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MONGOLIAN MINING PROJECTS
REPORT 2015
AUSTRADE DISCLAIMER
This report has been prepared as a general overview. It is not intended to provide an exhaustive coverage of the topic. The information is made available on the understanding that the Australian Trade Commission (Austrade) is not providing professional advice. Therefore, while all care has been taken in the preparation of this report, Austrade does not accept responsibility for any losses suffered by persons relying on the information contained in this report or arising from any error or omission in the report. Any person relying on this information does so entirely at his or her own discretion and Austrade strongly recommends that the reader obtain independent professional advice prior to acting on this information.
Commonwealth Copyright
©Commonwealth of Australia 2015
Published: November 2015
MONGOLIAN MINING PROJECTS REPORT 2015
This report is a guide for Australian mining equipment,
technology and services (METS) exporters considering doing
business in Mongolia.
Mongolia has world-class deposits of copper, gold, coal and
iron ore, and presents many present and future opportunities
for Australian METS organisations involved in the mining value
chain.
To assist Australian companies in accessing these
opportunities the Australian Trade Commission (Austrade) has
prepared this report. It examines market challenges, the mining
landscape, mining infrastructure issues, mining business and
investment opportunities, and profiles some operating mines
planned mines, and exploration projects.
We hope this publication will help you in undertaking your
research into the Mongolian market. Should you need further
information, please contact Austrade on +976 70 133 001 or at
Brendan Coyne
Consul General and Trade Commissioner
Australian Consulate-General, Mongolia
CONTENTSSECTION 1: ABOUT MONGOLIA
1.1. COUNTRY PROFILE 7
Map of Mongolia 7
Economic Overview 7
Political System 8
Legal Framework 8
Investment Law 9
Taxation 9
Market Challenges 10
Business Culture 11
Setting up in Mongolia 12
SECTION 2: MINING EXPLORATION AND PRODUCTION
2.1. MINING LANDSCAPE 13
Introduction 13
Minerals Law 13
Exploration and Mining Licences 14
2.2. GEOLOGICAL EXPLORATION WORK 15
Geology 15
Geological Map and General Exploration Work 15
Mineral Resources Reserves 16
Gold 16
Copper 17
Iron Ore 18
Coal 18
2.3. MINING PRODUCTION 19
Production 19
Exports 20
Processing and Concentration 21
Coal Mining and Processing 21
2.4. MINING INFRASTRUCTURE ISSUES 22
2.5. MINING BUSINESS AND INVESTMENT OPPORTUNITIES 23
2.6. KEY MINING AND INWARDS INVESTMENT AUTHORITIES 24 The Ministry of Mining 24
The Mineral Resources Authority of Mongolia 25
Invest Mongolia Agency 26
Copyright © 2015, Oyu Tolgoi
SECTION 3: MINES AND EXPLORATION PROJECTS
3.1. OPERATING MINES 27
1. Erdenet Mine Copper and Molybdenum 28
2. Oyu Tolgoi Mine Copper and Gold 29
3. Baganuur Mine Thermal Coal 30
4. Baruun Noyon Uul Mine Coking Coal 31
5. Khushuut Mine Coking and Thermal Coal 32
6. Naryn Sukhait Mine Coking Coal 33
7. Ovoot Tolgoi Mine Coking Coal 34
8. Shivee Ovoo Mine Thermal Coal 35
9. Tavan Tolgoi Mine Coking Coal 36
10. Ukhaa Khudag Mine Coking Coal 37
11. Ulaan Ovoo Mine Thermal Coal 38
12. Bargilt Mine Iron Ore 39
13. Bayangol Mine Iron Ore 40
14. Tumurtein Gol Mine Iron Ore 41
15. Tumurtei Mine Iron Ore 42
16. Bayan Airag Mine Gold and Silver 43
17. Bor-Undur Mine Fluorspar 44
3.2. PLANNED MINES 46
1. Gatsuurt Mine Gold 47
2. Ovoot Mine Coking Coal 48
3. Oyu Tolgoi Underground Mine Copper and Gold 49
4. Tsagaan Suvarga Mine Copper and Molybdenum 50
3.3 EXPLORATION PROJECTS 51
1. Cogegobi (Areva) Uranium 52
2. Haranga Resources Iron Ore 53
3. Kincora Copper Copper-Gold 54
4. Xanadu Mines Copper-Gold 55
SECTION 4:
LINKS AND RESOURCES 56
Government Ministries 56
Relevant Government Agencies and Authorities 56
Industry Associations 56
News and Media 56
REFERENCES 57
ABOUT THE AUSTRALIAN TRADE COMMISSION 58
6 > Mongolian Mining Projects Report 2015 ABOUT MONGOLIA > 7
MAP OF MONGOLIAMap 1: Mongolia
Source: Mongolian Mining Projects Report 2011
SECTION 1
1.1. COUNTRY PROFILE Mongolia is a landlocked country bordered by Russia to the
north and China to the east, south and west. With an area of
more than 1.5 million square kilometres (the world’s 19th largest
country) and a population of approximately three million people,
Mongolia has one of the lowest population densities in the
world.
