ULAANBAATAR, March 23 (Reuters) - Mongolia Mining Corp <0975.HK> reported losses of $154.2 million for 2016, despite a 20 percent jump in total revenue, with a resurgence in coal prices over the year unable to offset tough market conditions in the first half and high financing costs. Coal accounts for nearly half of mineral-rich Mongolia's total exports but weak infrastructure and high freight costs have forced the country to sell at discounted prices and prevented it from taking full advantage of its vast reserves. Delays to a railway project designed to help the landlocked nation deliver coal across its southern border into China have also held back the industry and eroded MMC's profitability. The firm reported an average selling price of $77.2 a tonne last year, 22 percent more than in 2015 after China's war on overcapacity helped cut coal supplies. But this was much lower than the average China spot price <ST-CNCCDS-MB> of around 946 yuan($137). MMC's hard coking coal sales rose 29.2 percent to 1.5 million tonnes in 2016. Mongolian Mining runs the Ukhaa Khudag mine in the Gobi desert that shares the same coal formation as Mongolia's huge state-owned Tavan Tolgoi mine, which the country hopes will attract billions of dollars in foreign investment. Mongolian coal is shipped by trucks to the Chinese border, about 240 kilometres (149 miles) away from Ukhaa Khudag. The country has long planned to build a railway to cut down on costs, but it has struggled to finance the project. "When MMC reaches full production rates of 7 million tonnes per year some time in 2018, it will be responsible for almost 10 percent of Mongolia's total GDP at current coal prices," said Harris Kupperman, chairman of the Mongolian Growth Group, a real estate firm that holds a stake in MMC. "MMC's future health is vital to the Mongolian economy." Mongolia's central bank said last week that the value of the country's coal exports grew 642 percent in February, compared with the same period of last year. According to data from China's customs authority this week, Mongolia overtook Indonesia to become China's No.2 source of imported non-lignite coal in February, with shipments up 211.6 percent on the year at nearly 2 million tonnes. [COAL/CN] Mongolia was also China's No.2 coking coal supplier last month, with shipments up 134 percent to 1.436 million tonnes. However, average prices of coking coal from Mongolia stood at $78.77 per tonne, far lower than the $171.2 average for all coking coal imported by China during the month. ($1 = 6.8854 Chinese yuan) (Reporting by Terrence Edwards; Editing by David Stanway and Himani Sarkar) ((david.stanway@thomsonreuters.com; +86 21 6104 1799; Reuters Messaging: david.stanway.thomsonreuters.com@reuters.net)) Keywords: MONGOLIA COAL/MMC

Published Date:2017-03-25