New subway push means big investments, big risks

New metro line projects approved by the central government in 2012 will necessitate investment totaling 910 billion yuan

($145.96 billion) over the next few years, the official Shanghai Securities News reported Monday, warning against the risks

involved in a subway investment spree as a means of reviving the economy.

Last year, the National Development and Reform Commission (NDRC), the nation's top economic planner, approved a total of

2,710 kilometers of new metro line projects for 28 cities in the next six to eight years, involving investments worth more

than 910 billion yuan, according to the newspaper report, citing data from the NDRC.

Current ongoing subway projects, as well as projects approved prior to 2012 but not yet started, already involve injections

worth over 1 trillion yuan, said the report, which disclosed that local governments will bear an estimated burden of 550

billion yuan in bank loans for projects approved in 2012.

Local government coffers will generally provide up to 40 percent of the investment required for metro line projects, while

the rest will mainly come from the banking system, according to the NDRC.

The big injections will mean big risks, especially for the smaller cities involved in the investment spree, warned the

report, citing an unnamed expert from Tsinghua University as saying that "in cities in central and western China such as

Nanchang, Kunming and Nanning, total investments into building a metro line would be equivalent to about one year of local

tax revenue."

The NDRC could not be reached for comment on Monday.

"Last year's subway boom is part of the government's big injections into infrastructure construction to help revive the

economy," said Li Lei, a Beijing-based transportation industry analyst with China Securities Co.

While downplaying investment risks involved in the projects, which Li believes will boost the country's urban transport to

meet the need for continued urbanization, he also noted that "the government should remain wary of subway projects in some

third-tier cities, where metro lines are not a must."

"In addition to construction costs, operation and maintenance costs should be taken into account while considering new subway

projects," Sun Zhang, a professor at the Urban Rail Transit and Railway Engineering Department at Shanghai-based Tongji

University, told the Global Times on Monday.

Instead of obsessively building subways, it would be more affordable to consider the alternatives of light rails and trolleys

in cities, Sun said, urging the government to think hard before committing to the subway boom.





Man purchases eight rail tickets to beat Spring Festival crush

Wang Dong, 27, has been buying several tickets to travel home since 2011(Photo/China Daily)

With eight train tickets and five transfers, it may sound like someone is heading for the South Pole, but in fact it is how

one young man plans to return home during the holiday crush.

The modern day Phileas Fogg, Wang Dong, a native of Deyang, Sichuan province, is a second-year PhD student at Fudan

University in Shanghai. Rather than going through the hassle of buying a direct train ticket from Shanghai to Deyang, the 27

-year-old designed a unique railway route home to avoid having to buy train tickets during the holiday crush.

The trip is about 2,000 km, including transfers in five cities. He will leave Shanghai at 1:20 pm on Feb 8, travel through

Nanjing, Hankou, Yichang, Dazhou, Chengdu and arrive at his final destination, Deyang at 11:50 am on Feb 9, Lunar New Year's


Wang researched the railway sections that have readily available tickets and arranged to transfer at those stops.

"I had barely any difficulty buying tickets in these sections," Wang said.

Tickets on the direct trains from Shanghai to Deyang are in short supply.

"There are only two direct trains. The first year in Shanghai, I lined up for five hours at the train station to buy the

ticket," Wang said.

As Lunar New Year approaches, millions of Chinese are traveling home by any means possible. A record 3.4 billion trips are

expected to be made during the crush, which runs from Jan 26 to March 6. The rail network is expected to handle 225 million


Buying a train ticket may become a challenge.

In 2011, Wang designed his roundabout route home. "People assume that the transfers will take time, but in fact, my trip is

12 hours quicker than the direct train," he said.

The direct train between Shanghai and Deyang takes 34 hours, while Wang's trip takes about 22 hours.

Wang, who is a big fan of railways, also enjoys the experience. His micro blog is full of photos of trains.

"My roundabout trip will allow me to take four types of trains, from high-speed to regular trains," Wang said, adding that he

loves the view along the journey. "Sometimes in one day, the train can take me from an white, icy world to a tropical beach.

It's magic," Wang said.

He also enjoys the stories on the train along the trip.

"I can walk into any train station, watch the passengers around me and imagine their travel stories. Sometimes when I am

standing in the middle of the train station hall, time seems to cease. People come and go, in a hurry or taking their time.

It is like I am in a movie."

His love of trains began in high school. "My high school is next to the train station. I liked to watch the train come and

go, and listen to the whistle."

Wang's friends always consult him about train routes.

Last year, he used his micro blog to document his train travel.

"I traveled about 30,000 km by train in 2012," he said.

He takes advantage of his expertise to design routes and buy train tickets during Spring Festival, but netizens have

questioned whether more transfers could raise the risk of delays and missing the train.

"I am not a green hand in transfers. I make plans," Wang said.