The landscape has several distinct geographical features,
including forest mountain ranges to the north, desert and low
mountain areas to the south, high mountain ranges to the west
and vast plains to the east. The climate is continental with hot
summers and very cold winters.
Mongolia’s population is relatively homogenous in terms of
ethnicity, language and religion. Its population is also relatively
young with more than 60 per cent below the age of 30.
Approximately 60 per cent of Mongolia’s population lives in
Ulaanbaatar (the capital city), Darkhan (an industrial centre in
the north, near the Russian border) and Erdenet (a city around a
large copper mine). The remainder of the population comprises
mainly nomadic livestock herders.
Mongolia has had a significant impact on world history. The
Hun, Turk and Mongol empires originated from this region, with
the latter controlling most of Asia and parts of Europe in the
12th and 13th centuries.
Economic overview
Mongolia’s GDP in 2014 was just over US$12 billion.1 The mining
sector is integral to the Mongolian economy, which accounts for
18 per cent of GDP, 68 per cent of industrial output and 81 per
cent of export earnings.2 Agriculture is a big contributor to the
economy and accounts for 30 per cent of GDP, 35 per cent of
the labour force and 7 per cent of export income.3
From 2011 to 2013, Mongolia’s economy weathered many
shocks to become one of the fastest growing economies in the
world. Mongolia achieved GDP growth of 17.5 per cent in 2011,
12.3 per cent in 2012 and 11.6 per cent in 2013.4 This success
was largely based on the investment in and development of
the US$6 billion Oyu Tolgoi copper-gold project and increased
earnings from mineral exports.
ABOUT MONGOLIA > 7
Economic growth decelerated in 2014, with GDP growth
slowing to 7.8 per cent and foreign direct investment (FDI)
dropping by 80.7 per cent. Growth is forecast to be sharply
lower in 2015 and 2016. Statistics released in August 2015
show economic growth increased by 3 per cent for the first six
months of 2015 relative to the same period in 2014. A major
policy challenge is to implement prudent macroeconomic
management that retains sufficient scope for productive
investment and social protection.5
Political system
In 1990, with the collapse of the USSR, Mongolia transitioned to
a democracy and a free market economy.
The Mongolian Constitution was formed in 1992 and enshrines
the concepts of democracy, freedom of speech, judicial
independence and importantly, a market economy founded on
a system of civil law.
The politics of Mongolia takes place in a framework of a semi-
presidential representative democratic republic, and of a multi-
party system. Executive power is exercised by the Government.
Legislative power is vested in both the Government and
Parliament. The Judiciary is independent of the executive and
the legislature.
Members of the State Great Hural (parliament) and the
President are both elected for fixed four-year terms (on different
electoral cycles). The Prime Minister is nominated by, and
serves on behalf of, the majority party in the Parliament. The
Cabinet is appointed by the Prime Minister, subject to State
Great Hural’s approval. The President is the Commander-in-
Chief and holds the power to veto legislation, although this can
be overridden by a two-thirds majority in Parliament.
