Mongolia’s SouthGobi Resources (HKEX:1878, TSX-V:SGQ) coal miner on May 14 announced in a press release its financial and operating results for the first quarter, recording a $4.6mn profit from operations versus a $15.7mn loss from operations a year ago.

The financial results were impacted by increased sales volume, as well as improved cost control on the coal production process, the company said.

The 1Q sales volume of 3.1mn tonnes compared to 2.1mn tonnes in 1Q25, while SouthGobi recorded an average realised selling price of $54.4 per tonne for the first quarter of 2026 compared to $59.5 per tonne for the first quarter of 2025.

The decrease in the average realised selling price was primarily attributable to prevailing market uncertainty and cautious buyer sentiment on the Chinese coal market, said the company.

SouthGobi owns and operates the Ovoot Tolgoi Mine in Mongolia and also holds the mining licences of other metallurgical and thermal coal deposits in the country’s South Gobi Region. It sells coal to customers in China.

SouthGobi said: “The Company continues to expand the scale of mining operations in 2026, as well as implementing various coal processing methods, including screening, wet washing and dry coal processing, which have resulted in improved coal quality and enhanced production volume and growth of coal export volume into China.

“In addition, the Company also continues to expand the categories of coal products in its portfolio, including mixed coal, wet washed coal and dry processed coal, which further increases the Company's coal export volume.”

Giving an outlook, South Gobi said: “The global coal market continues to face structural shifts amid evolving geopolitical and economic conditions. Although international trade tensions have moderated compared with previous years, uncertainties persist due to fluctuating commodity prices, energy transition policies, and regional security concerns. China's ongoing efforts to balance energy security with environmental commitments will continue to shape demand patterns, with coal expected to remain a critical component of its energy mix in the near term.

“The strategic partnership between China and Mongolia, particularly under the frameworks of the Belt and Road Initiative and Mongolia's ‘New Revival Policy’, continues to deepen. Significant investments in cross-border infrastructure, including the ongoing expansion and modernisation of railway networks and border ports, are progressively reducing logistical bottlenecks and enhancing efficiency. These advancements are expected to strengthen the competitiveness of Mongolian coking coal in the Chinese market by improving transit efficiency and lowering overall landed costs.

“At the same time, challenges persist. China's property sector remains under pressure, and infrastructure investment is being carefully managed, which may constrain steel production and, in turn, coking coal demand.”

South Gobi also observed that the recent global geopolitical events, particularly the escalation of tensions involving Iran and the US, have increased energy prices and demand for coal as a substitute for natural gas. As such, international coal prices have increased, at least in the short term, it said.

“However,” said SouthGobi, “management notes that coal price trends remain subject to uncertainties related to the conflicts and broader geopolitical developments. Should the conflict ease or cease, the price momentum driven by supply risk premiums and energy substitution may weaken or even reverse, thereby exposing coal prices to considerable downside uncertainty. Such volatility may affect the Company's operations, including the selling price of its coal product and its production costs.

“Against this backdrop, the Company remains cautiously optimistic about the China coal market, as coal continues to be regarded as the primary energy source on which China will rely in the foreseeable future. Coal supply and imports in China are expected to remain limited due to increasingly stringent environmental and safety requirements, which may contribute to volatility in domestic coal prices. The Company will continue to closely monitor market developments and respond proactively to changing conditions.”

Published Date:2026-05-15