International Commerce

Q: This fall, the U.S. Commercial Service of the U.S. Department of Commerce’s International Trade Administration, is leading a trade mission of U.S. companies looking to do business in China and Mongolia’s coal and mining sector. Could you tell readers about what you hope to accomplish with the mission? 

 

Billard: This mission is an excellent opportunity for U.S. companies in the coal mining equipment, technology, and services sectors to discover new market opportunities in China and Mongolia. The trade mission, scheduled for October 23-28, 2011, begins in Mongolia’s capital of Ulaanbaatar, and will proceed to major Chinese cities – Xian and Beijing. The mission will conclude in Beijing where participants will have the option of attending the China Coal and Mining Expo (October 28-31). 

Richmond: The mission offers participants a real opportunity to make valuable connections. To encourage the development of business contacts, each company will have the option of scheduling business matchmaking meetings tailored to its goals, as well as appropriate government meetings.

Q: Why is now a good time for U.S. coal mining companies to consider doing business in Mongolia and China?

Billard: China’s economic growth has created a large increase in demand for energy. Currently, 598 existing coal-fired power plants meet 65 percent of Chinese total energy consumption. Moving forward, 80 new coal-fired plants are planned for construction, making this an optimum time for U.S. clean coal technology firms, power plant construction businesses, and service providers to expand into China.

Richmond: Mining has been crucial to economic growth in Mongolia. Mongolia experienced more than a tenfold-increase in the value of mining exports to the North East Asian Region from 2002-2010. Hovering at $2.1 billion (90 percent of all Mongolian exports), mineral exports of coking and thermal coals, copper, molybdenum, tin, zinc, fluorspar, uranium, tungsten, and gold are expected to more than treble during the coming decade. U.S. companies exporting mining-related goods will likely find many interested consumers.

Q: Which coal and mining sectors are most ready for new business?

Billard: Within China, U.S. companies enjoy their greatest competitive advantage in supplying heavy coal mining machines and systems. For underground mining operations, U.S. firms are competitive in the following categories: long-wall shearers, stage-loaders, continuous miners, batch haulage vehicles, road headers, hydraulic roof support systems and conveyor systems. For open-pit mining, U.S. firms’ best opportunities include electric mining shovels, walking draglines, blast hole drills, and heavy mining trucks.

Clean Coal Mining Technology is another area in which China is open to more foreign participation. Currently about 90 percent of coal mining equipment used in China is produced domestically. However, Chinese companies are still behind technologically in mining equipment production. While coal usage efficiency has improved in China, it remains low compared with developed countries. Clean coal solutions can be divided into three categories based upon the stage of energy production: pre-combustion, conversion and combustion, and post-combustion. U.S. suppliers enjoy good prospects in all three categories.

Finally, coal mine safety remains a critical issue in China. The Chinese government closed nearly 3,000 small coal mines below 30,000 tons of production capacity that were considered unsafe. This creates significant opportunities for U.S. companies to export coal mine safety equipment to China. Best prospects also include gas control systems and fire and gas monitoring and control equipment.

Richmond: The Mongolian mining sector has seen extensive growth and has become a major contributor to the country’s GDP. Its world-class mineral deposits have attracted considerable investment in recent years – more than $600 million in direct foreign investment in 2010. Coal export values seem on track to more than double from $880 million in 2010 to $1.8 billion in 2011. This trend will continue and as more mining projects go into production, Mongolia should see a significant increase in GDP growth, estimated at more than 13 percent for 2011-12.

This development undoubtedly will be accompanied by a surge in mining-related imports. Mongolia is at the dawn of its mining era, and is not particularly committed to any one technology or partner.

Consequently, U.S. exporters will find customers seeking a variety of solutions to mining efficiently and profitably in harsh environments with little infrastructure.

Q: What do you think U.S. firms should be aware of when selling to China or Mongolia? What are some challenges?

Billard: Although many opportunities exist in both nations, it is important that companies are aware of differences in government policy and culture that may exist. In many cases, those hoping to trade with China will still encounter market barriers. Furthermore, China continues to have issues with implementing intellectual property rights, further improving transparency and law enforcement, and insisting that all product standards meet global norms and are applied to both domestic goods and imported goods. Laws may differ depending on region or province.

Richmond: While resource-inspired growth is generally welcome, it has imposed serious strains on a legal and regulatory system that continues to transition from the Soviet era. Legislators and regulators face capacity issues dealing with new practices and technologies. In addition, the systems affecting licensing, permits, and inspections are often affected by a lack of transparency in creating and executing rules. Mongolia is also concerned with dealing with the implications of selling the bulk of its commodities into the Chinese market. These concerns can impact how Mongolians conceive, structure, and execute mining operations.

Q: What types of export assistance are available to help U.S. companies in China and Mongolia?

Billard: The U.S. Commercial Service connects U.S. companies with international buyers through its network of offices in 108 U.S. cities and U.S. Embassies and Consulates in nearly 80 countries. These include offices in both China (Shanghai, Beijing, Hong Kong, Chengdu and Shenyang) and a partner post in Ulaanbaatar, Mongolia. Through this network, the U.S. Commercial Service provides export counseling, business matchmaking, participation in trade events, market research, advocacy, and other services to help U.S. exporters.

Richmond: The State Department at the U.S. Embassy in Ulaanbaatar has a working relationship with the U.S. Commercial Service in Beijing and with the Department of Commerce in the States. We offer economic and commercial expertise, as well as some U.S. Commercial Service export services.

For more information on the U.S. Commercial Service, visit www.export.gov. To learn more about the upcoming coal and mining trade mission, contact Louis Quay, International Trade Specialist at U.S. Commercial Service headquarters, at 202-482-3973 or Andrew Billard, U.S. Commercial Service Beijing, 86-10-8531-3589 or andrew.billard@trade.gov.

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