Mining giant Rio Tinto has warned that cheap coal from Mongolia as well as congestion at the Port of Newcastle in NSW could undermine export markets for the Australian commodity.

Rio Tinto chief executive Tom Albanese said he knew the leader of an energy company who likened opportunities in Mongolia to a ‘‘religious experience’’.

‘‘Coal from Mongolia to China is happening. It is expanding, probably doubling every two years,’’ Mr Albanese told an investors’ conference in Sydney on Monday.

‘‘Will that coal get to the seaborne markets? I suspect it will.

‘‘Will it get to the seaborne markets at a lower delivered cost than Australian coal? I suspect it will too,’’ he said.

Mr Albanese said problems at the world’s biggest coal port, Newcastle, were unhelpful.

He said Rio Tinto’s Australian coal production was not at capacity purely because of logistical reasons in getting the coal exported.

‘‘We should remind ourselves that Australia is not the only source of supply for the Asian seaborne market, so if the coal chain does not pick up, others will find their way to that market,’’ he said.

Mr Albanese said Rio Tinto was leading the way in moving towards a longer-term take-or-pay arrangement at the Newcastle port facility.

Newcastle’s coal port has been plagued by congestion over the past 20 years, causing headaches for exporters.

Mr Albanese said his company was continuing to look to invest in Mongolia, where coal coal horizons were 300 metres or more in thickness.

‘‘We have coal interests through our stake in Ivanhoe (Australia Ltd) but we also have coal interests on our own in Mongolia via Rio Tinto explorations,’’ he said.

Source: www.stockhouse.com

 * Gets $500 mln funding from China Investment Corp

* Plans to boost Ovoot Tolgoi output more than fivefold (In U.S. dollars unless noted)

TORONTO, Oct 26 (Reuters) - SouthGobi Energy Resources Ltd (SGQ.V) said on Monday it plans to accelerate the development of its Mongolian coal projects with a $500 million investment from a subsidiary of China's sovereign wealth fund, China Investment Corp (CIC).

However, the reaction from SouthGobi's Canadian-listed stock price was largely muted, due to limited liquidity. SouthGobi is almost 80 percent owned by Vancouver-based Ivanhoe Mines (IVN.TO) with the bulk of its remaining shares being held by institutional investors and mutual funds.

Shares of the SouthGobi, which is focused on exploring and developing metallurgical and thermal coal deposits in Mongolia, were up 1.6 percent at C$12.65 in afternoon trade on the TSX Venture Exchange.

The company's flagship project is the Ovoot Tolgoi coal mine in South Gobi region of Mongolia. The mine is expected to produce about 1.5 million tonnes of coal this year, but the company plans to ramp up production to 8 million tonnes in the next three to five years.

It also plans to develop its Soumber deposit, which is located about 20 km (12 miles) east of Ovoot Tolgoi.

A recent change in Mongolian mining laws has paved the way for foreign investment.

After years of discussions, Mongolia wrapped up a deal earlier this month to develop one of the world's biggest untapped copper and gold deposits, when it signed off on Rio Tinto (RIO.AX) (RIO.L) and Ivanhoe's $3 billion Oyu Tolgoi mine.

The deal, made possible after the government repealed a windfall profit tax in late August, will allow work to begin on the project that will help boost the central Asian nation's economy. Many hope this deal will fuel further investment in the country's vast, largely untapped natural resources.

SouthGobi said CIC's investment will give it the right to nominate one director to SouthGobi's board, which currently consists of eight members.

CIC's investment, in the form of convertible debentures, also gives it the right of first offer for any direct and indirect sale of Ivanhoe's ownership stake in SouthGobi.

($1=$1.07 Canadian) (Reporting by Euan Rocha; editing by Rob Wilson)

Source:  www.reuters.com

By Steve James

NEW YORK, Oct 20 (Reuters) - Demand for coal to generate electricity and make steel in China and India is expected to grow by 7 percent to 8 percent annually in the next five years, leaving the world "chronically" short of the fuel, the head of U.S. coal miner Peabody Energy Inc (BTU.N) said on Tuesday.

He also outlined his company's plans to double exports from Australia to handle Asian demand and to develop its joint venture in Mongolia to produce coal for the Chinese.

The coal shortage, as industrial activity rebounds from last year's economic downturn, is driving up prices and Peabody forecast steam, or thermal, coal selling for $100 per tonne by 2012, up from around $70 today. It also said metallurgical, or coking, coal is already selling for $160 per tonne -- way above this year's benchmark of $129.

"We believe China is short of met (steel-making) coal and demand is shredding supply and pushing prices north," Chief Executive Greg Boyce told Wall Street analysts on a conference call to discuss Peabody's third-quarter earnings.

"India will turn to seaborne markets and in the next five years we see the region with 7 percent to 8 percent growth compounded annually, which is 300 million to 400 million tonnes per year.

"That will leave the world chronically under-supplied," Boyce said.

Peabody President Richard Navarre noted that China had become the company's biggest metallurgical coal customer in just one year, as the country had imported 25 million tonnes so far in 2009, more than 10 times last year's pace.

Through August, China's net imports of thermal coal totaled 38 million tonnes compared with net exports of 7 million tonnes last year, he said.

"Peabody is very well positioned with access to the fastest-growing markets globally, where we see shortages of metallurgical coal and growing strength in the Pacific thermal markets," said Navarre.

He said Peabody's mines in the Powder River Basin of Wyoming and Montana would likely produce the extra coal needed to supply the Pacific market.

Also, Peabody has opened an Asian trading hub in Singapore, established a new business center in Indonesia and plans to further expand international investments, Navarre said.

Asked about plans for Mongolia, where Peabody has a 50 percent interest in a joint venture for Polo Resources'(3PO.L) coal interests, Boyce said: "We believe Mongolia will play a role in supplying the largest coal market in the world, which is China."

On thermal coal, which is burned in power plants, Boyce said global electricity demand was expected to increase.

"The vast number (of new coal-fired plants) are in China and India and we have not seen any slowdown," he said. "They continue to be major drivers of coal demand. They are the ones building most extensively."

India may be as much as 200 million tonnes short of its needs in five years, positioning it as the fastest-growing coal importer, Peabody said.

In its earnings announcement, Peabody said it intends to double exports of Australian metallurgical and thermal coal over the next five years to serve the Asian markets.

This year, the company is targeting 2009 sales of around 190 million tons in the United States and 21 million to 23 million tons in Australia. (Editing by Steve Orlofsky)

Source: www.reuters.com

TORONTO, ONTARIO, September 28, 2009 – Khan Resources Inc. (TSX:KRI) today announced its development plan for the Dornod Uranium Project (“Project”) in the Republic of Mongolia. Aker Solutions of Toronto completed a Definitive Feasibility Study (“DFS”) for Khan in March 2009, which demonstrates an internal rate of return after tax of 29.1% for the Project at a long-term uranium price of US$65 per lb. of U3O8, and assumes a three year construction period after the awarding of engineering contracts. “The DFS confirms that Khan’s Dornod Uranium Project is one of the most economic of the next generation of uranium mines and is poised to come into production in short order during the period of expected higher uranium prices,” said Martin Quick, President and CEO of Khan.