There are two major political parties: the Mongolian People’s
Party (MPP), which evolved from the communist single-party
government, and the Democratic Party (DP), which grew out of
Mongolia’s 1990 democracy movement. The next election is
expected to be held in June 2016.
Legal framework
The Mongolian legal system is based on the Roman-German
(continental) legal system. The principal legal act is the
Constitution. The provisions of the Constitution, the laws
corresponding to it, other regulatory acts, international treaties
and other commitments of Mongolia, as well as regulatory
resolutions of Constitutional Court and the Supreme Court,
comprise the functioning law in Mongolia.
The Constitution empowered a Judicial General Council (JGC) to
select all judges and protect their rights. The Supreme Court is
the highest judicial body and judges are nominated by the JGC,
confirmed by the Parliament and appointed by the President.
The Supreme Court is constitutionally empowered to examine
all lower court decisions (excluding specialised court rulings on
appeal) and provide official interpretations on all laws except the
Constitution.
Specialised civil, criminal, and administrative courts exist at all
levels and are not subject to Supreme Court supervision. Local
authorities and district and city governors, ensure that these
courts abide by presidential decrees and Parliament decisions.
At the apex of the judicial system is the Constitutional Court
of Mongolia, which consists of nine members, including a
chairman, appointed for six-year terms, whose jurisdiction
extends solely over the interpretation of the Constitution.
Economic and business activities in Mongolia are regulated by
a variety of laws, including the Civil Code (2002), Company Law
(2007) and Law on Investment (2013).
8 > Mongolian Mining Projects Report 2015 ABOUT MONGOLIA > 9
Copyright © 2015, Oyu Tolgoi
Market challenges
There are some important market challenges in Mongolia that
need to be considered in any market entry strategy.
Perceptions of foreign investment
Mongolians are more familiar with Russia and Eastern Europe
than Western nations, as many have either lived or studied
in these countries and are more likely to speak Russian than
English. This is largely due to Mongolia having been a socialist
republic and a command economy until 1990. However, the
educated younger generation is more favourable to the West,
particularly the increasing number of young Mongolians who
have studied abroad.
Economic nationalism
Mongolia experienced a renewed sense of nationalism and
independence from 1990 and this is evident at all levels of the
political economy. This sense of national pride is an influential
factor at all levels of decision-making in government and the
commercial sector. Politicians have a tendency to use this
to their electoral advantage and practice popular politics
with economic issues. They are also conscious that their
electoral success is dependent on a constituency that is highly
nationalistic, and the importance of this is compounded by the
relatively high value for every vote in a country of three million
people.
Politicisation of process
From a mining perspective, it is often Parliament not professional
civil servants trained and qualified in specialised areas that
determines what deposits are strategic. There are, however, a
number of highly qualified and experienced advisers to the Prime
Minister, President and Cabinet, covering areas such as foreign
investment, mining legislation, royalties and taxation, and foreign
affairs.
Bureaucracy
Mongolia inherited the Soviet system of bureaucracy that
presided over a planned, command economy. During this
era, the state bureaucracy managed the economy, and this
legacy has largely continued despite the change to a free
market economy. The degree of government intervention
in the economy is high by Australian standards, and this is
compounded by the overlapping of authorities and a lack of
cooperation or coordination between departments in many
areas. The bureaucratic process can be fluid, as government
departments can unexpectedly change their requirements and
procedures, for example, indefinitely calling a moratorium on all
new exploration and mining licence applications.
Investment Law
Mongolia’s parliament passed a new Investment Law, which
came into effect on 1 November 2013, replacing the Law of
Mongolia on Foreign Investment (1993) and Law of Mongolia
on the Regulation of Foreign Investment in Business Entities
Operating in Sectors of Strategic Importance (2012).
The Investment Law eliminates the previous restrictions on
private foreign investment, reduces governmental approval
requirements for foreign state investment, introduces a simpler
and more open investment process, establishes a new,
dedicated agency to assist with the process and provides an
array of investment incentives.
