May 10, 2011 / 1:01 PM / in 6 years

UPDATE 1-SouthGobi facing fuel shortages in Mongolia

TORONTO, May 10 (Reuters) - Coal miner SouthGobi Resources Ltd SGQ.TO warned on Tuesday that it is facing fuel shortages and may have to curtail operations following Russia’s recent move to curb fuel exports.

Last month, the world’s largest oil producer Russia said it would raise export duties on fuel, due to shortages in its own domestic market. [ID:nLDE73R0P7]

Russia is the primary supplier of fuel to Mongolia and it has substantially cut fuel exports to Mongolia for the month of May, the company said.

SouthGobi said its fuel supplier has claimed force majeure and will be unable to meet contracted fuel supply this month. The company said it has managed to secure an agreement with a new supplier to offset some of the shortfall.

The company said the new supply combined with its existing diesel stocks will allow its Ovoot Tolgoi mine to operate for about 45 days under normal conditions, or around three months if operations were partially curtailed to preserve fuel. (Reporting by Euan Rocha, editing by Gerald E. McCormick)

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