Cross-border trade and transport infrastructure development in NEA. By: Prof. Gotov Dugerjav, Dr.Sc

Transcription

1 Cross-border trade and transport infrastructure development in NEA By: Prof., Dr.Sc

2 Contents NEA and Mongolia cooperation Mongolia s Macroeconomic Review Brief description of the Eastern Mongolia Infrastructure capacity review Future Development Potential (ongoing/planned megaprojects, traffic forecasts) Road and Rail Transport corridors Conclusions and Recommendations 2

3 I. NEA and Mongolia cooperation 3

4 NEA cooperation Northeast Asia : 3 of the world s major powers, 2 of the 5 permanent members of the UN Security Council, and 2 of the largest economies of the world 2 of the BRIC s countries. It is also a home to one of the world s hottest flash points. The situation in the sub-region remains fragile, although it is relatively stable. 4

5 Basis of Cooperation This area of the World includes countries with very diverse political and economic conditions. The basis of an international economic cooperation framework could be a combination of rich mineral resources of Mongolia and investment capital and advanced technology from South Korea and Japan, as well as a considerable pool of workforce from China (PRC) and North Korea. 5

6 Mongolia s s foreign trade with NEA, million USD Export Import Total NEA DPRK ROK PRC Taiwan Japan Source: National Statistical Office, Mongolia 6

7 II. Mongolia s economy 7

8 GDP growth, Mongolia Spurred By: Development of large coal, copper and gold mining projects; Continued strong flows of FDI doubled between 2010 and 2011; Public investment being raised; Strong consumer demand due to disbursement of cash to the citizens. 8

9 Infrastructure capacity review Summary Transportation Statistics for Mongolia Freight (Thousand tones) By Rail By Road By Air , , , , , , , , , , , , , , , , , , , ,930.9 Freight (Million TKM) By Rail By Road By Air 9, , , , , , , , , , , , , , , , , ,708.6 Passengers (Million) By Rail By Road By Air Passengers (Million PKM) By Rail By Road By Air 3, , , , , , , , , , , , , , Source: Mongolia Statistical Yearbook 2011, National Statistical Office, Ulaanbaatar

10 Brief description of the Eastern Mongolia 10

11 Shares to total GDP 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Share to total GDP, Eastern aimags Agriculture Industry Services 11

12 III. Current situation of Transport corridors in Mongolia and NEA 12

13 Millennium Road Routes Source: Ministry of Roads, Transportation, Construction and Urban Development, Mongolia 13

14 Main Mongolia Road Corridors Route 1 (GTI Road corridor- 1a among the studied trans- GTR transport corridors): Ulaanbaatar- Undurkaan- Choibalsan- Sumber- Nomrog. This route will be constructed in the framework of the Millennium Road in nearest future. Route 2: Altanbulag-Darkan-Ulaanbaatar-Choir- Sainshand- Zamyn Uud This route is being built now and will be completed in The development plans for the route include implementation of an international highway construction project. 14

15 Road conditions in the Road Corridor-1a Paved road between Ulaanbaatar and Undurkhaan (331 km) Earth road between Undurkhaan and Choibalsan (324 km ) Earth road between Choibalsan and Sumber (Nomrog) 15

16 Transport Network in Eastern Mongolia Types of Roads in Eastern Mongolia Type of Road State (Km) State (%) Local (Km) Local (%) Paved Gravel Improved Earth Earth 2, , Total 3, , Road Distances in Eastern Mongolia From To Distance (Km) Ulaanbaatar Ondorhaan 331 Ondorhaan Baruun Urt 229 Ondorhaan Choibalsan 324 Choibalsan Baruun Urt 191 Choibalsan Ereentsav 240 Choibalsan Khavirga Port 135 Choibalsan Tamsagbulag

