Mongolia and China will build a rail link to connect their networks to reduce trade costs, particularly for Mongolia’s coal, Railway Supply reports.

The line will extend a 240km track connecting the coal mines of Tavan Tolgoi in Mongolia to the border town of Gashuun Sukhait. It will be dual gauge because Mongolia uses the Russian broad-gauge track whereas China has the European standard gauge.

In 2023, Mongolia exported around 54 million tonnes of coking coal to China, making it the largest supplier to the Chinese market. This was a substantial increase from the 14 million tonnes exported in 2021.

The Mongolian government announced the agreement after talks between Chinese premier Li Qiang and Mongolian prime minister Luvsannamsrai Oyun-Erdene in Harbin, Heilongjiang province, last Friday.

The Chinese readout of the meeting said Beijing was “ready to strengthen the synergy of development strategies and policy coordination with Mongolia”.

Chinese steel makers are hoping the improved logistics will reduce their supply costs and reinforce industrial growth. At present the People’s Republic accounts for 54% of global steel production.