Northern Railways LLC (Northern Railways) is a Mongolian registered company, a special purpose investment vehicle established by Aspire Mining, which is responsible for the oversight of all aspects of pre-development, construction, and operation of the Erdenet to Ovoot railway.
Northern Railways is currently owned 80% by Aspire Mining Limited and 20% by the Noble Group. In October 2017 Northern Railways and Aspire entered into a binding Memorandum of Understanding with China Gezhouba Group Corporation (CGGC) a large Chinese state owned enterprise and one of the world’s largest construction companies. In the MOU CGGC agreed to complete a Definitive Feasibility Study for the Erdenet to Ovoot Railway by 31 March 2018. There was also agreement on a path for CGGC to acquire a 51% interest in Northern Railways through further investment in order for Northern Railways to complete conditions precedent relating to the Rail Concession Agreement.
Erdenet to Ovoot railway forming part of the Mongolian rail policy forming part of the trilateral Economic Corridor between Russia, Mongolia and China
The Erdenet to Ovoot Rail Corridor represents a section of the Mongolian Government planned “Northern Rail Corridor”, which extends the national rail network from Erdenet, to Aspire’s Ovoot Coking Coal Project and onto the Russian border at Arts Suuri. The Russian Government has further plans to then link the rail from Arts Suuri to the Trans-Siberian Railway at Kyzyl, thereby creating an international rail link connecting Russia, and northern Mongolia with China.
The Northern Railway will open up significant new opportunity for various industries, small business, the community and local economy in northern Mongolia, as well as providing a direct route to the Chinese market for Russian transit freight. It is estimated that the Northern Railway will reduce the distance travelled for miners in the Elegest Coking Coal field to Chinese markets and freight to/from Kyzl by 40%.
The Northern Railway forms part of a larger regional plan which sees the integration of Russia’s Eurasian Economic Policy planning, China’s Silk Road and Mongolia’s rail policy to create an international Economic Corridor to facilitate increased levels of trade between the three nations and the wider Asia-European economies.
Northern Railways initially partnered with both Noble Group and two subsidiaries of China Railways Corporation to progress the development of the Erdnet to Ovoot railway – China Railways 20 Bureau Group Corporation (CR20G) and China Railway First Design Survey and Design Institute (FSDI).
A 30 year concession was granted to Northern Railways in August 2015 by the Government of Mongolia to progress the development of the Erdenet to Ovoot railway. A consortium, made up of Aspire, CR20G and FSDI are supporting Northern Railways to progress the completion of necessary financing, specialist design and construction for the Erdenet to Ovoot railway.
In February 2018 this Consortium was expanded to include CGGC.
In June 2016 the Presidents of China, Russia and Mongolia signed off on a Trilateral Programme to develop an Economic Corridor between the three countries. This programme includes the establishment of the Northern Rail Corridor connecting China with Russia through Mongolia. The Erdenet to Ovoot railway is specifically included in this ‘Northern Rail’ Economic Corridor, which places the Erdenet to Ovoot project as a priority funding project for the development banks and funds established to support the build of China’s One Belt Road Policy. This agreement has created significant value in Northern Rail LLC and Aspire, given the location of its rail and metallurgical coal assets.