His practice with train transfers comes with a love story. Wang's girlfriend works in Xiamen, and he studies in Shanghai. The

direct train leaves in the morning and arrives at night. Wang designed a roundabout trip to spend a night on the train so he

could spend time with his girlfriend in the day.

"The monthly trip to Xiamen is practice," he said.







East Rail Line users stung by new luggage limits

Luggage limits on the East Rail Line, designed to deter parallel-goods traders, caused problems for regular travellers


With the weight limit slashed from 32kg to 23kg, airport and mainland-bound travellers and couriers carrying goods within the

city for local companies were caught in the net to restrict parallel-goods trading.

Meanwhile, the security chief said 600 suspected parallel-goods traders from Shenzhen had been turned back at the border as

part of the effort to curb the trade and ease a shortage of infant milk formula.

"The number of parallel-goods traders coming to Hong Kong has dropped, which means there have been fewer packed goods …

carried by these traders," Secretary for Security Lai Tung-kwok said on RTHK.

"By strengthening the list of suspected parallel-goods carriers [and] questioning suspected traders … immigration control

has been reinforced."

But normal passengers trying to get their luggage onto the MTR trains were not impressed.

The policy took effect a week before Lunar New Year, when passengers were already beginning their exodus to the mainland to

visit friends and relatives.

"There are only some clothes and souvenirs with my luggage," said Ms Lam, whose luggage was rejected when she tried to board

a train at Fo Tan to her hometown in Shanwei, eastern Guangdong. "I couldn't even buy something more for people I know."

Weight scales have been installed at Fo Tan and Tai Po Market stations, which have recently seen a surge in parallel-goods


In Fo Tan, security staff said about 10 people were found to be carrying overweight luggage. Some, who were deemed unlikely

to be traders, were "discretionarily" allowed through.

Fo Tan is a centre for dozens of logistics and delivery firms whose staff rely on quick railway transport. Ms Choi, a carrier

for Ricoh, had her luggage passed yesterday, but feared it would not be in future if she were to carry heavier items, such as


"Sometimes I go to Yuen Long and Tin Shui Wai and MTR is the most convenient [mode of transport]," Choi told an MTR staff

member. "The company has asked me to work it out [under the new limit]. Do you want me to lose my job?"

Mr Lee, a middle-aged messenger, was carrying two big boxes and a nylon bag full of documents on a trolley, weighing 26.5 kg

in total. "The parallel-goods trading has upset me. I have a proper job. How could I be treated in the same manner as them?"

he said.

At Sheung Shui, parallel-goods traders were still seen operating, but carrying smaller packages than before.

Despite the disappearance of the previous long queues outside the station, Secretary for Food and Health Dr Ko Wing-man

warned of a resurgence after the Lunar New Year.

"Though the activities have seemed quieter in the past few days, I daren't say it is entirely the result of our crackdown

effort," he said.




The journey home begins for millions of Chinese 

BEIJING - Every year, at this time, millions of Chinese embark on the world's biggest travel rush - the trek home.

With joy, or possibly frustration after toiling for the past year, a huge proportion of the population will set out on a

journey of reunion for the country's most important holiday - Spring Festival.

Possibly as many as a billion people will shuttle between the cities where they live and work and their hometowns for the


To ensure the smooth running of the world's largest annual migration, extra travel services are being organised from Jan 26

until March 6. A record 3.41 billion trips are expected to be made.

In addition to the railway system, which will bear the brunt of the pressure, airlines, road and shipping networks have all

geared up to meet the surge in passenger numbers.

The rail network is expected to handle 225 million trips, while long-distance buses will transport up to 3.1 billion

passengers. The combined figure accounts for 99 per cent of China's rail and bus capacity, according to Xinhua News Agency.

Some 35.5 million journeys will be made by air during the festival's peak, a rise of 4.9 per cent from the same period last


Obviously, such a huge number of travellers will stretch the country's transport network to its limits and pose challenges

for each part of the system.

While some will enjoy the luxury of air travel, for many millions more the journey means being stuck in overcrowded train

carriages for long, boring journeys that will take many hours.

China Daily asked five people, representative of different groups in society, to share their stories of the journey home.

The student

Each Spring Festival since 2011, Lin Tongfei, a 23-year-old graduate student at the School of Journalism and Communication at

Renmin University of China, has undertaken the long haul back to his hometown in Pingtan county, Fuzhou city.

Only three trains a day make the journey from Beijing to Fuzhou, the capital of East China's Fujian province.

Train No. Z59 leaves Beijing West Railway Station at 3:08pm and arrives at 10:50am the following day. Although the journey

lasts a gruelling 19 hours and 42 minutes non-stop, the train is usually on schedule. A ticket for a hard-sleeper bed costs

436 to 466 yuan (S$86-92) for an adult and around 300 yuan (S$60) for a student.

