Celsius Coal (ASX: CLA) is heartened by news of China’s completion of a Feasibility Study for the People’s Republic of China-Kyrgyz Republic-Republic of Uzbekistan railway, known as the Trans-Asia Railway.
The current mapped route comes within 10 kilometres of Celsius’ Uzgen Basin coking coal projects and will connect to the existing Chinese railway network at Kashgar (Kashi) in Xinjiang.
China’s policy is to bring investment to Xinjiang with an estimated 2.1 billion yuan (A$320 million) of policy-led investments planned between now and 2020.
This investment includes the establishment of a Special Economic Zone at Kashgar (Kashi) to become a manufacturing centre for export to Central Asia and Russia.
The 2015 Xinjiang development goals include 60% urbanisation; an additional 170,000 kilometres of roads; 8,200 kilometres of railway expansion and 22 new airports.
Xinjiang is forecast to import 30 million tonnes of coking coal from other countries and provinces of China by 2015 and will be the important ‘beach head’ market for Celsius’ plans to export its coking coal to China.
Celsius’ Uzgen Basin coking coal projects are about 250 kilometres from Kashgar (Kashi) via the proposed Trans-Asia Railway.
Alternative transport options
The company has undertaken a review of transport options to facilitate coal export prior to completion of the Trans-Asia Railway.
For the Uzgen Basin coking coal projects, two options exist for export to China.
The first is a route of around 385 kilometres via Osh and then to export via the Irkeshtam border crossing between Kyrgyz Republic and China.
The second is a route of about 465 kilometres via Naryn for export via the Torugart border crossing.
Both options appear feasible, however the route via Osh is more favourable based on road conditions and distance.
Using this route, Celsius estimates a transport cost of about $10 per tonne to the Kyrgyz Republic-China border.
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