17 Main Mongolia Rail Corridors Rail Corridor 1: Suhbaatar-Darkhan-Ulaanbaatar-Sainshand-Zamyn Uud (existing main line); Rail Corridor 2: Ukhaa Hudag (Tavantogoi)- Zuunbayan- Sainshand- Baruun Urt-Khuut-Choibalsan- Ereentsav; The section Uhaa Hudag-Zuunbayan-Sainshand-Khuut- Choibalsan is going to built within 2.5 years. Therefore, the existing section between Choibalsan and Ereentsav needs to be upgraded. Rail Corridor 3 (GTI Rail Corridor -1b among the studied trans- GTR transport corridors): Ukhaa Khudag-Zuunbayan-Sainshand- Khuut- Tansagbulag- Sumber BCP (Nomrog bridge). The section of Rail line Ukhaa Khudag-Zuunbayan-Khuut will be built under the route 2. Thus, the new construction of the section between Khuut and Nomrog with total length of 338 km would be main focus area under GTI Transport Corridors Project. 17

18 Carrying capacity of the Main rail line 18

19 ZAMYN UUD BCP q Besides petroleum products 90%- of the total import q 75% of the total export pass through Zamyn Uud BCP q Transit traffic is significant as well. Year/traffic Imports (tons) 728,056 1,232, , ,744 Exports (tons) 34,257 52,719 74,260 75,651 Trucks inward 18,919 34,501 21,446 19,190 Trucks outward 18,106 34,302 21,152 17,453 Cars in/out 80,634/81,659 95,350/95,059 98,493/99, ,089/104,844 Passengers in and out figures rounded 750,000/766, ,000/810, ,000/702, ,000/863,000 19

20 New logistics center in Zamyn Uud 20

21 Mongolia and NEA transportation connections 21

22 Border crossing points Between Mongolia and China - Border crossing point 22

23 IV. Railway Plans in Mongolia 23

24 Mongolia s s railway policy 24

25 New railway construction phases Phase III: Western Vertical Corridor Phase II: Khuut - Numrug Phase I: Dalanzadgad- Tavantolgoi Tsagaan Suvarga-Sainshand- Baruun Urt-Khuut- Choibalsan Phase II: Khuut - Bichigt Phase II: Nariin Sukhait - Shiveekhuran Phase I: Ukhaa Khudag - Gashuun Sukhait Under construction (Samsung) 25

26 Planned Rail networks in Eastern aimags of Mongolia 26

27 Applicable legal frameworks Road sector legal and regulatory framework: Between Mongolia and PRC : Road Transportation Agreement between the People s Republic of China and Mongolia on June 24, 1991; Between Mongolia and Russian Federation: International Road Transportation Agreement between Russian Federation and Mongolia on February 07, Railway sector: The applicable laws of a specific nature applying to the railway subsector as a whole are: 1996 Law on Railway Safety (1996 Law); the Law on Railway Transport (LRT); Parliamentary Resolution approving the establishment of Mongolian Railway Authority (MRA); MoRTT (now MRTCUD) Regulation dated February 2, 2005 Amendment 2; and Law of Government Inspection The applicable agreements of a specific nature applying to the railway subsector as a whole are: the 1949 Agreement between Russia and Mongolia on the Establishment of the Ulaanbaatar Railway Joint Stock Company (UBTZ) and its protocols (1949 Agreement), and Multi-Lateral Agreements on Rail Transit Transportation: the Border Railway Agreement between Mongolia and Russia, 1953; the Border Railway Agreement between Mongolia and PRC, 1954; and the Border Railway Agreement between Mongolia, Russia and PRC,

28 V. Traffic demand 28

29 Review of on-going/planned economic development projects likely to impact future traffic 1/ Tavan Tolgoi (TT) coal mine project. In 2020, volume of the unprocessed products of the mine would be 67.7 million tons. s: 2/ Nariin Sukhait (NS) coal mine project. In 2020, volume of the unprocessed products of the mine would be 30.5 million tons. 3/ Oyu Tolgoi (OT) copper mine project. Expected production volume is 2.1 million tons of copper concentrate. 29

