• Sfeco Consulting - Project & Corporate Advisory

Northern Railway Project

Project Info

The Erdenet to Ovoot railway (the Project) represents a section of the “Northern Railway” planned by Government of Mongolia, which extends the national rail network from Erdenet to Aspire Mining LLC’s Ovoot Coking Coal Mine and onto the Russian border at Arts Suuri, to be connected to the Trans-Sibirian Railway at Kyzyl, creating an international rail link connecting Siberia and northern Mongolia with China. The Project is to be implemented via SPV called Northern Railways LLC, a 100%-subsidiary of Aspire Mining.

Clients

Aspire Mining LLC & Northern Railways LLC

Services provided by Sfeco

Project Financing, Equity & Debt Financing, EPC Consulting

Status

Bankable Feasibility Study

Project Budgets

$1.3 billion USD

Project Description

Initiated as private project by Aspire Mining in 2012, Erdenet to Ovoot railway route shall not only contribute to the economic development of northern part of Mongolia, linking various mining sites to Chinese and Southeast Asian markets, but also an extension to Trans-Mongolian railway, creating another transportation route to Trans-Sibirian railways. Supported by Government of Mongolia, Northern Railways Consortium, lead by Aspire Mining and with members of Northern Railways LLC, China Railways 20 Bureau Group Corporation (CR20G) and China Railway First Survey and Design Institute (FSDI), was granted a 30-year concession to build, operate, and transfer the railway route. Furthermore, the trilateral Economic Corridor between Russia, Mongolia and China, to be agreed in June 2016 in Tashkent, Uzbekistan, shall include high-level political support for the extension of railway transportation capacity among three countries, strengthening bilateral agreements between Russia and Mongolia and China and Mongolia, respectively.


Project Details

With support by strategic stakeholders, the Project reached the milestone of Bankable Feasibility Study, which has been conducted by China Railway First Survey and Design Institute. Project details are as below:

  • Project owner - Aspire Mining, SPV - Northern Railways LLC, Major offtaker - Noble Group
  • Equity investors - Aspire Mining, Noble Group, and Chinese and Russian strategic investors
  • Total length of 547km
  • Expected project cost of USD1,3billion
  • Construction period of 3-5 years, to be commenced in 2017
  • Transportation capacity of up to 22mln tones per annum
  • To be linked to Trans-Sibirian railway
  • BOT Concession Agreement of 30 years
  • China Railways 20 Bureau Group Corporation as general EPC contractor

What We Did/Do

Since 2013, we at Sfeco Consulting have been engaged as corporate and financial advisor to Aspire Mining on Northern Railway project. We brought in CR20G as general EPC contractor and FSDI as designing party, both well-known engineering and construction companies for railway projects, especially in perma-frost territory such as Tibetian plateau, which offers similar conditions as for the Project. The involvement of both companies with their intellectual property has enabled direct concession negotiation in accordance to the legal environment of Mongolia, in which we also have successfully advised Aspire Mining and Northern Railways on terms and conditions of Concession Agreement. With Pre-Feasibility Study, we started also our interaction with project financing institutions such as China Development Bank, Sinosure, and AIIB and Chinese SOEs of railway transportation sector as equity investors, all of which show their strategic interest into the Project. We do expect to finalize project financing within 2016.

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