The Investment Law stipulates that a foreign entity must either
be incorporated as a business entity with foreign investment
(BEFI) or as a representative office in order to conduct any
activity in Mongolia. A BEFI is defined as an entity that is
incorporated in Mongolia and of which at least 25 per cent
of the equity is held by a foreign investor(s) whose minimum
contribution to the entity is US$100,000, per investor.6
A representative office is defined as an entity that is established
in Mongolia solely to operate as a representative office of a
parent foreign entity. Such an office does not have the power to
earn revenue from business activities in Mongolia.
Taxation
There are four principal tax laws affecting companies in the
mining sector: 7
› General Law of Taxation – contains general provisions
relating to tax but does not impose taxation. This also
includes provisions regarding the administration of taxation,
including the rights and duties of both taxpayers and
administrators, and tax audit protocols.
› Minerals Law of Mongolia – contains provisions specific to
the prospecting, exploration and mining of minerals, and also
imposes royalties on mining licence holders.
› Corporate Income Tax Law – the provisions within this law
apply to all companies; there is no separate corporate tax
law for mining companies.
› VAT Law of Mongolia – an indirect tax relevant to all
companies, with no separate section for miners.
ABOUT MONGOLIA > 9
Continuity of governance
Politics in Mongolia revolves around a four-year electoral
cycle (the next parliamentary election is expected to be held
in June 2016). At the end of this cycle, and depending on the
outcome of the election, there may be a change in personnel
at all levels of government, including ministers, department
heads, provincial governors and their support staff. This has
implications for the continuity of governance; officials are often
replaced when they have just become proficient in their roles,
and there is then a delay before new officials learn the role.
Lack of skilled labour
There is a lack of skilled labour in Mongolia and exploration
and mining companies often have difficulty finding labour to
support their operations, including drilling, blasting, loading,
haulage, processing, mine administration and IT support. Most
companies invest in their own in-house training programs and
infrastructure to support their operations, due to the limitations
of vocational training and educational institutions in Mongolia.
However, progress has been made in recent years, such
as the Polytechnic College in South Gobi province, which
has received support from Oyu Tolgoi. Oyu Tolgoi has also
constructed a Mining School of Excellence in Nalaikh and
upgraded and expanded Technical Vocational Education and
Training (TVET) centres in the cities of Dalanzadgad, Choir and
Darkhan.
Technical skills shortage
Mongolia has a shortage of technical skills, especially
in modern methods of mine management, mechanical
engineering, process engineering, geology, hydrology and
geophysics. The majority of available labour has tertiary
qualifications based on the Russian curriculum and tends to
have limited experience with equipment and processes outside
Mongolia, Russia or Eastern Europe.
Environmental concerns
Although 40 per cent of Mongolians reside in the capital,
the country is predominantly rural and there is still a strong
connection to the land and concerns over mining companies’
intentions regarding the environment. Mining projects in the
past have left some environmental damage and modern
mining legislation and licence conditions place considerable
importance on environmental management.
Corruption
The potential investor needs to be aware of complaints of
corruption from foreign operators and investors in Mongolia.
There have been claims of misconduct in mining licence
applications and tender processes with foreign licence
applicants often being informed that a local licence has
already been granted for a property they are applying for, or an
unexpected decision has been made to put the property out to
tender.
10 > Mongolian Mining Projects Report 2015 ABOUT MONGOLIA > 11
Australian companies are advised to spend time investigating
the market, obtain professional advice where appropriate and
thoroughly investigate the issues in entering the market and
establishing business relationships. Australian firms wishing
to operate in Mongolia should commit to the highest level of
corporate behaviour and familiarise themselves with Australia’s
law and penalties pertaining to bribery of foreign officials.
Bribery of foreign public officials is a crime. Australian
individuals and companies can be prosecuted in Australia for
bribing foreign officials when overseas. For further information
on the regulations governing bribery of foreign public officials,
please visit: www.austrade.gov.au/Export/About-Exporting/
Legal-issues/Bribery-of-foreign-public-officials.
