The Border Port Revival Policy ranks first among the six objectives implemented under the government’s New Revival Policy. The priority is to increase the capacity of the border ports and fundamentally expand the economy. I spoke with B. Tulga, chair of the National Committee for Revival of Border Ports, and a Minister of Mongolia, about the economic benefits of developing Mongolia’s border ports.
You were appointed to a ministerial position without staff. The budget of your ministry is the smallest, but it is expected to have a significant impact on the economic development of the country. What did you start doing when you first took up this position?
Within the New Revival Policy framework, the government has set a goal to expand the economy by 3-4 times. First of all, it is planned to triple the capacity of ports to increase the flow of goods across the border, increase the number of crossing points for exports and imports, support economic growth, and increase the inflow of foreign currency. Achieving this goal is progressing faster than originally planned. To expand the economy, it is necessary to maximize the number of ports, improve the capacity of old ports, and intensify the development of port infrastructure and railroad connections. Under the Border Port Revival Policy, the ports should increase trade turnover between the two countries, accelerate regional development, and in a broader sense, become the main driving force of the country’s economic development by profit-making.. Therefore, first of all, the task has been set to speed up the work of connecting border checkpoints by autoroutes and railroads. We plan to adopt a port management strategy based on public-private partnerships and increased private sector participation.
A number of relevant laws need to be amended and are scheduled to be discussed and approved at this year’s fall session of Parliament and next year’s spring session. Mongolia already has experience in engaging the private sector in port management. A contract was concluded with a Japanese private enterprise to invest in the stablishment of the new Chingis Khan airport in the Khushig Valley and to manage the airport for 15-20 years.
Many policy mistakes were made in the development of border checkpoints. For example, the problem of the railroad gauge was not solved and is still being discussed. How will this problem be solved in the near future?
The parties reached an agreement on the urgent completion of the rail link between the border checkpoints of Gashuunsukhait and Gantsmod, which have different gauges. Parliament and the Government have passed the necessary resolutions. (Parliament Resolution. June 7, 2023) If the rail link is completed early next year, 20 million tons of goods can be transported from the Tavantolgoi and Gashuunsukhait deposits not only by autoroute but also by rail.
Our country has a 1000 km long railroad connecting Altanbulag to Zamyn-Uud, which has been in operation for 70-80 years. Besides, a mining railroad has been constructed to the ports of Khangi and Gashuunsukhait. In order to put at railroad into operation, the Mongolian government is proposing to the Chinese side the “1+3+1” option to accelerate railroad connections. “1” refers to the construction of a second parallel rail line to the existing 1,000 km railroad. We talk a lot about the construction of an additional railroad running south of Bogd Mountain in Tuv aimag. In order to advance this construction, we are sharing a detailed feasibility study of the project with our partners from the Russian Federation and other investors.
“3+1” means connecting the railroads of the three countries included in the 1955 Mongolia-China border railroad agreement. This work has been underway since 2010 but has not yet been finished. In particular, due to the failure to reach an agreement with the Chinese side, the gauges of the Gashuunsukhait and Gantsmod railroads are different. Connecting these two railroads now requires enormous costs.
The government is paying special attention to improving the competitiveness of the transportation and logistics system and is focusing on the construction of cross-border rail links.
At present, a joint working group has been established with the Chinese side to accelerate construction work.
We also discussed and reached an agreement with the Chinese side through diplomatic channels on the issue of the Shiveekhuren-Sekhe railway connection. We are working on moving this project forward.
The preparations for the construction of the railroad between Bichigt and Zuunkhatavch ports are complete. We proposed to the Chinese side to start constructing the railway as soon as possible. The construction work to connect the Bichigt port to the Russian Solovievskiy railway via Erentsav to the north has started. The 226.9-kilometer railroad from Zuunbayan to Khangi-Mandal was built by a private company in eight months and commissioned in November 2022. However, the Chinese side set a condition to connect Khangi to the Mandal checkpoint by rail only after connecting the three previously constructed railroads. Therefore, we plan to focus on connecting the previously constructed railroads, especially the connection between Gashuunsukhait and Gantsmod ports. We expect to complete the construction work next year.
THE NATIONAL RAILWAY NETWORK WILL BE DOUBLED IN SIZE
Although the railroad to Khangi checkpoint in Mongolia has been completed, it is still not connected to the Chinese railroad system. How is the railroad to Khangi used today?
