Dulguun Baasandavaa, Mongolian Stock Exchange Interim CEO

Mongolia is the largest supplier of coking coal to China, the world’s largest consumer. The country has quickly assumed the role of China’s top traditional supplier, overtaking Australia, the leading exporter. The Mongolian Stock Exchange plays a critical role in physical coal trading for Chinese markets, and its plans for coking coal futures may become a game changer for global coal trading.

Dulguun Baasandavaa, interim CEO of the Mongolian Stock Exchange, speaks with S&P Global Commodity Insights Managing Editor Rohan Somwanshi and Senior Price Reporter Olivia Zhang on Mongolia’s coal expansion plans, dependency on China, India as a potential export market and Mongolia’s emerging role in the global coking coal trade.

“Selling coal to India will depend on arbitrage. If prices at Indian ports exceed those at Chinese ports, trading companies will likely pursue Mongolian coal.

-What is the current level of coking coal production in Mongolia? Are there any key expansion plans over the next three to four years?

-Mongolia’s coking coal production volume reached about 85 million mt in 2024, and it is expected to increase in the coming years as the coal industry plans to boost production in the country.

There is definitely a lot of potential for coking coal in Mongolia in terms of expansion. We are inviting potential investors to explore, as only a small percentage of our land has been surveyed. Right now, geological surveys are limited and below expectations. While many mining companies operate, improving the quality of coal for coking purposes requires investment in coal washing facilities. If that happens, the overall volume of coking coal will increase without the need for additional mines.

-China plays a big role in Mongolian exports, but is there growing interest from other countries? Do you see Mongolia's exposure to these markets increasing in the foreseeable future?

-It all depends on coal prices. If prices rise, as we have seen from 2021 through 2024, there is potential. However, if prices fall to pre-COVID levels, the chances for Mongolia’s shipments beyond China or Russia diminish. Our aim is not to reach many countries but to achieve the highest profit margin per metric ton of coal, which largely depends on transportation.

-Do you see moving coal becoming easier in the future? Physically moving coal is Mongolia's biggest challenge. If prices are right, do you see any opportunity to move coal out of Mongolia to ex-China markets?

-We observe that moving coal is becoming easier in Mongolia and China. We are thankful to our Chinese partners, as we are building a railway connecting Mongolia's largest land port, linking Mongolian and Chinese railways. This will increase coal transportation volumes by 15 million mt/year.

-Will these upcoming railway upgrades boost Mongolian coking coal exports to China this year and in the future?

-I definitely hope so. If we perform well and deliver as promised, we can surpass 80 million mt in exports to China in 2025.

-India is the largest seaborne coal importer, and its demand has skyrocketed in recent years. Is it profitable for Mongolian coal exporters to ship coal to India?

-India has shown interest in purchasing Mongolian coal. However, I do not know and cannot promise how they will transport the coal -- either through China or Russia -- and whether it will be feasible by the time it reaches the nearest Indian port. We do not have those calculations yet.

Furthermore, selling coal to India will depend on arbitrage. If prices at Indian ports exceed those at Chinese ports, trading companies will likely pursue Mongolian coal. I can see such events happening, as coal prices are declining significantly and oil prices also drop, potentially reducing transportation costs. I think there is room for traders to not just play in the Indian market but also globally due to falling transportation costs and shifting economic dynamics.

-What role does the Mongolian Stock Exchange play in shaping the future of Mongolia's coking coal physical trade? Does it plan to introduce futures coking coal contracts?

-We aim to be an exchange with top international standards, guaranteeing quality, transparency and fairness. Our commodity trading platform serves all participants, whether domestic, Chinese or global companies. The exchange is open to all participants interested in Mongolian commodities.

Regarding coking coal, the MSE facilitates trading of mining products through spot and forward contracts. As commodities trading began just two years ago in Mongolia, our focus is on building a strong foundation with a few financial institutions for the first time to build a reputation.

As the market matures, we can introduce futures contracts. Personally, I'd rather say that in three years' time we may see the introduction of coking coal futures.