Business culture
Mongolians are proud, independent, self-confident and loyal
in disposition. It is preferable to have someone introduce you
to the person you wish to meet, but if this is not possible, then
write a formal letter or email in English in advance of your
planned visit.
Mongolians expect to be greeted formally, with a handshake
and direct eye contact. Mongolians typically use only their
first name. Always provide your business card as part of the
greeting process.
Informal conversation is generally expected before getting
down to business. Mongolian executives often enjoy being
invited out for lunch or dinner to get to know overseas contacts
in a more informal atmosphere. The giving of small inexpensive
gifts is customary at the conclusion of an agreement.
The peak summer holiday months of July and August are difficult
times in which to arrange meetings. Most businesses have at least
one person who can speak English and translate.
Setting up in Mongolia
Austrade looks forward to providing initial and ongoing support
and advice; however you will probably require a reputable third
party provider to accomplish the mechanics of setting up in
Mongolia.
According to the World Bank, Mongolia stands at 42 in the
ranking of 189 economies on the ease of starting a business.8
The incorporation of a new business entity with foreign
investment (BEFI) in Mongolia takes place at the General
Authority for State Registration of Mongolia. To register a new
BEFI, the estimated time of preparing registration documents,
obtaining a company name, opening a bank account and
translation of documents is approximately 2-3 weeks.9
More information related to the registration of a company in
Mongolia is provided on the website of the State Office in
Mongolia: www.burtgel.gov.mn.
ABOUT MONGOLIA > 11
Copyright © 2015, Oyu Tolgoi
12 > Mongolian Mining Projects Report 2015 MINING EXPLORATION AND PRODUCTION > 13
Copyright © 2015, Oyu Tolgoi
SECTION 22.1. MINING LANDSCAPE
Introduction
Mongolia is rich in mineral resources and has some of the
world’s major mineral deposits including gold, copper, uranium
and coal.
The Mongolian mining industry consists of placer, sedimentary
and hard rock, mineralised zones and ore-bearing veins forms
of mining. The types of mines that occur in Mongolia include
open cut, underground, riverbank panning and washing.
Mongolia’s mineral wealth first began to be explored and
exploited by Russia after 1920, and later by Mongolians
themselves. Geological data gathered since the 1920s and
exploration to date has proven vast mineral reserves, but only
30 per cent10 of Mongolia is covered by general exploration
work and geological mapping is at a scale of 1:50,000.
Small-scale mining activities are usually placer with some hard
rock operations. There are a number of illegal mining operations
in this category that are largely unregulated by the central
government, but usually have the sanction of the provincial
governments (aimags).
The majority of mines are medium-sized deposits. They are
predominately legal operations that have obtained exploration
and mining licences from the central government and have
formal permits from the provincial authorities.
There are a small number of large-scale mines that are either
Mongolian joint ventures with foreign companies or wholly
foreign-owned. These mines have the relevant licences and
permits and account for a large proportion of GDP, exports and
employment in Mongolia. Some of these deposits have been
designated as ‘strategic mineral reserves’ by the Mongolian
Goverment and have special conditions attached to the
licences.
Mining companies can operate in Mongolia by applying for and
periodically renewing their exploration and mining licences with
the Mineral Resources Authority of Mongolia.
Up until the 1970s, there was limited mining due to poor
infrastructure, capital and technical capability. During the 1970s
many significant mineral deposits were brought into production
through joint ventures with Russian or eastern bloc countries.
However, since 1990, the mining industry in Mongolia has
expanded dramatically, particularly after the introduction of
the Minerals Law of Mongolia of 1996, which saw an influx of
foreign exploration companies.
The mining sector is integral to the Mongolian economy,
accounting for 18 per cent of GDP, 68 per cent of industrial
output, 81 per cent of export earnings11 and employing more
than 40,000 people.
The recent slump in commodity prices has adversely affected
the Mongolian mining sector with export earnings falling and
unemployment growing. However, the importance of the mining
sector to the economy is likely to continue and contribute to an
even higher proportion of the country’s GDP in the future.
Minerals Law
On 1 July 2014, the Mongolian Parliament passed the Law
on the Amendments to the Minerals Law. Set out below is an
overview of the changes to the Minerals Law (2006).