30 Traffic and Transport demand forecasting Years Growth rate GDP/capita traffic elasticity Growth percentage GDP Population GDP/capita Passenger traffic (IEp) Freight traffic (IEf) Passenger traffic Freight traffic Traffic forecast diagram between Choibalsan and Sumber BCP (Nomrog bridge) 30

31 Demand for coal in Northeast Asia, million tons per year,

32 Coal and copper markets in Asian countries 32

33 Potential markets of Mongolia s minerals 33

34 Coal extraction estimates per year,

35 Coal traffic forecast, (thousand tons) 35

36 Possible routes for coal transportation from Tavan Tolgoi coalfield 36

37 Possible routes for coal transportation from Tavan Tolgoi coalfield 37

38 Mineral transportation flow, million tons 38

39 Traffic flow forecasts (coal) in 2020, million tones 39

40 Copper transportation demand, 2020 Òàéëáàð: Áàÿí-Àéðàã /çýñ, àëò/ æèëä 980 ìÿí òí õ äýð îëáîðëîæ, áàÿæóóëíà /2012 îíîîñ 2 æèëä áàðèíà/, Îþóòîëãîé /çýñ, àëò/ 2012 îíä ýõä ëæ, 2013 îíîîñ çýñèéí áàÿæìàë éëäâýðëýíý. Öàãààí ñóâàðãà /çýñ, ìîëåáäåí/ 2014 îíä êàòîäûí çýñíèé éëäâýõ àøèãëàëòàíä îðóóëíà. 40

41 Iron ore transportation forecast,

42 Coal transportation estimates from Khuut to Sumber BCP (Nomrog) According to our estimates, 15.2 million tons coal would be delivered mainly to Chinese market. However, some shares of the coal would be exported to Republic of Korea (ROK) and Japan as well. On the basis of the interviews of officers from the freight forwarders, transport operators and railway specialists, we assume that very rough shares would be as follows: Eastern China: ROK: Japan: 10.6 million tons (70%) per year 2.3 million tons (15%) per year 2.3 million tons (15%) per year. 42

43 Margin from the Coal export, USD Margin from Mongolian coking coal export to China Extraction Transpor -tation by trucks to the border Extractor s profit Price of extractor Washing cost Washin g loss Rail cost to Baotou Rail cost to Tanshani Trader s cost Trader s margin SPOT price in China Possible profit margin from Mongolian coking coal export 43

44 VI. Tourism development in Eastern Mongolia 44

45 Natural and Cultural Sites in the Eastern aimags of Mongolia Source: TERA Consultant 45

46 Tourism Products for Eastern Mongolia Tourism Resources Unique steppe flora and fauna, especially Mongolian gazelle Unique landscapes and lakes of Sukhbaatar and Dornod Aimags Historic and archeological sites of the Mongols and other groups in Hentii, Dornod, and Sukhbaatar Culture of nomadic herdsmen and unique steppe landscape Buir, Ganga, and Sumiin Steppe lakes Hunting Areas at Khenti- Batashreet, Dornod-Bayan Uul, Dornod-Matad- Sumber, and Sukhbaatar Unique Landscapes, flora and fauna, lakes Unique Landscapes, flora and fauna, lakes, and nomadic lifestyle Existing and Potential Products Steppe and Flora Tours Adventure 4WD Safari Tours Archeological Discovery Tours Soft Adventure, Sightseeing Tours Lake Resort Facilities; Fishing Tours Hunting Expeditions Incentive Tours Caravan Tours Potential Market Segments By Activity Ecotourism, education, photography, and research Hard and Soft adventure travel based on walking, climbing, riding, swimming, fishing, photogrpahy, and visits to herdsmen's ger camps Culture, research, education, and ecotourism Sightseeing and photography based on visits to herdsmen; optional horseback riding tours and hiking tours Rest, relaxation, entertainment, and medical treatments; special interest in freshwater fishing Hunting Segments Team building exercises in unique environment: horseback riding, paragliding, survival games Hard and Soft adventure travel based on camping, visiting herdsmen s gers, photography Source: Marketing and Product Development; UNDP; WTO Project RAS/00/088; Madrid

