GETTING THE FREIGHT RAILROADS RIGHT.  Coal-rich China, already importing metallurgical coal from North America, seeks to import Mongolian coal, and The Great Game is on.
[With] Mongolia so rich in what China needs — locals with mining licenses and a swelling swarm of foreign investors believe that only the absence of modern transport links to China clouds Mongolia’s future as a would-be Saudi Arabia of coal.

It should therefore have come as good news when Mongolia recently started preparations for a new railway line from Tavan Tolgoi, the first such link with the epicenter of this landlocked nation’s nascent, China-driven mining boom.

But there is a problem: The new track will not go to China. Instead, it will head hundreds of miles in the opposite direction toward Russia — and carry a heavy freight of suspicion and wariness that impedes China’s global quest for energy.

China’s demand for the coal, uranium and other minerals that Mongolia has in abundance — but has so far barely touched — is gargantuan and growing. China, which surpassed the United States as the world’s biggest energy user in 2009, needs to find enormous quantities of new fuel to meet what, according to the International Energy Agency, will be a 75 percent increase in its energy needs by 2035.

But as China scours the globe for coal, oil, uranium and natural gas — and hunts for rivers just beyond its borders on which to build electricity-generating dams — it increasingly confronts a stubborn reality: What Beijing and foreign businessmen embrace as a simple law of supply and demand stirs complex, and sometimes dangerous, political passions, security fears and big power rivalries.
Mongolian coal exports currently go to China by truck. There are no plans, yet, for an international version of the Powder River Basin line.
Battulga Khaltmaa, a former wrestling champion who is in charge of Mongolia’s railway-building program, said that a track to China will come one day but that first Mongolia needs to start laying rails away from China. That, he said, will curb dependence on the Chinese market by opening up alternative export routes to Japan and South Korea and also anchor a planned industrial zone at home. Mongolia, he said, doesn’t want to just shovel raw materials into China and end up “lazy” like oil-fattened Saudi Arabia, with a “few families controlling the country and making all the money.”
The problem, for railroad development, is that a joint venture between China Rail and any of the former Soviet railroads has complications that even Penn Central didn't have to deal with.
China and Russia have offered money to help finance Mongolia’s railway-building plans from Tavan Tolgoi. Beijing wants the line to head south and use Chinese-gauge tracks. Moscow wants it to go toward Russia and to use Russian-width track, which is incompatible with China’s network.
Mongolia's current railroads are built to the Russian five foot (1520 mm) gauge. China's use the Union Pacific's gauge.

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