Exploration licences
The moratorium on the issuance of new exploration licences
has been repealed and the maximum period for an exploration
licence has been extended from nine to 12 years.
Newly issued exploration licences will be immediately
transferable, opening the door to a reactivated secondary
market and, importantly for junior exploration companies, there
is no restriction on the use of these licences as security for
capital raising.
Mining licences
Mining licence holders are now obliged to:
› supply products that have been mined, processed or semi-
processed in preference to processing facilities operating in
Mongolia at market price
› employ an employee to act as a liaison with the Mineral
Resources Authority of Mongolia regarding environmental
rehabilitation and mine closure.
The amendments specifically address the overlapping
obligations of licence holders with obligations under the
Petroleum Law with regard to coal bed methane. They are
obliged to notify the Petroleum Authority of Mongolia if
methane is discovered during coal mining and are permitted to
produce coal bed methane in accordance with the Petroleum
Law.
MINING EXPLORATION AND PRODUCTION > 13
Source: MRAM Information Circular 2015, MRAM
Revocation of licences
Where a licence is revoked it must be reissued by tender
except where the revocation is because the licence holder
has failed to pay licence fees on time (or spend the minimum
expenditure).
Preference for suppliers and customers
Mining licence holders must preferentially:
› procure goods and services and hire subcontractors from
business entities which are registered, and paying taxes, in
Mongolia
› supply products that have been semi-developed,
concentrated or mined from the mining licence site to
processing facilities operating in Mongolia at prevailing
market prices.12
Other related laws
Relevant laws for the prospecting, exploration and mining of
minerals in Mongolia include:
› Law on Investment
› Law on Petroleum
› Law on Protection of Mineral Resources
› Mining and exploration in the forests and buffer zones of
protected areas with riverhead and water resources
› Land Law of Mongolia
› General Taxation Law
› Law on Water
› Law on Economic Entity and Organisation Income Tax
› Law on Customs Tariff and Customs Duty.
Exploration and mining licences
In January 2015, the Mineral Resources Authority of Mongolia
(MRAM) resumed the licensing process for exploration and
mining licences, after licences that had been previously issued
had been revoked regarding environmental and transparency
concerns. The new areas opened for exploration activities
are shown in Map 2. Exploration licenses will be granted for
31 million hectares of land (20 per cent of the total area of
Mongolia) of which 20.9 million hectares will be issued through
an application process and 10.1 million hectares will be issued
through a competitive tender.
Map 2: Granted licences in Mongolia
14 > Mongolian Mining Projects Report 2015 MINING EXPLORATION AND PRODUCTION > 15
Before the issuing of licences resumed at the end of 2014,
there were 11 million hectares of land licensed for exploration
and mining.
As shown in Figure 1, this was approximately 3.7 million
hectares less than the year before. Of this 11 million hectares,
mining licences covered 1.1 million hectares and exploration
licences covered 9.9 million hectares.
Figure 1: Area of valid licences in million hectares from
2006 to 2014
0
10
2006 2007 2008 2009 2010 2011 2012 2013 2014
20
30
40
50
60
70
59.3
39.5
26.0
22.920.2
14.7
11.0
49.4
42.1
Million hectares
Source: Monthly mining industry statistics, Jan 2015, MRAM
Figure 2 shows that 2,736 valid licenses for mineral resources
had been registered in Mongolia, composed of 1,391 mining
licences and 1,345 exploration licences.
Figure 2: Number of valid licences from 2006 to 2014
Sources: Monthly mining industry statistics, Jan 2015, MRAM
Geology and mining industry booklet, first half of 2014, MRAM
0
1000
2000
3000
4000
5000
6000 5357
4315
1042 1020 1091 1085 1158 1198 1237
1301 1391
3416
41113659
2979
25722303
1717
1345
4463
5202
4744
4137
37703540
30182736
2006 2007 2008 2009 2010 2011 2012 2013 2014
MiningExplorationTotal
Tungsten2%
Gold34%
ContructionRaw Material
21%
Source: Monthly mining industry statistics, Jan 2015, MRAM
Looking at the nature of business ownership, at the end of
2014, 1,557 businesses owned the 2,736 licenses referred to in
Figure 2. The dynamics of the ownership, licence holders and
areas are shown in Table 1.