In the meantime, we are focusing on resolving existing smaller challenges in the markets before introducing futures so that the buyers and sellers are satisfied with the current instruments, and then there will be a clear line moving forward in introducing futures.

问：目前蒙古的炼焦煤产量水平如何？未来三到四年是否有主要扩产计划？
2024年，蒙古的炼焦煤产量已达到约8,500万吨，预计未来几年将进一步增长。目前，煤炭行业正计划通过提升产能，推动整体生产水平的提高。

蒙古在炼焦煤领域具备广阔的扩展潜力。目前，仅有极少比例的国土面积完成了地质勘查，我们正在积极邀请潜在投资者参与资源勘探与开发。当前地质勘探工作尚未达到预期，覆盖面有限。尽管已有多家矿业公司在运营，但提升炼焦煤品质仍需在煤炭洗选设施方面进行实质性投资。若相关基础设施得以完善，无需新建矿山，即可显著提升整体炼焦煤产出。

问：中国在蒙古出口中占据核心地位。但是否有来自其他国家的兴趣？您是否认为蒙古对其他市场的出口将在未来增加？
这在很大程度上取决于煤炭价格水平。若煤价维持2021至2024年间的上涨态势，蒙古煤炭出口拓展至其他市场是有可能的。但若煤价回落至新冠疫情前的水平，则蒙古出口超越中俄两国市场的可能性将大幅下降。我们的目标并非在于出口至更多国家，而是希望通过更优的运输方式，实现每吨煤炭的最大利润空间。

问：您是否认为未来煤炭运输将更加便利？当前运输是蒙古面临的最大挑战之一。如果市场价格合适，您是否认为有机会将蒙古煤出口至中国以外的市场？
我们观察到，蒙古与中国在煤炭运输方面的便利性正在不断提升。我们对中国合作伙伴表示感谢。当前，我们正在建设一条连接蒙古最大陆路口岸的铁路线路，该线路将实现蒙古铁路与中国铁路系统的有效对接。此举将使煤炭年运输能力增加1,500万吨。

问：即将完成的铁路升级是否会在今年及未来进一步提升蒙古对中国的炼焦煤出口？
我对此持积极态度。如果我们表现完好、按时交付，2025年出口至中国的煤炭总量有望超过8,000万吨。

问：印度是全球最大的海运煤炭进口国，且近年来需求激增。向印度出口煤炭对蒙古而言是否具有盈利性？
印度方面已表达了采购蒙古煤炭的兴趣。但目前我不知道也无法承诺印度方面将通过何种途径运输蒙古煤炭——无论是经由中国还是俄罗斯——且无法确定煤炭到达印度最近港口的可行性。目前尚未进行相关成本计算。

此外，向印度销售煤炭将取决于市场套利。如果印度港口的价格高于中国港口，贸易公司很可能会选择采购蒙古煤炭。我认为这类情况是有可能发生的，尤其是在煤炭价格持续走低、石油价格同样下滑的背景下从而显著降低运输成本。基于运输成本的下降及全球经济格局的变化，未来不仅在印度市场，全球其他市场也存在一定的贸易机会。

问：蒙古证券交易所在推动蒙古炼焦煤实物交易方面发挥何种作用？是否有推出炼焦煤期货合约的计划？
我们致力于打造一家符合国际高标准的交易所，确保交易的质量、透明与公平性。我们的矿产品交易平台面向所有参与者，无论是蒙古本土企业、中国企业还是全球贸易商，均可公开参与蒙古矿产品交易。

目前，蒙古证券交易所主要通过现货和远期合约参与矿产品的交易。由于蒙古的商品交易仅在两年前才开始，我们的当前重心是首次与少数金融机构合作，打下坚实的市场基础、能够建立良好声誉。

随着市场的成熟后，我们计划推出期货合约。就我个人而言，更倾向于认为未来三年内，我们有望实现炼焦煤期货的正式推出。

在此之前，我们将继续聚焦于解决现有市场中的各类小问题，确保买卖双方对当前交易工具感到满意，从而为未来推出期货合约打下坚实基础，推动市场健康、有序发展。