Mining companies transport coal to the border by rail and then transport it across the southern border in container trucks. Construction work at the Gashuunsukhait trans-shipment terminal is approximately 76% complete. The terminal will operate for 24 hours a day and provide services such as transfering cargos from wagons to trucks and wagons to wagons, storage, customs clearance and payments. The trans-shipment terminal will soon be operational and fully automated. If an unmanned transportation system is established, the capacity of the terminal will also increase correspondingly. The Chinese position is to connect the ports of Khangi and Mandal only after other ports are connected. However, we are already discussing with Chinese partners about urgently connecting Khangi and Mandal.
The government’s goal is to connect border ports with paved roads, and this work has already started. What is the progress in this work?
21 aimags are already connected by paved roads, and the next step is to connect border checkpoints by paved roads. These works will be financed by budget investments and implemented on the basis of public-private partnership. Connecting border checkpoints by autoroutes and railways is one of our main tasks. The goal is to double the national railroad network. There will be three railroads connecting Russia and China. This means that the three railroads will be connected via six ports.
Currently, the ports of Altanbulag and Zamyn-Uud are connected by railroad. In addition, a railroad will be built in the eastern corridor of Erentsav - Choibalsan - Bichigt with a length of 750 km. The construction of the western railroad connecting the port of Artsuuri in Zavkhan with Shiveekhuren in Umnugobi continues. The companies that won the tender organized by the Ministry of Road and Transport Development and the Mongolian Railway have begun working on this big project. The expansion of the road connecting Altanbulag to Zamyn-Uud has begun. In this regard, the Government organized a tender for a concession contract for the construction of a four-lane road from Altanbulag to Darkhan and selected a contractor. A tender for the construction of a four-lane road from Nalaikh to Zamyn-Uud has also been announced.
MORE THAN HALF OF MINING PRODUCTS ARE EXPORTED THROUGH GASHUUNSUKHAIT
When will the port of Gashuunsukhait get international status?
More than 50% of Mongolia’s mining products pass through the Gashuunsukhait checkpoint. The Ministry of Road and Transport Development is responsible for giving international status to the port and is in constant touch with China on this issue.
The Ministry of Economy and Development of Mongolia, the Ministry of Road and Transport Development and the National Development and Reform Commission of the People’s Republic of China have signed a Memorandum of Understanding on the establishment of the working group in charge of the Shiveekhuren-Sekhee cross-border railroad.
How many ports have already started infrastructure works to expand their capacity?
With funding from the Asian Development Bank, construction work was completed at six border checkpoints. Borshoo in Uvs aimag was the first port where construction work was completed during the Covid19 pandemic. A tender has been announced for the supply of indoor equipment. Depending on the success of the tender and equipment procurement, the Borshoo port could be operational as early as this year.. As part of the Year of Visiting Mongolia, the number of tourists entering through Borshoo is equal to the number of tourists entering through Zamyn Uud. Sukhbaatar port was expanded and became operational this year. The cargo terminal of Altanbulag port will be fully operational this month. Passenger transportation will be opened and become fully operational next spring.
The passenger section of the Zamyn-Uud port was also commissioned. The cargo terminal was accepted by the State Commission on October 13. Its official opening will take place in November.
Cargo and goods are accumulating at the port of Zamyn-Uud and this is causing prices to rise. What measures are being taken to increase the port’s capacity?
Last June, Prime Minister L. Oyun-Erdene paid an official visit to China and reached agreement with them on moving the Zamyn-Uud port to round-the-clock operation. The two countries are preparing to start joint research and testing. There are a total of 317 ports in China. Of these, there are 87 sea ports, 80 airports and 180 autoroute checkpoints. China is connected with our country through 17 checkpoints. Among China’s 180 land ports, there is not a single port currently operating in 24-hour mode. The round-the-clock operation of the Zamyn-Uud cargo terminal is one of the main topics of negotiations between Mongolia and China.
The port of Zamyn-Uud connects the three countries by rail, but has low capacity for transit cargo. Due to the heavy traffic, containers arriving from Tianjin get stuck at Zamyn-Uud. This leads to higher prices and disruptions in the supply of goods. If the cargo terminal operates round the clock, congestion will be eliminated and cargo flow will increase. During the Belt and Road meeting in China, President U. Khurelsukh discussed this matter with the Chinese side again.
