Noble Group Ltd., Asia’s biggest listed commodity supplier, agreed to boost its stake in Aspire Mining Ltd. and to help fund the explorer’s railway in northern Mongolia as seeks to expand coal shipments from the nation.
The Hong Kong-based trader will pay A$2.8 million ($2.9 million), or 8 cents a share, to increase its holding to 15 percent from 10 percent, Perth-based Aspire said today in a statement. Noble will also pay 10 percent of pre-development costs for a railway that will link Aspire’s coal mine to the existing Trans-Mongolian rail line, Aspire said.
Noble is expanding its presence in Mongolia with investments in Aspire and an alliance with Xanadu Mines Ltd., also developing coal mines in the nation. The commodity supplier last month bought a stake in a company that has a permit to build a coal export terminal on the far eastern coast of Russia, which borders Mongolia.
“Mongolian coking coal is largely being sold to Chinese steel producers,” Aspire said. “It is a key part of Mongolian development policy to establish access to seaborne markets for Mongolian coal, to provide pricing tension with Chinese customers and establish seaborne price benchmarks for Mongolian coking coal.”
Aspire surged as much as 95 percent, the most in four years, before trading 58 percent higher at 9.3 Australian cents as of 1:08 p.m. in Sydney. Noble was unchanged at S$1.24 in Singapore trading.
The railway, to be overseen by Aspire’s subsidiary Northern Railways LLC, will cost $1.2 billion. Noble has the option to take a 10 percent stake in Northern Railways should a concession be granted by the government and help attract funding, Aspire said today. The accord also includes marketing rights for Noble for coal produced from Aspire’s Ovoot mine, it said.
Ovoot, scheduled to produce steelmaking coal in 2016, has the second-largest coking coal reserve in Mongolia after Tavan Tolgoi, Aspire said in a November presentation.