Train No K45 is much slower, taking more than 34 hours to travel between the cities. Train No D365 only takes 15 hours and 10

minutes. It leaves Beijing at 7:35am and arrives in Fuzhou at 10:45pm, but the tickets are more expensive. A second-class

soft seat costs 673 yuan (S$133).

"D365 is not a good choice for me, given the ticket price and schedule," said Lin. "It arrives at Fuzhou late in the evening,

but my home is still a two-and-a-half hour drive away. If I take that train, I have to stay overnight at a relative's home in

Fuzhou and then I have to take a bus before 6am in the winter chill."

Lin was desperate to book a ticket for a hard-sleeper bed on Z59 because the schedule is passenger-friendly and the ticket is

affordable. He can sleep on the train and arrive home in the afternoon of the following day.

The pre-sales window opened 20 days before his scheduled departure date of January 25, so Lin rose before 8am and logged on

to, the only official online ticket-purchasing platform operated by China's Ministry of Railways. The website

told him tickets were still available, but every time he submitted an order, he received a failure notice, which either

informed him that tickets were sold out or that too many people were waiting in front of him.

For three consecutive days, he and a friend attempted to buy a ticket on the website, spending at least 90 minutes online

every morning. Their efforts came to nothing. Eventually they gave up. In the end, he got a hard-seat ticket for Z59 through

the help of his university.

"The train ticket-purchasing platform is not transparent," he said. "People have no idea whether the tickets are sold out or

not. Sometimes, I find dozens of tickets are still available on the website, but when I file an order, the tickets are

suddenly down to zero. Often, you will find people buying sleeper-bed tickets after they have boarded the train, even though

the website has said the tickets are sold out."

Moreover, not everyone has access to the Internet, which makes it difficult for migrant workers and elderly people, who are

not keen on new technologies, to buy tickets online, he added.






Up to 300 injured in South Africa rail crash

Two passenger trains packed with school kids and rush-hour commuters collided near the South Africa capital Pretoria on

Thursday, injuring up to 300 people, medics said.

The accident took place before 8am local time (2pm Hong Kong time) when a commuter train heading from the suburbs to the

capital ploughed into a stationary train on the same track.

Medical workers said up to 300 people had been treated for various degrees of injury.

“We do have 20 seriously injured,” said Johan Pieterse of Tshwane Emergency Services.

“Both of the trains were full of commuters and between them were lots of school children on the way to school,” said


“We counted about 50 plus children,” he added.

At least three people were said to be in a “critical” condition according to Chris Botha, a spokesman for emergency

services provider Netcare.

“The people who were critically injured suffered multiple injuries to the body,” said Botha.

At least one person was airlifted to the nearby Milpark Hospital, others were taken by ambulance and many were treated at the


Rescue workers struggled to cut away the tangled wreckage of the trains to free the passengers.

One of the train drivers was freed from the carriage where he was trapped for two hours.

“He’s critical at this stage,” said Pieterse.

The trains were operated by Metrorail, the country’s rail system in cities.

The cause of the accident is unknown.

“At this stage we do not want to speculate,” said Metrorail spokeswoman Lillian Mofokeng.

It is just the latest serious rail accident to hit South Africa’s urban rail network.

In 2011, 857 commuters were injured in Johannesburg’s Soweto township when a passenger train smashed into a stationary train

during the peak rush hour period.

The Passenger Rail Agency of South, has itself described its passengers as “travelling like cattle.”

Over 90 per cent of commuter trains in South Africa date back to more than fifty years, the most recent dating from 1986.

The network is currently undergoing a major revamp to upgrade its fleet, spending 123 billion rand (US$14 billion) over 20




China, Mongolia seek to mend differences

The kabuki-style dance of trade partners Mongolia and China began again in earnest when on January 15 the third meeting of

the Mongolia-China Cooperation Commission on Mineral Resources and Energy met in Ulaanbaatar.

Mongolia's Minister of Mining Davaajav Gankhuyag led the Mongolian side and the deputy director of China's National

Development and Reform Commission, Zhang Xiaoqiang, headed the Chinese delegation. According to Zhang, "Boosting co-operation

in mineral resources and energy, which account for the bulk of China-Mongolia economic and trade relations, is in the

interests of both countries and can help Mongolia turn its advantages in resources into economic development."

Although China and Mongolia see great benefits in continuing their vibrant trade in minerals, each side has a different

vision on how to proceed. This has led to a tense relationship that often, mistakenly, is described by global financial

commentators as resource nationalist sentiment in the Mongolian parliament and populace.

Mongolia exported a total of US$4.38 billion worth of products in 2012, 89% of these being minerals that represented 20% of

the country's gross domestic product (GDP), according to the Mongolian National Statistics Office. All of Mongolia's coal,

iron ore, copper, zinc and tin concentrate as well as much of its gold are exported to China. Chinese state-owned enterprises

(SOEs) and private corporations in 2011 were the largest investors in Mongolia's mineral sector with $2.3 billion foreign

direct investment - five times the amount China invested in 2006. This close reliance is hardly the definition of resource


Two of the prime goals of the Mongolian side during the consultations were to renegotiate upwards the prices the Chinese pay

for Mongolian raw minerals and lessen transit tariffs for Mongolian shipments destined for third nations, such as South Korea

and Japan.