47 Map of Tourism Route 47

48 Weaknesses Related to Poor Infrastructure According to the JICA Study, the ease of moving tourists to and from points of interest and to satisfy their basic needs is a fundamental prerequisite for tourism development. Unfortunately, Mongolia has significant deficiencies in this regard. These deficiencies include: Poor Access this is considered to be one of the biggest constraints for tourism in Mongolia. Improvement in international access in particular was cited as a key need in the sector, along with selective improvement in roads. Poor Public and Private Infrastructure Inadequate infrastructure such as telecommunications and hotels that are not built for those seeking higher standards of comfort were listed as areas for selective upgrading. 48

49 Map of the constructed and proposed locations of the Nomrog bridge GPS reading: E o N o 49

50 Nomrog river bridge (Sumber BCP) 50

51 VII. Potential Transport Corridors 51

52 Trans-GTI corridors Rail link to modernize Missing road Absent rail link 52

53 Major bottlenecks along the trans-gti corridors Source: Final report of the GTI transport corridors 53

54 Investment programs Feasibility studies, design and construction Railway section between Khuut and Sumber (Nomrog) BCP (FS cost: 1.2 million USD); Feasibility study, detailed design and construction of paved road between Choibalsan city vicinity and Sumber (Nomrog) BCP (FS:300 thousand USD). Upgrading Rail section between Choibalsan and Ereentsav including replacement of existing wooden sleepers with concrete ones, introducing modern signalization system and electrification. 54

55 VIII. Conclusions 55

56 Conclusions and recommendations: Ø The Halkgol (Sumber) - Rashaan BCPs (Rail Corridor 1b) connection through the Nomrog Bridge seems to be the most cost-effective and feasible connection between Mongolia and NEA especially between Mongolia and PRC, at this time for further development of the tourism sector in both countries. Ø Due to environmental considerations on both sides of the border, however, it is recommended that this bridge is only used for ecotourism and environmental protection related activities and all the other freight traffic should be carried through another route to be developed further north, away from the Nomrog SPA. Ø Even though significant mineral resources exist in the Project Area, it will be very difficult to attract private sector investors without building the basic transportation and other required infrastructure. With the exception of some megaprojects, such as the Tavantolgoi (coal mine with proven reserves of 6 billion tons of coking coal) and Oyu Tolgoi (copper and gold mine) Project, it is very unlikely that mining companies will assist in the required transportation infrastructure investment in the Project Area. 56

57 Conclusions and recommendations: (continued) Ø Main constraints and problems limiting the use of the transport corridors are inadequate development of the infrastructure, especially missing rail and paved road sections along the Corridors. Ø If the constraints were lift up, traffic would be increased to great extent. Particularly, tourism and border trade between Mongolia and PRC would be much increased along the Road Corridor and freight traffic of coal, coking coal, copper concentrate and iron ore to PRC and further to ROK and Japan would be increased enormously along the Rail Corridor. Ø Investment Programs are required to missing infrastructure links, namely: Conduct feasibility studies, design and construction Railway section between Khuut and Sumber (Nomrog) BCP; Upgrading Rail section between Choibalsan and Ereentsav including replacement of existing wooden sleepers with concrete ones, introducing modern signalization system and electrification, and Preparing feasibility study, detailed design and construction of paved road between Choibalsan city vicinity and Sumber (Nomrog) BCP. Ø If the Corridors are in operation, Mongolia would have a reliable gate to the ocean. Foreign trade transportation expenses would be reduced to some degree. They will create favorable conditions to develop agriculture especially crop farming, meat and dairy farms in the Eastern region of Mongolia. 57

58 Thank You! 58