing has cracked down on Mongolian language, culture, and history. This is being done by China in an effort to assimilate the dwindling Mongolian population into the Han Chinese majority.

Beijing's crackdown on Mongolian culture

The Chinese government carries out these acts under the garb of promoting "national unity". But in reality, all that it is trying to seek with the imposition of such bans is to simply trying to erase Mongolian culture and identity.

Ulaanbaatar has been careful to manage its relationship with its superpower neighbour and largest trading partner. The director of "The Mongol Khan," Hero Baatar, has said that he is determined to bring the production to London, despite the the pushback in China.

Mongolian artists and cultural workers have often voiced their concerns and are fighting to preserve their culture.

“The production team of 130 members, including six British nationals, were expelled from the theatre building where £2 million [$3.8 million] worth of set and technical equipment was set up,” the Mongol Khan spokeswoman said adding, “The production team was also banned from wearing traditional Mongolian dress in public.”

Inner Mongolia is an autonomous region in northern China. It borders Mongolia to the north and west. Beijing claims to have improved the region's living and educational standards. Being one of the most populous regions in China, it has experienced double-digit economic growth for the majority of the last two decades.

Mongolia-China relations are marred due to their shared historical background. Genghis Khan, the Mongol leader, conquered Beijing in 1215.

Activists in May asserted Lhamjab Borjigin, a well-known Inner Mongolian author, was deported to China after being captured by Chinese authorities while residing in Ulaanbaatar, the capital of Mongolia. Herders in the Zaruud area were struck by vehicles in June while attempting to stop a Chinese business from occupying their pastures.

Then, in September, it was mandated that all Inner Mongolian schools teaching in Mongolian switch to teaching in Chinese.

At the regular Cabinet Meeting held today Prime Minister Oyun-Erdene Luvsannamsrai ordered to intensify the "Five W" operation to fight corruption in the capital city and pledged that the Government will give all-round support for the fight against corruption in the capital.

The Prime Minister of Mongolia tasked the members of the government and the authorities of ministries and agencies to take actions in the following directions within the plan to solve the problems of the capital in a comprehensive way.

It includes:

1. To intensify the 5 W Operation in the capital and conduct a broad inspection

2. To clarify the legal framework of the capital

3. To make complete structural reforms

4. To update the standard of quality of life in the capital

5. To rectify unplanned land allocation and urban development

Within this goal, the Premier introduced the political decision to appoint Minister of Justice and Internal Affairs Nyambaatar Khishgee as the Governor of the Capital City and the Mayor of Ulaanbaatar.

"The Government will pay special attention to solving the problems that have arisen in the capital," said Chief Cabinet Secretary Amarbayasgalan Dashzegve, Minister of Mongolia and Chairman of the Government of Mongolia.

D.Amarbayasgalan, Chief Cabinet Secretary of Mongolia, reports the decision of today’s cabinet meeting.

- A decision to appoint Kh.Nyambaatar, Minister of Justice, as Governor of the Capital City has been made. The Prime Minister instructed the newly appointed Governor to take steps to solve the problem of traffic jams and reduce air pollution.

Kh.Nyambaatar will perform the duty of the Governor of the Capital city alone after refusing the positions of the Minister of Justice and the Parliament Member. The cabinet made a decision to create the conditions for working as a plenipotentiary.

A board meeting of Mongolian People’s Party will be held today. During the meeting, the issue of nomination for the mayor will be discussed as presented by the Prime Minister. Also, within the framework of authority, the Prime Minister will present names of candidates to be appointed to the positions of the Minister of Justice and Chair of the National Committee on Reducing Traffic Congestion in Ulaanbaatar.

Kh.Nyambaatar will work hard to make major structural reforms to the city, and to create a friendlier environment for the residents of the city.

- Shall D.Sumiyabazar, former Mayor, be left without any charges?

- D.Sumiyabazar explained that he is resigning from his job under ethical responsibility. He clearly expressed his ethical responsibility because of procedural errors in the organization of public transport park reform. There is nothing related to corruption or official crime.

Recently, the citizens are frustrated that 600 buses ordered from South Korea were old. "Zyle Daewoo bus" company director, the manufacturer of the bus, arrived in Mongolia today and gave an explanation from the office of Tenuun-Ogoo LLC.

A.Gankhuyag, executive director of "Tenuun-Ogoo" LLC:

Our company has been working in the field of public transport for 22 years. We have never received any bidding from the state. And we chose Daewoo buses, considering them as the most suitable for our situation for the park renewal of the public transport sector.

We also accept manufacturing errors. Thus, we have submitted a requirement about recalling the buses that don’t meet requirements.