The Mongols also raised the issue of the failure of Chinese mining operations to obey all Mongolian environmental and safety

laws, demanded the employment of more Mongolian mine workers and discussed plans for construction of mineral processing

plants inside Mongolia.

China pressed for more stability in the legal environment regulating bilateral trade and foreign investment. Deputy director

Zhang also suggested that the two countries focus on developing large mining projects and constructing a connected railway

transportation and coal transport border infrastructure.

One area both sides agreed has potential for expansion is in oil products. PetroChina's investment of $1.4 billion in the oil

sector made it the biggest investor in Mongolia last year. This oil production is exported to China for refining. Minister

Gankhuyag told the Chinese side that Mongolia considered it necessary to make the border checkpoint where the crude oil

crosses into China (Bayankhooshuu-Uvdug) a permanent one, to process the raw Mongolian crude in China and return the product,

and to make an agreement on implementation of a 2008 memorandum between PetroChina and the Oil Authority of Mongolia to

supply 10,000 tonnes of oil products monthly as well as purchase additional volume.

Mongolia imports all its refined oil and diesel, with more than 90% coming from Russia. To overcome this lopsided dependence,

the government has set a goal of building a state oil refinery with Japanese technology that would be functional in 2015. In

the interim, it wants to cooperate with China to diversify its oil imports.

The Mongols expected the consultations would be open to the public; however, at the request of the Chinese, it was held

behind closed doors. Midway through the discussions, Zhang and Gankhuyag issued a joint statement, but refused to take

questions from journalists. In their statement they noted that bilateral trade volume in 2012 reached $6.6 billion and

announced that negotiations would continue over infrastructure and railroad projects as well as oil cooperation.

Changes to law complicate picture
These bilaterals were influenced by the fact that 2013 began with the foreign investment picture in Mongolia again in

turmoil, because of President Tsakhia Elbegdorj's proposals for revising Mongolia's Strategic Entities Foreign Investment Law

(SEFIL) of May 2012 that imposes tight regulations on investments in mining, banking, finance and media communications.

Passed in a rush by Mongolia's parliament after the state-owned Aluminum Corporation of China (Chalco) attempted to acquire a

majority stake in a privately held coal mine controlled by South Gobi Resources (owned by Canadian company Ivanhoe, now

renamed Turquoise Hill), the law requires Mongolian governmental review of all assets in the affected sectors with foreign

state-owned FDI or cross the value threshold of 100 billion togrog (US$70 million).

While Chinese mineral assets are hit the hardest by these new regulations, China and Western investors are on the same side -

although apparently not working together - to counter the SEFIL and moderate its provisions.

Investor complaints about the law in recent months were not unnoticed by President Elbegdorj. The day after Christmas, he

went on Mongolian television to give support to respecting the controversial 2009 Oyu Tolgoi (OT) agreement wherein Rio Tinto

and its partner Turquoise Hill hold 66% to Mongolia's 34% of a huge deposit in the Gobi projected to contain 31 million

tonnes of copper, 1,328 tonnes of gold and about 7,000 tonnes of silver.

He cautioned that Mongolia must respect legal documents and warned that the nation's "reputation for having a favorable

investment environment is being tarnished as domestic demand is growing for the government to hold more shares in the

project". One day later, the president's 91-page draft proposals (published on December 5, 2012) to parliament for amending

the 2012 Mineral Law were discussed in a news conference by Minister Gankhuyag, who while serving as a parliamentarian was

known for his demand that Mongolia renegotiate the OT agreement and hold a larger stake in all major strategic mineral


The minister announced the government is seeking to revise upward the threshold of FDI that triggers automatic government

review to as high as 300-400 billion togrog ($210-280 million). Gankhuyag speculated such changes could be introduced for

parliamentary debate in mid-February around the recess for the traditional lunar New Year holiday.

The Business Council of Mongolia, with some 250 members (although apparently no Chinese ones), sent a letter on January 7 to

the Office of the President commenting on the president's draft law proposals. The council's strongly-worded document had

five macro-conclusions:
1. "The significant increase in regulation and intruding State control" would deter greater growth and prosperity";
2. "The impact of the Draft Law on the minerals industry will be to halt current minerals exploration and development in

Mongolia and greatly discourage any future investment" - citing in particular, the development of Tavan Tolgoi coal deposit;
3. The draft law would be "over politicized" in the upcoming June presidential election;
4. Mongolia's "brand as an investment destination" would be damaged, resulting in repelling not attracting FDI; and
5. The draft needed at least six months of debate before a vote.