Table 1: Ownerships of valid licences by investments at the
end of 2014
Source: Computerised mining cadastre system, 2014, MRAM
Figure 3: The structure of mining licences by types of
minerals at the end of 2014
Other9%
Iron5%
Flourspar11%
Coal18%
Legal entity Ownership LicenceArea
(million ha)
Total 1,557 100% 2,736 100% 11 100%
Foreign 100 per cent 270 17.3% 536 19.6% 3.1 28.1%
Foreign and Mongolian JV 117 7.5% 240 8.8% 1.2 10.9%
Mongolian 1,170 75% 1,960 71.6% 6.7 61%
MINING EXPLORATION AND PRODUCTION > 15
Most mining licences in Mongolia have been issued for gold,
various construction materials and coal.
2.2 GEOLOGICAL EXPLORATION WORK
Geology
Within Mongolia, there are formations and sediments belonging to all different ages with Archean to Quaternary being identified. The
area is structurally divided into Precambrian microcontinent massifs, Paleozoic (Hercynian and Caledonian) fold belts that developed
in the oceanic stage and structural basins, which were formed in the continental stage. 13
Geological mapping and general exploration work
Concerning geological mapping as of 1 January 2013, 30 per cent of Mongolia was covered via the 1:50,000 scale. According to the
Government Action Plan to be implemented in 2012-16, 40 per cent of Mongolia should be covered in such detailed scale by 2016. As
it stands with regards to the 1:200,000 scale, having fully incorporated all types of relevant geological and mining information into an
integrated digital system, the state’s geological complex map covers 81.6 per cent or 1,276,176 square km of Mongolia. Four new projects
are being implemented over an area of 287,924.4 square km and by 2016 it is intended that the entire territory of Mongolia will be covered
via such scale.
Concerning geological and exploration activities undertaken by exploration licence holders, in 2014 149.1 billion MNT (approx.
A$99.4 million) was spent by private organisations on geological exploration work. This represented a decrease of 174.8 billion MNT
(approx. A$116.5 million) or 53.9 per cent compared to 2012 and 153.4 billion MNT (approx. A$102 million) or 50.7 per cent compared
to 2011.14 Independent research released in August 2015 shows that this trend in the decline of exploration in Mongolia is steadily
continuing.15
Mineral resources reserves
As of 1 January 2010, there were 1,130 mineral deposits and 7,668 mineral occurrences with 80 different commodities discovered and
recorded in Mongolia. The four largest types, and mentioned here in greater detail, are gold, copper, iron ore and coal.
Map 3: Distribution map of mineral deposits and occurrences in Mongolia
16 > Mongolian Mining Projects Report 2015 MINING EXPLORATION AND PRODUCTION > 17
Source: Geology department, MRAM, April 2015
Gold
There are ten major gold bearing areas in Mongolia, with the main recoverable reserves being mineralised zones and placer deposits.
As of 2014, there are 117 primary and 664 gold placer deposits with proven reserves, and 1,763 occurrences had been identified. The
deposits contain 3,290 tonnes of reserves.
Copper
Mongolia is rich in porphyry copper deposits. Copper-molybdenum (Cu-Mo) mineralisation mainly occurs in three types, including
copper (Cu) porphyries deposits, copper-nickel (Cu-Ni) magmatic segregations, and strata bound (Cu) deposits. There are 57 copper
deposits and around 1,180 copper occurrences which hold 60.7 million tonnes of reserves.
Map 4: Gold deposits occurrences in Mongolia
Map 5: Copper deposits occurrences in Mongolia
Source: Geology department, MRAM, April 2015
MINING EXPLORATION AND PRODUCTION > 17
Scale 1:2,500,000
Scale 1:2,500,000
Iron ore
Seventy-one iron ore deposits with proven reserves and 500 occurrences have been defined countrywide. The proven iron ore
reserves of Mongolia are calculated to be 1.65 billion tonnes.