What infrastructure and development projects are planned to be launched in the near future as part of the Border Port Revival Policy
In 2024, it is planned to expand 3-4 ports with the highest cargo turnover using loans from the Asian Development Bank (ADB). Currently, negotiations are underway with the ADB to conclude a loan agreement and start construction of Bulgan and Tsagaannuur ports along the vertical axis in the west of the country, as well as the port of Khavirga in Dornod aimag in the east.
In addition to Altanbulag-Zamyn Uud and Sainshand-Ulaanbaatar ports, Tuv aimag will be developed as a port. The area around the new international airport belongs to the Tuv aimag. So, the Khushig Valley where the airport is located will be part of the international dry port logistics network. In addition, we aim to strengthen the competitiveness of the transport and logistics system and become a transit country in the future. In the context of Border Port Revival Policy, in addition to discussing only the problems of border crossings, we should talk about expanding transport and logistics capabilities, which is our goal and challenge at the same time. The piling up of cargo containers at the port of Tianjin is not the fault of the port itself, but the lack of storage space and warehousing capacity in Mongolia.
It is already obvious that many mistakes have been made in the process of port development. What should be given more attention to avoid future mistakes?
In the past, the state paid little attention to the development of ports. Most of them were built by private enterprises and donations. The government has come to realise that port development has a direct impact on strengthening Mongolia’s competitiveness, and has formulated relevant policies and plans accordingly. Thus, developing the infrastructure of border ports, providing them with water supply, heat, and internet linkage are important for port sustainability.
The problems of power supply and drinking water in the Gobi regions are still not fully solved. A similar problem exists at several border checkpoints. To address that the government is investing into exploring water resources and drilling wells.
How many ports does Mongolia have on the border with two of its neighbors?
Our country has 39 checkpoints on the border with Russia and China. Currently, there are 16 checkpoints on the border with Russia and 17 with China. Six checkpoints bordering Russia are not working. 6-7 of the 17 ports connected with China are major gateways for mineral exports. As part of the Border Port Revival Policy, both sides are discussing the possibility of adding three more ports to the existing 17. For example, negotiations are underway to establish a new railroad port at Khangi-Mandal. China frequently proposes to open the Ulzii Port in China and Tsagaandel-Uul Port in Mongolia. This issue was discussed by the previous government and the head of state.
The Chinese side invested and developed its port, while our side did nothing. Every province in China bordering Mongolia aims to open a border crossing with Mongolia. The port of Naransevstei, bordering Bayankhongor aimag, was closed in 1992 after one year of operation. The Chinese side also believes that this port should be re-opened and developed. There are 13 ports on the border with Inner Mongolia and four ports with Xinjiang Uygur Autonomous Region. Bulgan port in Khovd aimag has been operating steadily since 1992, exporting 20 million tons of goods per year. It is possible to enter China from Russia via the ports of Tsagaanuur and Bulgan in Mongolia.
$12.5 BILLION WAS GENERATED FROM TRADE WITH CHINA
What is the size of the turnover of our country’s main export commodity?
In 2023, Mongolia plans to transport 52 million tons of cargo and goods through ports bordering China. In 2022, when President U. Khurelsukh visited China and met with the head of the People’s Republic of China, a mutual agreement was reached to transport a total of 70 million tons of cargo through the ports of the two countries. We are very close to achieving this goal. In 2024, it is planned to transport 60 million tons of cargo. In 2028 and 2030, this figure will increase to 80-95 million tons.
As of August this year, our country earned $12.5 billion on trade with China. By the end of the year, this figure will increase. Assuming that one ton of coal is sold at a price of $140, the total income will be $140 million per million tons.
President U.Khurelsukh participated in the Belt and Road conference in China on the 17th of this month. Have the two sides signed any new agreements on the border ports during his trip to China?
The Belt and Road Initiative has six major corridors. One of them is the transit road between the ports of Zamyn-Uud and Altanbulag in Mongolia. This used to be the shortest route to Europe via Russia, but due to geopolitical issues, it is now a corridor connecting Russia, China, and Mongolia rather than going to Europe. By joining the Belt and Road Initiative, Mongolia should connect to China by rail and road 40, 60, 80 km from our border and open a new gateway to Europe. We are actively working on this. The main financier of the Belt and Road project is China’s Asian Infrastructure Investment Bank. We are negotiating with this bank to develop the ports and obtain financing. The agreement on the establishment of a joint commission on Mongolia-China border port management has been extended. The agreement on port operations of Mongolia and China is renewed every 10 years. The agreement provides for cooperation between the two sides in the field of port development and early resolution of outstanding problems related to ports.
Thank you for your interview.