Slow down in Mongolian coal exports to china
Mongolia's overall exports in 2012 fell 8.99% - a decrease of $430 million from 2011. The main reason was the drop in mineral

exports to China. In 2012, Mongolia exported 20.9 million tonnes of coal, 574,000 tonnes of copper concentrate, 6.4 million

tonnes of iron ores, 3,570 barrels of crude oil, 2.8 tonnes of semi-processed and unprocessed gold and 140,000 tonnes of zinc


Coal represented 43.2% of the country's exports, copper concentrate 19.1%, and iron ore 12.1 per center. Iron ore exports

increased by 10% and crude oil exports grew by 40%. Despite the downward trend and the slowing of China's economy, it was

predicted by Mongolia's Mineral Resource Authority that Mongolian coal exports would grow 32% this year.

During the consultations, it is likely that the Mongols informed the Chinese that development of Mongolia's 7.5 billion

tonnes coal project of Tavan Tolgoi - 300 kilometers from the Chinese border and operated by the state company of Erdenes

Tavan Tolgoi (E-TT) - would be further delayed until after 2013.

CEO Yaichil Batsuuri, appointed to E-TT last October, had announced in mid-January that E-TT was suspending all coal

deliveries to its client, Chalco, because it had run out of funds for overland trucking service fees (it owes $3.6 million)

and wanted to renegotiate its supply contract with Chalco. E-TT's finances were drained in 2012 when it was forced to pay

$310 million into the Mongolian government's Human Development Fund, so it could disburse promised monies to each citizen

just prior to the June 2012 parliamentary elections.

Chalco had paid Mongolia $250 million in July 2011 for an unannounced amount of coal, but at a price Batsuuri claimed was

close to $53 per tonne - a price analysts agree is considerably lower than international standards. When the bankrupt E-TT

recently sought government assistance, it was promised in January $355 million from Mongolia's Development Bank to resume

work, repay its debts and possibly refund in cash to Chalco the contract's coal obligations.

Batsuuri explained that Mongolia wishes to maintain a relationship with Chalco, but change the nature of their cooperation

and price formula. Claiming that E-TT loses over $5 on every tonne under the present arrangement, he indicated that the

government wanted to sell its coal at world prices to other nations if it can dissolve the Chalco agreement: "Paying by coal

is not profitable for the company. We are losing on coal trade. That's why the government made the decision to pay out the

remainder. We will pay the remaining $180 million in cash."

Chalco in a written response to Bloomberg's Mongolian office regarding the news that E-TT was stopping delivery of its coal

maintained the "fundamental terms of the agreement should not be changed", separately and reportedly including "secret


The January consultations with the Chinese covered the topic of expanded Sino-Mongolian rail construction for Tavan Tolgoi to

replace the present truck transport of coal. Zhang said "the Chinese side will give support to construct a railway to be

built in southern Mongolia and pay attention to transporting products at cheaper prices after the railway is constructed. The

Chinese side is willing to render support to construct a railway from Tavan Tolgoi to Sainshand [the linkage point to

Mongolia's rail south] based on an economically profitable basis."

A finalist bid list, consisting of China's Shenhua Group Corp Ltd, Peabody Energy Corporation of the United States, and a

Russian Railway-Mongolian consortium, for foreign investment rights to Tavan Tolgoi's western section has been held up for

two years by protests over the selection process, particularly from Japanese and South Korean companies.

Shenhua had put up $200 million as a good faith gesture to secure its finalist position. Shenhua Energy has not made a

statement on the situation but the Mongolian Ambassador to China, Tsedenjav Sukhbaatar, revealed discussions are ongoing.

How to proceed with this western field bid list has delayed Mongolia's plan this year to raise up to $3 billion in funds in

an initial public offering (IPO) for development of Tavan Tolgoi's eastern field, to be handled by BNP Paribas, Deutsche

Bank, Goldman Sachs and Macquarie. Batsuuri explained the IPO cancellation by saying: "We decided to wait until the market

recovers, the price of coal increases, and until E-TT starts regular construction of its wash plant. Plus we need to increase

our exports."

Strategies going forward
The Chinese government has been very circumspect in commenting on recent trade disputes with the Mongols. This posture is far

different from the 1990s, when rail freight traffic often was severed to punish Mongolian actions or influence Mongolian

decision-making. This change in strategy may reflect the realization that a hard-line approach with Mongolia politically was

counterproductive and that Inner Mongolian factories have become more dependent on Mongolian minerals with each year.

The Chinese have used Mongolian news outlets to voice disappointment during this third round of Sino-Mongolian consultations

about what they see as Mongolia's uncertain legal regime and changeable mineral sector regulations. These same media sources

claim that the Mongols had "high expectations" for negotiations on the big issues, such as the unprocessed coal price that

were not met and concluded that "many questions are still left without answers".