The reason why Daewoo bus was chosen is that Mongolia received 400 buses in 2009, and they have been operating in Mongolia's public transport for 14 years.

Each bus is purchased by MNT 336 million with a 30% discount, and USD 9,800 is transportation cost from the factory in Vietnam to Mongolia.

Next Monday, I will go to the Independent Authority Against Corruption and Police Station, and will have the financial information of the company’s account checked.

I am sure that buses are not old, and agree that there are defects in painting.

The vice president of "Zyle Daewoo bus" company said:

The Daewoo Group of South Korea is apologizing to the government and people of Mongolia. On the way I arrived here, I saw an old Daewoo bus driving by. In 2014, I myself signed a contract with Mongolia to purchase 400 buses.

The bus manufacturing suffered during the pandemic. After the pandemic, contracts were signed with Qatar, Saudi Arabia, Qatar, Sudan, Iraq, and Mongolia for the supply of BS-106 buses.

Later, the United Arab Emirates bought buses from our factory and then ordered 100 more buses. Also, 5000 of our buses are operating in Russia.

Due to tight order from Mongolia, we admit that we made a small mistake with the painting. But this is not a big mistake.

There was bad news about the bankruptcy of Daewoo. Our company has not gone bankrupt and is still producing and assembling buses. If you want, you can visit our factories in Korea and Vietnam. We are open.

There was another false information that the plate number was issued 30 years ago. Our company obtains the VIN number according to the law of South Korea.

Also, I was very surprised when I read about the purchase of old buses. Our company continues to produce the square model bus released in 2012 due to its durability. Also, It is considered a more classic style.

The reason why our company is still in production today is because we maintain our quality and constantly improve it. Other companies may prefer their designs. Although it looks old, people will understand its quality after 4-5 years.

It is false information that black smoke was emitted from the new bus. A new bus may emit black smoke at first. This is related to the quality of Mongolian diesel fuel. It is guaranteed that in the long run, black smoke will stop.

We made a mistake due to pressure from the Government of Mongolia and director A.Gankhuyag. According to the contract, we will recall the buses with defects and correct the mistakes. Misinformation about our manufacture will be taken to the court through the embassy.

- Why did you supply such poor quality buses to Mongolia? Are you disrespecting Mongolia?

- I respect Mongolia. We will never deliberately insult Mongolia. It is true that this time he made a mistake due to pressure. The contract reflects a recall if there is a quality defect. Therefore, the contract will be adhered to and the buses will be recalled.

- It is said that among the shareholders of Tenuun-Ogoo company include politicians such as Z.Enkhbold. Is it true? Did you bribe D.Sumyabazar, the Mayor, and J.Sukhbaatar?

- A.Gankhuyag: Our company has 4 shareholders and was established in 2006. There are no politicians as shareholders.

- Did the Korean director himself see the buses that arrived in Mongolia?

- I checked some buses. Tomorrow, I will check all of them.

- How much payment is transferred as of today?

-A.Gankhuyag: USD 16.8 million, which is 30 percent of the payment for 600 buses, has been transferred. Payment will be transferred according to performance.

Minister of Energy B.Choijilsuren answered journalists’ questions about energy tariffs on October 2. He said, “For many years, we talked about bringing the price of energy in line with market principles and bringing it to the real cost. If the income of the economy, citizens, and enterprises stabilizes in the first half of next year, we will talk about increasing the price of electricity. Otherwise, the loss of the energy sector this year is estimated to be about 200 billion MNT. So, we have no choice but to increase the price of energy. However, we are wary of making such a decision when the income is not stable after the world economy is shaken due to the pandemic and the Russia-Ukraine war.”

The minister also stated, “Mongolia’s energy consumption has exceeded the installed capacity for a long time. This problem cannot be solved in one year. But this winter may be a bit calmer. We are working to install a battery storage system with a capacity of 80 MW at the Songino substation in late November or early December. In the Dornod Power Plant, 50 MW of power will be added. Compared to last year, the consumption will increase by six to seven percent, so it will meet the previous year’s level. The first round of Buuruljuut Power Plant’s 150 MW will be installed in Q4, 2024. We plan to put the next 150 MW block into operation in Q1 and Q2, 2025. In this case, it means that we will have some energy reserves from 2025.”

The operating loss of the energy sector was 45.1 billion MNT in 2010, 18.9 billion MNT in 2015, 88.1 billion MNT in 2020, and 187.3 billion MNT in 2022. Some media reported that Russia may stop supplying energy to Mongolia and other countries from this month or may reduce the amount. When asked, the Minister said, “There was no discussion about stopping the supply of energy to us.”