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Adani invests in Indonesian coal railway while Mongolia rejects rail link to China

Oilfield Technology,

Indian industrial conglomerate, the Adani Group, will help to build a coal railway in Indonesia’s South Sumatra Province, according to the Indonesian Investment Coordinating Board.

Adani, which could invest US$ 1.6 billion in the project, will work with PT Tambang Batubara Bukit, the Indonesian state coal producer, and the South Sumatra state Government, to construct the 270 km railway. The project also includes a coal terminal with 50 million tpa capacity.

Construction is expected to start this year with completion in 2013.

Meanwhile, the Mongolian Government has decided that a railway from the country’s largest coal mine should link with its domestic rail network and not go directly to China. Although this would go against the advice of international advisors, the Mongolian Government argues that the domestic route would better protect the country’s interests from possible Chinese pressure.

The proposed alternative rail route would stretch to the Russian border using the wide gauge that is present throughout the former USSR, including Mongolia. The original plan submitted by the owners of the massive Tavan Tolgoi deposit, Energy Resources LLC, would have used the more common narrower gauge used in China and linked directly to Mongolia’s resource hungry southern neighbour.

The Chinese border in only 200 km away from the massive Tavan Tolgoi coal deposit and most of the coal mined there will probably end up there.

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