Meanwhile, the Chinese could not fail to note that on the same day as the Sino-Mongolian consultations, Mongolian Minister of

Foreign Affairs Lu Bold started his official visit to India with meetings in Mumbai with Indian Chamber of Commerce

businessmen to encourage more investment in the already burgeoning Indo-Mongolian mineral relationship.

On January 24, it was announced in Beijing that after attending the 21st Annual Meeting of Asia-Pacific Parliamentary Forum

in Vladivostok, Wu Bangguo, chairman of the Standing Committee of the National People's Congress, will pay an official

goodwill visit to Mongolia from January 27 to February 1 at the invitation of Mongolian Parliamentary Chairman Zandaakhuu

Enkhbold. These visits are signs that Sino-Mongolia relations will continue to be played out in Asia at the very highest

levels as 2013 progresses.

The lack of clarity on how bilateral mineral trade will proceed, however, reflects both Mongolian domestic political

sensitivity over Chinese predominance among foreign investors and a growing Mongolian desire to develop mineral deposits more

slowly under their own auspices.

China has been mostly reactive, trying to parry Mongolian moves. It seems to understand that with Mongolia's new

assertiveness, political and strategic factors are as important as economic ones, so for now Beijing remains calm and

relatively tolerant.

Dr Alicia Campi has a PhD in Mongolian Studies, was involved in the preliminary negotiations to establish bilateral relations

in the 1980s, and served as a diplomat in Ulaanbaatar. She has a Mongolian consultancy company (US-Mongolia Advisory Group),

and writes and speaks extensively on Mongolian issues.

This article was amended on February 5 from the original.





Rail Europe reports outstanding results for 2012

With a 16% increase in sales year on year and traveller numbers reaching 2,6 million, Rail Europe confirms in 2012 its

dynamism and reinforces its position as the #1 distributor of European rail travel in the world. Passing the symbolic € 200-

million mark, Rail Europe 2012 sales established a new record in the company's history.

"We're thrilled with these outstanding results for 2012, which exceed our initial previsions and show a doubling of our sales

in three years' time!" said Pierre-Stephane Austi, Rail Europe’s CEO. "Despite a difficult worldwide economic context, Rail

Europe managed, once again, to achieve a double digit growth, contributing to the growth of the whole industry and affirming

its leadership role" Austi added.

Greater China increased 21.13% compared to last year. Particularly, Mainland of China continued to grow 59% after a

successful year in 2011. Singapore, Indonesia also showed the dynamism with 24% and 42% increases.

2012's other major highlights were

?the 2nd edition of RIDE -Rail Europe's International Distribution Event-, which gathered in Paris during 2 days more than

250 professionals of the rail industry (carriers, distributors and tourist offices)
?the launch of Rail Europe Connexion, an inspirational magazine proposing travel ideas and rail itineraries, distributed to

over 2 million readers in 20 countries
?the launch of Italo, the new Italian high speed train, operated by NTV, thus transforming Rail Europe's distribution system

into a truly neutral distribution platform, with more opportunities to travel by train in Italy
Rail Europe not only benefits from the growing trend in rail travel, it actually seems to stimulate it. Thanks to its

systematic strategy, the company expands across all distribution channels (trade and direct), all segments (groups &

individuals), and on all products: rail passes and point to point tickets, European and non-European.

In 2013, Rail Europe will accelerate this strategy thanks to the introduction of new products in its -already large- product

portfolio, ambitious partnership and promotional programs, new innovative distribution solutions, and of course close support

to all markets, fast growing and mature markets alike.

2013 will also see the direct connections of Rail Europe's distribution system to Trenitalia's & Deutsche Bahn's distribution

systems produce full-year results. Rail Europe  expects significant sales from these connections, which allow Rail Europe

customers and trade partners to access the same offer as in Italy or Germany, with real time access to all trains, fares

(including the most discounted ones) and promotions, as well as to advanced functionalities like e-ticketing.

Need to improve movement of goods: Rail Minister

New Delhi: Stressing the need for faster and economical movement of goods, Railway Minister Pawan Kumar Bansal on Monday

advocated adoption of technologies and construction of more dedicated corridors.

"Heavy haul operations are now the need of the hour. However, at the same time there is an utmost need for considering

technologies which aim at reducing the unit cost of transportation," Bansal said at the International Heavy Haul Association

conference here.

He said, "In view of the pace of growth which the world has witnessed over the years, there is obvious need for faster,

economical and greater movement of goods. It is a challenge for the transportation sector to transport goods to mega level

required by the growing global economy."

The theme of the conference was "Building Transport Capacity through Heavy Haul Operation".
Referring to the Dedicated Freight Corridors (DFC) project, Bansal said that both the Eastern Corridor from Ludhiana (Punjab)

to Dankuni (Near Kolkata) and Western Corridor from Jawahar Lal Nehru Port (JNPT) in Mumbai to Dadri/Tughlakabad (Near Delhi)

covering 3,400 kms of two busiest legs of the Golden Quadrilateral are being designed for 32.5 tonnes axle load trains which

is higher than present 25 tonnes axle load trains.

