Mongolia Energy Corporation
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| Mongolia Energy Corporation 蒙古能源有限公司 |
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| Type | Public Company |
| Founded | 1999 |
| Headquarters |  Hong Kong |
| Area served |  Mongolia |
| Key people | Chairman: Mr. Simon Lo |
| Industry | Coal mining |
| Website | Mongolia Energy Corporation |
ABOUT MEC
Mongolia Energy Corporation Limited (SEHK: 276) is a company incorporated in Bermuda. The company's shares are "listed" on The Hong Kong Stock Exchange Limited. That is, the company's shares can be bought and sold by the public in Hong Kong. The company was formerly a company within the New World Group. The company's shareholders include Mr. Simon Lo, its chairman, and the chairman and managing director of the New World Group, Dr. Cheng Yu Tung and his son Dr. Cheng Kar Shun of New World Development Company.
BUSINESS TRANSFORMATION
The company was formerly an internet company, and then transformed itself into a private jet management company. Its latest business transformation is to the mining industry. From January 2007 to July 2007, the company acquired 66,000 hectares of concession areas in western Mongolia. The company's website discloses that 600 hectates were explored and 181 million tonnes of coking coal resources were demonstrated. Further, the company raised HK$2 billion for building coking facilities to produce 2 to 3 million tonnes of coke.
The company's website also discloses that the company has, during December 2007, commenced co-operation with CNPC Daqing Petroleum in around another 487,000 hectares of oil and gas exploration concession in western Mongolia which the company owns 20% but controls. It was also disclosed that during 2008, the company will work on the feasibility relating to oil and gas recovery at the concession areas with CNPC Daqing Petroleum. The development of oil and gas resources are complicated as these are liquid and gaseous natural resources respectively within geological traps. Thus, the economic benefits are uncertain and depend initially on feasibility, followed by exploration and then production. The overall process takes a number of years and normally requires a production sharing contract to be signed with the Mongolian government prior to actual production.
THE KHUSHUUT ROAD
If the company is able to process its explored coking coal and other resources, there is a transport issue to the company's markets elsewhere. This is because domestic consumption within Mongolia is limited. The size of Mongolia's population is around 2.8 million. The company discloses that it intends to upgrade an existing road from Khushuut to the border with Xinjiang, China. This is some 310 km. This is also a matter to watch out for as this goes to the viability of the commencement of commercial production of the company.
OPPORTUNITIES IN CHINA
The company also discloses that it has recently entered into a transaction relating to tungsten and tin deposits for HK$1.108 billion. The final date for completion of the transaction is September 1, 2008. This nevertheless appears to be a potential development of an opportunity for the company in China.
BUILDING AN ENERGY FOCUS
The company's stated intention is to build an energy focus. The analysis of the transactions is that the company is at the initial stage of development of its mining business and requires a lot more work before commencement of production. There are obvious risks as well as rewards should the transactions be successful.
