How recent FEED studies drive Aspire Mining’s (ASX:AKM) Mongolian coking coal project

Highlights

• Aspire Mining operates one of the highest-grade coking coal projects in Mongolia.
• The company has completed two vital FEED studies on the project.
• Detailed Environmental Impact Assessment for the mine is under the approval process.
• Depending on permitting and funding, the company plans a decision to mine in 2022.

Amidst growing concerns over carbon emissions and climate change, coal projects have been in discussion.

Germany, on the other hand, has decided to fire up its coal power plants as oil & gas supply disruptions loom over Europe due to the ongoing conflict between Ukraine and Russia.

This is thermal coal which is responsible for the emission of greenhouse gases.

Another type of coal is required for steel manufacturing- coking or metallurgical coal. This particular coal type is heated in a ‘coke oven’ in a reducing condition at a high temperature. At sufficiently high temperatures, the coal becomes plastic and fuse together. On resolidifying, coke particles are produced.

Coke is used in the steel-making process and is the primary source of carbon in steel. Nearly 700kg of coke is required to make one tonne of steel.  

Steel continues to remain in demand while premium coking coal deposits are vanishing. Steel industries in China, Japan and South Korea are witnessing a shortfall of high-grade metallurgical coal.

Eyeing lucrative opportunities, ASX-listed Aspire Mining Limited (ASX:AKM) is going full steam at its Ovoot Coking Coal Project (OCCP) in Mongolia. The OCCP Project boasts world-class coking coal deposits with best-in-class caking and plastic properties.

The project has a reserve of 255Mt of world-class coal with excellent caking and plastic properties. The company is developing the project to tap the Chinese market. To ship the coal produced from the mine to the market, the company is planning to use a combination of road and rail networks.

Aspire is currently busy finalising the Definitive Feasibility Study (DFS) on the project. The company has recently completed Front-End Engineering and Design (FEED) studies for the Coal Handling and Preparation Plant (CHPP) infrastructure and the Erdenet Rail Terminal. The plan is to ship coal from the CHPP to Erdenet via road and then to China using rail wagons.

CHPP Infrastructure FEED Study

The completion of Stage 2 of the FEED Study on CHPP infrastructure to be constructed on the Ovoot project is a major development. The Stage 2 of the study has drawn conclusions reached in Stages 1 and 1b completed earlier. The final report has refined and optimised the earlier proposed design, estimated capital costs, construction schedule and operating costs.

The final design outlines that CHPP can handle 2.1Mt of run-of-mine (ROM) coal feed annually. The estimates show that in a baseline scenario, CHPP can run 6,000 hours annually, which can be enhanced to 7,200 hours on the back of good maintenance and optimum operating practices, increasing the coal output to 2.5Mt per annum.       

Erdenet Rail Terminal FEED Study

In June, Aspire announced the completion of the Stage 2 of the FEED Study on the Erdenet Rail Terminal.

The Stage 2 of the rail terminal study was based on outcomes of the Stage 1 study. The key features of the terminal will include an enclosed truck unload facility capable of handling 750tph in nominal terms with an enclosed coal storage facility of 58,500 tonnes.

 Conceptual design of the rail terminal (Image source: AKM update, 17 June 2022)

The estimated capital cost would be around US$17.7 million with a margin of -10% to 25%. The total time duration required for the construction is estimated to be around 15 months, including eight months of pre-construction activities.

The total distance of mine to the market is around ~1,560km, out of which nearly 1,000km will be covered by train. This will provide cost and environmental benefits as transportation by train is economical with lesser consumption of fuel.

Way Forward 

Aspire continues to work with the Ministry of Nature, Environment and Tourism, for securing approvals of the Detailed Environmental Impact Assessment, which will underpin the completion of the DFS of the project.

Once permitting and funding are secured, the company plans to mine in 2022. The goal is to deliver the first washed coking coal in the calendar year 2024.

AKM shares were trading at AU$0.089 midday on 21 July 2022.