16.05.2024 Author: Bair Danzanov

Ovoot-Erdinet and the Northern Railway Corridor: Prospects and Challenges

Ovoot-Erdinet and the Northern Railway Corridor

The Ovoot-Erdenet railroad line is currently under construction in Mongolia. This railroad line is one of the key sections of the so-called “Northern Railway Corridor” – a rail highway to connect Western Siberia with the PRC, the possibility of which is envisaged in the 2016 Russia-Mongolia-China Economic Corridor Project List. The length of the Ovoot-Erdenet line is 542 kilometers and the tracks run through areas with very difficult terrain and minimal power and road transport infrastructure. According to the feasibility study, this line’s throughput capacity is estimated at 22 million tons of freight per year, which is almost equal to the performance of a significant portion of the railway corridors serving freight traffic along the China-Europe route.

Further development plans for this project, available from the Mongolian Ministry of Roads and Transport Development, are closely aligned with the concept of the Northern Railway Corridor and envisage the creation of the Ovoot-Artssur line, which will bring the main line to Mongolia’s border with the Russian Federation, as well as connecting the project to Mongolia’s main railroad line, the Ulaanbaatar Railway.

The Mongolian authorities officially decided to start construction of the Ovoot-Erdenet section in 2017, shortly after the Northern Railway Corridor was included in the List of Projects of the Trilateral Economic Corridor. At this stage, the project was actively promoted by mining corporations, in particular, Australian Aspire Mining, which was interested in developing a large coal basin located in the north of Mongolia. Chinese investors, who were actively buying Mongolian coal, also had a certain interest. Just in the same years, the People’s Republic of China temporarily cut coal imports from Australia for political reasons – and interest in new Mongolian coal deposits of this resource was in its upward phase. At the end of 2017, a memorandum was concluded with the Mongolian Government for the construction of the Ovoot-Erdenet main line, and a feasibility study for the project was finalized in 2018.

Mongolia’s interest in promoting this railroad is not limited to the prospect of receiving “transit rent” from international transportation. The Mongolian authorities see the construction of the SLC as a solution to a number of domestic economic problems: first of all, related to the introduction of the deposits of the country’s second largest coal basin into economic turnover. The Ovoot deposit alone, through which the railway line is planned to run, contains up to 250 million tons of coal and has a large concentration of coking coal. Development of the deposit could increase Mongolia’s already substantial coal exports to the PRC by another 10-15 million tons above the current 50-60 tons per year. The Ulaan-Ovoo lignite deposit (up to 200 million tons of coal), the joint development of which has been discussed by Mongolia and the Russian Federation since the early 2000s, is located in close proximity to the proposed route of the main line. Also, the Northern Railway Corridor could help Mongolia connect the economic and demographic center of the country with its western regions, which have the least developed infrastructure, the most modest economic indicators, and significant power shortages.

Nevertheless, the implementation of this project has its own significant obstacles. In particular, the future of the Russian section of the prospective “Northern Corridor” is ambiguous – for example, the construction of a railway line from Krasnoyarsk through Tyva to the Mongolian point of Artssur, although it was envisaged in the prospective program for the development of Western Siberia (in the form of the Kyzyl-Kuragino road), was frozen in 2021. The creation of this railway is expected in a number of West Siberian subjects, but the cost of its realization requires funds from the federal budget. Clarification in the question of the future fate of the line should be expected after the Russian Government finalizes the configuration of the prospective corridor from Western Siberia to China by order of the Russian President.. Without the Russian section, the corridor from UBZhD to Artssuur inevitably turns out to be a dead end.

Already functioning rail lines linking the European part of the Russian Federation with China via Kazakhstan are serious competitors to the SZhK in the fight for freight transportation. The Northern Corridor may become more profitable only for Russia’s Western Siberia, for which it will provide the shortest routes to China – Krasnoyarsk, Abakan, and Kyzyl. For the rest of the country, its profitability is less obvious. Also, the route through the north of Mongolia will compete with another promising trans-Mongolian corridor – the Western corridor, the Mongolian section of which is supposed to run from the same as the SZhK border crossing Artssuur to the southwest, to the existing station Shivehuren, connected (like the SZhK) with the UBZhD by newly built railroad lines in the south of the country. The cross-border Chinese-Mongolian section of the future LWC – the Shivehuren-Sehe rail line – is also under active construction.

Of course, as mentioned above, Mongolia is very interested in the SLC project, as it seeks to put into economic turnover a number of deposits in its northern aimags – but the wishes of one country will not be enough for the successful development of the trilateral railway.

Another obstacle is the impossibility to effectively operate the Northern Corridor without modernizing the Central Corridor, namely its longest section, the UBZhD. Discussions around the future development and legal status of this line have been ongoing for decades. Since 2023, progress in this direction has been made again – Russia, Mongolia and China have formed a Working Group to develop a feasibility study for the modernization of the Central Corridor. Even now, the UBZhD is already operating literally “on the edge of its limits” – and if another international railway were to access it, the situation could be critical. We should also not forget about the additional load that the UBZhD will receive from the transportation of Mongolia’s fossil exports from those fields, the development of which will be ensured by the creation of the Ovoot-Erdenet line. Therefore, it is impossible to talk about the advancement of the Northern Corridor without modernizing the UBZhD and increasing its capacity.

There are also problems in terms of financing the project – Mongolia has encountered difficulties in attracting foreign investors.

To summarize, there is a high probability that the project may never become an important node of the Russia-Mongolia-China economic corridor, having been implemented in a reduced Mongolian version that has no international transit significance.


Bair Danzanov, independent expert on Mongolia, exclusively for the online magazine “New Eastern Outlook

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