Mining
From The Report: Mongolia 2012
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Mining is the driving force of the Mongolian economy, contributing 30% of GDP, and upcoming projects will surely increase this ratio. The two biggest are Tavan Tolgoi, a massive coal mine, and Oyu Tolgoi, a copper and gold mine, which should both be in full operation by 2013. In addition, Mongolia has potentially viable deposits of rare earth minerals, although extraction has yet to begin for these. The sector faces a number of key challenges, however, particularly with an unclear regulatory environment. The issuing of new licences has been stalled through 2012, and the government has drawn criticism for trying to renegotiate the Oyu Tolgoi contract after it had been signed.
This chapter features interviews with D. Zorigt, Minister of Mineral Resources and Energy; Tom Albanese, CEO, Rio Tinto; B. Enebish, CEO, Erdenes Tavan Tolgoi; and G. Battsengel, CEO, Mongolian Mining Corporation (MMC).
Articles from this Chapter
Ramped up: The sector is poised for substantial expansion despite some early-stage issues
Plentiful potential: The country is home to major deposits of rare-earth mineralsOBGplus
With Mongolia’s mining sector suddenly drawing international attention, one frequently asked question is whether or not the country can provide a steady supply of rare-earth minerals – a list of 17 elements crucial to the large-scale manufacturing of a wide range of items. Ramping up exploration for this set of crucial raw materials is one of several priorities for Mongolia’s mining sector. Although exploration efforts are currently under way, it will be at least two or three years before…
Precious metals: A major copper and gold project has caused controversyOBGplus
The 2011 autumn session of Mongolia’s parliament, the Grand Huraal, began with a shot heard across the globe. Prime Minister S. Batbold’s opening remarks on October 6 called for a major change to the mining agreement that had promised to put Mongolia on the map. On the advice of a group of about 20 parliamentarians, he said the country should seek a greater stake in the Oyu Tolgoi (OT) mine, a copper and gold project that is considered to be crucial to Mongolia’s long-term economic growth…
Desert deposit: Coal from the south is set to transform the sectorOBGplus
One of the top priorities in Mongolia in 2012 will be resolving the issue of development and production at Tavan Tolgoi (TT), the world’s largest undeveloped coal deposit, which holds an estimated 6.4bn tonnes of coking and thermal coal. It appeared that an agreement to develop the site was reached in July 2011 by a consortium of Mongolian, Chinese, Russian and US interests. However, since then that deal has fallen apart and the government has resolved to try again. TT is one of two large-scale…
Make it official: The government is working to update the licensing systemOBGplus
As the mining sector moves from potential to actual production, one of the main challenges is to streamline the licensing system. Decisions in the past have left the country exposed to licence hoarding, environmental concerns and corruption. In recent years, several steps have been taken to combat these issues. Taken together, they amount to an extended campaign to reduce the number of licences. In the past there had been more than 10,000, but by the third quarter of 2011 that number had been…
OBG talks to D. Zorigt, Minister of Mineral Resources and EnergyOBGplus
Interview:D. Zorigt How sustainable is the current rapid rate of growth we are seeing in the mining industry? ZORIGT: The mining sector’s status as an engine of healthy growth for Mongolia depends on legal, political and social stability. In terms of the legal environment, we are currently looking at amendments to the Minerals Law, seeking to improve the overall framework of regulation. We want to ensure environmental issues are addressed more stringently and that international standards…
OBG talks to Tom Albanese, CEO, Rio TintoOBGplus
Interview:Tom Albanese Production at Oyu Tolgoi is now expected to commence in August 2012. What is your assessment of the progress in completion of phase one? TOM ALBANESE: Oyu Tolgoi is being developed in phases. Phase one, which includes the development of an open-pit mine and a 100,000-tonne-per-day concentrator is progressing well. We passed the halfway point in September 2011, which is an important milestone. With phase one quickly ramping up to full capacity in 2013, development will…
Outgoing inputs: Coking coal could eventually comprise a substantial percentage of exportsOBGplus
Mongolia will soon be one of the world’s key producers of coking coal, one of the two main ingredients for making steel. In 2011 the country overtook Australia as the single largest supplier of coking coal to China, the world’s biggest importer. As of late 2011 local coal mining firms were reporting lower prices than earlier in the year, as Europe’s sovereign-debt issues cast doubt on the strength of the global economy. In general, prices for coking coal vary widely according to regional…
Added support: Secondary services firms are expected to benefit from future growthOBGplus
Mining is not as labour-intensive as most other economic activities. Although the mining sector is expected to propel Mongolia’s economy forward in leaps, it is not forecast to be a major driver of employment. In the mining services niche, however, it is anticipated that many of the country’s small-scale entrepreneurs and small and medium-sized enterprises (SMEs) will find plenty of opportunities to participate. In 2011 there were around 45,000 workers in the mining sector as a whole, which…
OBG talks to B. Enebish, CEO, Erdenes Tavan TolgoiOBGplus
Interview:B. Enebish What key issues are being addressed in shaping the Mineral Law of Mongolia? ENEBISH: The workings of Mongolia’s mining law started during the exploration boom. Initially there were only small to medium-sized private companies involved in mining. The discoveries of Oyu Tolgoi and Tavan Tolgoi, and the development of these deposits, were extremely important for Mongolia. These two vast projects will set an example for future mining schemes. In 1997 the Mongolian Minerals…
OBG talks to G. Battsengel, CEO, Mongolian Mining Corporation (MMC)OBGplus
Interview:G. Battsengel How would you assess the continued development of Mongolia’s mining sector? BATTSENGEL: For a long time, Mongolia has been known as a mineral-rich country, but our landlocked geography was a limiting factor to accessing international markets, in particular for bulk commodities. The enormous infrastructural challenges and lower commodity prices hindered the development of any significant mining project in the country. In the last 10 to 20 years, however, we have seen…
