Mr Purevbaatar Luvsandavag, first vice chairman of the Ulaanbaatar Railway, told Reuters that the government has failed to raise the initial $US 50m required to fund a series of feasibility studies of project designs put together last year, and has not yet granted permission to launch an open tender to build the railway.
Mongolia aims to construct a multi-billion dollar railway network in an effort to monetise its extensive mineral resources. The route proposed by the government will connect the Tavan Tolgoi coal project in the southern Gobi desert to Russia providing access to markets in Japan and Korea.
Mongolia exported 22 million tonnes of coal last year, the majority of which was sold to China at $US 25 per tonne less than international market value. As a result the government is cautious about becoming overly dependent on its southern neighbour and is reluctant to allow Mongolian Mining Corp to build a 267km private railway into China before its preferred route, because it argues it would make the Russian connection less economically viable.
According to Luvsandavag, the Mongolian government is seeking funding for the Russian project through overseas equity markets rather than the railway authority's preferred option to establish public-private partnerships with investors from Japan and Korea. Mongolia's transportation ministry is reportedly looking at listing 49% of Mongolian Railway Corp on the domestic stock exchange to raise funds for construction.
The government hopes to begin construction of both projects in tandem, but delays mean that the third western phase is unlikely to begin before 2017.