He said tangible progress has been made on the construction on the DFC and "we need to develop more such corridors capable of

running, higher axle load trains".

Appreciating the progress made by Australia, Bansal said that 40-tonnes axle load trains achieved by them "is really

praiseworthy and we too need to constantly work towards achieving higher and higher axle load".

International Heavy Haul Association conference is organised once in every four years. The last conference was held in

Shanghai China in 2009.

Highlighting the fact that railways are the most efficient and environment friendly mode of transportation, Bansal pointed

out that there is bound to be greater dependence on it for transporting goods on a very large scale which is possible only

through heavy haul operations.

Railway Minister said that India too is a growing economy and needs transport connectivity both for carrying essential

commodities to every nook and corner of the country and also to carry its people from one place to other.

Speaking on the occasion, Chairman Railway Board, Vinay Mittal said that besides the two ongoing Dedicated Freight Corridors,

Indian Railways has also undertaken a survey for taking up the work of similar Dedicated Freight Corridors on another four

high freight density legs of the Golden Quadrilateral covering a length more than 6,000 kms.

Heavy haul rail operation has evolved over the years as a technology to transport bulk commodities in large volumes and

reduce the unit cost of transportation.

Referring to the fact that heavy haul operations require strict maintenance regimes, Mittal said that its impact needs an in

-depth study considering the life cycle, costs and asset reliability, availability, maintenance ability and safety.






Laos-Thailand freight rail link by 2015

The 3.5km railway link from Vientiane to the Thai border will be able to handle freight by 2015, news reports in Laos said


Laos would build the required facilities at its end of the Lao-Thai Friendship Bridge by 2015, the Vientiane Times reported.

"Construction of a yard to store containers and lifting facilities will begin at the end of this year," said Bounchanh

Xaybounheuang, a senior official at the Lao Railways Authority.

The project will be financed by a 1.65 billion baht (US$55 million) loan from the Thai government.

The road and rail bridge was opened in 1994, and links Nong Khai in Thailand to Laos on the other side of the Mekong River.

The railway extends another 3.5 kilometres to the Lao capital Vientiane.

The train service has so far been limited to passengers, mainly foreign tourists.

Thailand and Laos plan to double their bilateral trade to $8 billion by the year 2015, compared with $3.9 billion in 2011,

the Vientiane Times said.

Laos has also said it plans to invest $7 billion in a freight and passenger rail connection from Kunming, the capital of

China's Yunnan province, to Vientiane and on to Thailand.

The project was supposed to start in 2011 but has been delayed.






Aquila puts US$7.7b iron ore project on ice

Australia’s Aquila Resources has put its A$7.4 billion (US$7.7 billion) West Pilbara iron ore project on ice at least

through June due to funding difficulties, sending its shares down nearly 10 per cent.

Along with its partners, Aquila, partly owned by China’s biggest listed steelmaker, Baoshan Iron & Steel, effectively froze

the project last September, when iron ore prices hit a three-year low. Aquila’s partners in the project are AMCI, a mining

investment firm, and South Korean steel giant POSCO. They had failed to agree on a budget for the year to June this year and

sent the dispute into arbitration.

Arbitration was due to begin on February 18, but Aquila said on Monday it had bowed to its partners and would continue the

suspension on the project for the rest of this financial year.

“Aquila will continue to focus its efforts on how best to progress the project,” executive chairman Tony Poli said in a


The company also said last week that the project’s director, Kevin Watters, had quit. He will take up the role of head of

project development at a competitor Brockman Mining, working on the Marillana iron ore project also in the Pilbara, which has

more options to export its ore.

Aquila and its partners have yet to agree on a replacement for Watters.

Shares in Aquila, 14 per cent owned by China’s biggest listed steelmaker, Baoshan Iron & Steel Co, sank to a one-month low

of A$2.82 and last traded down 8.3 per cent at A$2.86.

The West Pilbara Iron Ore project won state environmental approval last week, but still needs rail and port construction

approvals, key to its plans for exporting 30 million tonnes a year of ore.

The Western Australia state government has said it will not approve construction of Anketell Port until it is certain the

project’s backers have the funds to build a mine, rail and port, which will depend on what has become an increasingly

volatile iron ore market.

The API joint venture has wound down all engineering and design work for now, Watters told Reuters.

He said that with the heat having coming out of the construction market as several projects have been put on hold, the joint

venture should be able to negotiate lower construction and engineering costs when it comes back to the market.

“It’s certainly a keener market now in the engineering space and in the construction space,” Watters said.





Steady economic growth continues

China's non-manufacturing businesses strengthened for a fourth month in January, fueled by the accelerated consumption of

retail goods and a growing number of construction projects.

The non-manufacturing purchasing managers' index last month climbed to 56.2 from 56.1 in December, reaching its highest level

since September, the National Bureau of Statistics and the China Federation of Logistics and Purchasing reported on Sunday.

