I used to hold AKM and believe there is great potential in...

I used to hold AKM and believe there is great potential in theproject. At current prices I would like to buy back in for the coking coal side of operations if I can offload some duds in my portfolio. 

I would like to understand how the 238.6km @ $581.82M capital cost for the Ovoot - Arts Suuri extension mentioned in this announcement is within the $450 - $550M range provided in the 7 September 2015 announcement? I think it is a bit cheeky to compare the cost per km results of the 7/9/15 announcement (which included the Arts Suuri - Kyzyl) against the standalone cost of the Ovoot - Arts Suuri extension. I have obviously missed something along the way (?).

When the TrasnCare GmbH report referenced by AKM in several announcements was produced in 2016, the Chongqing-Duisburg route was operating at about 15 or 16 days. As of 2018, the Chongqing-Duisburg route now takes 12 days due to rail upgrades and a 600km shortening of the Lanzhou-Chongqing route. There is a good article from the Hong Kong Trade Development Council‘s website on for the existing China to Europe rail link for those interested (here). 

In Germany at the time (2016) there was a lot of focus on the Northern & Southern Routes - which included Mongolia - with a notable reference to the ‘New Silk road’ (see the Deutsche Bahn 2016 rail map). Fast forward to 2018, and it is clear from the German and Central European perspectives that the definition of what is the Northern and Southern rail routes seems to have changed slightly. A recent article from the German publisher Handelsblattis accompanied by a different 2018 Duisport rail map vs the 2016 Deutsche Bahn rail map from 2016. 

There is a clear desire amongst the CEE members of '16+1 initiative' to greater utilise both parts of the Southern Route of the New Silk-Road. Poland has all but approved initial funding for the first part of the E40 waterway connecting the Baltic to the Black sea which is loosely backed by the EU (except for Germany). There is a lot going on in with regards to the existing Caspian Sea rail ports and development of the ‘new’ Southern Route via Iran and Turkey under the guise of the BRI (http://vestnikkavkaza.net/analysis/How-the-Caspian-Sea-is-becoming-a-rail-corridor.html).

Why do I mention this here? Because I believe several of the rail and sea projects mentioned above are strategic 'irons in the fire' that have taken priority for European transit and thus priority for funding. I believe the Russians will still make the Northern Corridor Extension happen from their end, so they can continue to increase fuel, coal,wood, chemicals and wheat/flour exports to China. Probably they still need to resolve a couple of small quirks including:

• Which gauge are we all operating on? Do the Russians still want broad gauge? The Swiss based Zeit-Fragen is suggesting in its 2018 September edition of its ‘Current Concerns’ paper that the gauge debate is considered the stumbling block between Russia and China progressing high-speed rail tracks (http://www.voltairenet.org/IMG/pdf/CC_20180918_21.pdf- see page 4).
• How important to China (and the EU) is the Russian ban on EU food imports passing through its borders? How will this influence the allocation of investment funds in any 2^nd or 3^rd New Silk Road route that by passes Russia?

I don't think there is anything fundamentally wrong with AKM however I do think some of the dynamics relating to the BRI (Belt & Road Initiative) have changed rapidly over the last 24 months and should be considered by anybody investing in AKM on the basis of announcements on rail infrastructure. I would prefer to see AKM management tone down the claims that the Northern Corridor has the potential to be the fastest, lowest cost rail path linking North Eastern China, Mongolia, Russia and Europe until they can provide some substance to these claim. 

I look forward to the release of an integrated Chinese, Russian and Mongolian Economic Assessment of the extension which includes a clear transport cost recovery model and does not rely on 2016 data. We can then be sure about the economic viability and not just the capital costs.