SouthGobi 2013 Coal Output More Than Doubles as Mine Restarts
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SouthGobi Resources Ltd. (SGQ), a coal producer in Mongolia controlled by a Rio Tinto Group unit, more than doubled output in 2013 after a resumption in mining.
Production rose to 3.06 million metric tons last year, from 1.33 million tons in 2012, Vancouver-based SouthGobi said in a statement to the Hong Kong stock exchange today.
The increase may signal a turnaround for SouthGobi, whose shares plunged 56 percent last year in Hong Kong. The company has been dogged by issues including a failed takeover bid by Aluminum Corp. of China Ltd. that was blocked by Mongolia, as well as a halt in production and a corruption probe.
“The rate of production in the first quarter of 2014 will be paced to meet contracted sales tonnages,” SouthGobi said in the statement. “The company expects sales volume in the first quarter of 2014 to decrease compared to the fourth quarter of 2013,” it added, citing national holidays for the slowdown.
Operations at its Ovoot Tolgoi mine were halted in June 2012 on uncertainty caused by the takeover bid and deteriorating market conditions. The company restarted production in March last year and said at the time that it planned to produce 3.2 million tons of semi-soft coking coal in the remainder of 2013.
Shipments of coal, Mongolia’s biggest earner, declined 41 percent by value last year, leading to a 2.6 percent drop in export income, the National Statistics Office said this week.
SouthGobi is 56 percent-owned by Turquoise Hill Resources Ltd. (TRQ), according to data compiled by Bloomberg. Vancouver-based Turquoise Hill operates the Oyu Tolgoi copper mine in Mongolia, which is forecast to account for about a third of the country’s economy when in full operation.
To contact the reporter on this story: Michelle Yun in Hong Kong at myun11@bloomberg.net
To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net