"Stable growth of the non-manufacturing sector is strengthening," said Cai Jin, vice-chairman of the CFLP.

The index surveys 1,200 randomly selected enterprises in 27 industries. A PMI of above 50 indicates expansion and below 50

indicates contraction.

The civil engineering construction industry saw its fastest growth in January since March, the data showed.

"Economic growth driven by infrastructure construction investment will be more important this year," said Cai, adding that

the Ministry of Railways will invest 650 billion yuan ($104.39 billion) in 2013 - the third-largest amount in a decade.

The push for urbanization will increase demand for rail lines, roads and housing, he added.

According to the NBS, the retail industry developed at the fastest rate among the 19 consumer service industries, with a PMI

reading that rose to 71.1, up from 66.6.

"It indicated that China's social consumption ability still has huge potential," Cai said. "The income distribution reform

should be pushed to sustain the economic growth from domestic consumption."

On Friday, the NBS and the CFLP revealed the manufacturing PMI in January was 50.4, compared with 50.6 in December, and

suggested the external market still remained a risk factor while domestic demand is holding up.

"China's growth recovery remains on track, but it is not yet on a solid footing," said Chang Jian, an economist with Barclays


A moderate recovery, rather than any sharp rebound, will drive up the GDP growth at a pace of 7.9 percent, compared with the

13-year low of 7.8 percent last year, a research note from the investment bank said.

Along with the expected growth in development, Chang also predicted that inflation risk and property prices are likely to

rise under a neutral monetary stance.

Wang Tao, the chief China economist with UBS AG, said infrastructure spending and industrial profit may show "very strong"

year-on-year growth in the first quarter.








MaxXLogistics secures UAE wagons

MaxXLogistics FZCO will be responsible for the shipment and transportation of rail wagons that will be used in phase one of

the Etihad Rail Project, which will link Shah-Habshan-Ruwais rail line in the western region of the UAE for the transport of

granulated sulphur. The first delivery of wagons arrived at Mina Zayed port during January.

MaxXLogistics is a joint venture between Almajdouie Group – a member of the Cargo Equipment Experts (CEE) network

representing Saudi Arabia – and China headquartered Sinotrans Limited.

The Etihad Rail Project is a government-led project, which aims to deliver a secure transportation link between the UAE and

its Gulf Cooperation Council (GCC) neighbours.







African Nations Should Approach Equity Infrastructure Investment With Caution -IFC

African countries should approach equity investment in infrastructure projects with caution, said a senior executive at the International Finance Corp. Sunday.

"Taking an equity stake in infrastructure projects should be carefully considered by any country, particularly those with limited financial resources," said Tom Butler, Global Head of Mining at the IFC, in an interview ahead of the Indaba mining conference.

"Taxes and concession fees can provide more stable revenue streams to governments and don't require up front investment by governments, thus freeing up public money for investments in things such as health and education, where private sector funding is not as readily available," he added.

Standard Bank Group Ltd. (STD.JO) estimates that African nations will need to spend more than $50 billion in the next 10 years on new rail networks alone to meet growing demand for mineral resources.

Some African governments have sought to use their own capital to develop infrastructure but the results have been mixed, with some companies raising concerns over project delays caused by transportation development delays. Mr. Butler said a multi-user transportation network that is privately owned but regulated by the government would prove to be a more efficient and effective way of allocating capital and generating a steady stream of revenue via taxes and concession fees.

Rio Tinto PLC (RIO, RIO.LN) last month wrote down most of the value of its $3.78 billion purchase of Mozambican coal assets in 2011 after failing to secure permits to barge coal down the Zambeze river. It is now considering other transport options,

including a rail line, but the government is still working on creating a third-party concession framework for new lines in the country.

Meanwhile in Guinea, Rio Tinto is still waiting for clarity from the government on the terms of investment for its Simandou iron ore project, including how the government plans to finance its share of the rail and port infrastructure.

Rio Tinto signed an accord in April 2011 with Guinea to secure Rio Tinto's mining title over its two Simandou iron ore blocs in the south-east of Guinea. The accord gave the government the right to take up to a 35% stake in the project and a 51% stake in a special purpose vehicle for the project's 670 kilometer rail and port infrastructure.

A year later, Rio Tinto and Aluminum Corp. of China Ltd. (ACH, 601600.SH, 2600.HK), or Chalco, agreed to create a joint venture to develop and operate the Simandou mine. Through the joint venture, Rio and Chalco own a 50.35% and 44.65% stake respectively in the Simandou project while the remaining 5% is held by the IFC, a part of the World Bank.

When asked how his views on infrastructure equity ownership relate to Guinea, Mr. Butler said "Each country is unique. We are fully committed to working with Rio Tinto and the Government of Guinea on advancing the Simandou project, including the infrastructure component."





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