Aspire said the proposed rail extension would service its remote Ovoot coking coal project.

Ovoot is the third largest coking coal reserve in the country with a maiden reserve of 178 million tonnes.

Aspire signed a non-binding memorandum of understanding with Infrastructure Development, the Mongolian subsidiary of rail giant JSC Russian Railways, with plans to connect the existing railway at Erdenet through to Ovoot via the town of Moron.

The agreement provides a framework for Aspire and ID to discuss the application for a rail concession for the Erdenet-Moron-Ovoot rail line, investment and network rail capacity and integration.

“The securing of the MoU with Russian Railways represents a step forward in the development of infrastructure to support the Ovoot coking coal project,” Aspire managing director David Paull said.

“In addition, it demonstrates the importance of the Erdenet-Moron-Ovoot rail line to the economic and national interests of Mongolia.

“The development of this rail line would establish an important new source of export revenues for Mongolia and routes to seaborne markets via the Russian rail system.”

The news follows closely on from the announcement by miner SouthGobi Resources regarding the first day of construction for a paved coal highway which will carry more than 20Mt of coal per year across the China-Mongolia border.

Last May, eight new border gates were opened for coal transportation in the region, allowing for what SouthGobi said would “significantly increase” the capacity of coal traffic between Mongolia and China.