Coal
Coal occurs within units of intercalated sandstone, siltstone, and conglomerates. There are 160 coal deposits and 270 occurrences over
15 coal basins and three coalfields in Mongolia. As of the first half of 2013, the geological estimation of coal reserves had reached 173.3
billion tonnes (category P) and the reserves determined through more detailed exploration accounted for 26.8 billon tonnes. This places
Mongolia in the top 10 countries for coal reserves.
Map 6: Iron ore deposits occurrences in Mongolia
Map 7: Coal deposits occurrences in Mongolia
Source: Geology department, MRAM, April 2015
18 > Mongolian Mining Projects Report 2015 MINING EXPLORATION AND PRODUCTION > 19
Scale 1:2,500,000
Scale 1:2,500,000
2.3. MINING PRODUCTION
Production
In 2014, total production of the mining sector reached 6,388.9 billion MNT (approx. A$4.2 billion) as shown in Table 2. This represented a 22
per cent increase from 2013 and a 66 per cent increase from 2012. The sector’s contribution to the overall economy is illustrated in Figure
4. In 2014, the mining sector generated 17.6 per cent of GDP and 68.7 per cent of total industrial output.16
Production (billion MNT) 2010 2011 2012 2013 2014
Gross domestic product 9,756.6 13,173.8 16,688.4 19,118.0 21,844.3
Mining sector 2,102.2 2,536.2 2,742.8 2,965.6 3,845.38
Industrial production 4,987.0 6,185.6 5,723.6 7,651.7 9,299.6
Mining production 3,097.0 3,752.3 3,839.7 5,217.4 6,388.9
Table 2: Production of the mining and extractive industry in billion MNT, 2010-14
Figure 4: Share of the mining sector in the GDP and total industrial production in Mongolia, 2010-14
Source: National Statistical Office of Mongolia, www.1212.mn
0
10
20
30
40
50
60
70
2010
21.5%
62.1%
2011
19.3%
60.7%
The contribution of mining
to Mongolia`s GDP
The contribution of the
mining sector to Mongolia`s
industrial production
2012
16.4%
67.1%
2013
15.5%
68.2%
2014
17.6%
68.7%
MINING EXPLORATION AND PRODUCTION > 19
Table 3 shows that with regards to the production of major commodities, in 2014 iron ore production increased by 70.7 per cent,
copper concentrate production increased by 35 per cent and gold production by 29.2 per cent. On the other hand, coal production
decreased by 26.7 per cent.
Table 3: Production of main commodities of mining and extractive industry, 2010-14
Exports
In 2014, total mineral exports increased by 38 per cent or US$1273.1 million (approx. A$1743.9 million) compared to 2013. As shown
in Table 4, this was largely as a result of the exports of copper concentrate production increasing by 179 per cent owing to the
expansion of the Oyu Tolgoi mine. On the other hand, exports of coking coal, iron ore and crude oil decreased by approximately
37 per cent, 34 per cent and 33 per cent respectively.
Table 4: Export of main mineral products by countries, 2013-14
Main commodities Unit 2010 2011 2012 2013 2014
Copper concentrate with 35 per cent copper content thous.t 357.10 347.40 347.60 533.30 712.00
Molybdenum concentrate with 47 per cent copper content t 4,677.10 4,163.10 4,050.20 3,869.20 4,254.00
Gold kg 6,037.10 5,702.60 5,995.00 8,904.40 11,503.80
Flour Spar concentrate thous.t 140.70 116.40 157.20 76.40 374.90
Iron ore thous.t 3,203.20 5,678.30 7,561.40 6,011.20 10,260.50
Zinc concentrate thous.t 112.60 104.70 119.10 104.10 93.20
Coal thous.t 25,253 32,994 31,139.1 33,340.5 24,449.3
Main commodities by countries Measurement unit2013 2014
Volume Value Volume Value
Iron ore thous.t, thous.USD 6,724 654,333 6,324 446,364
Republic of China thous.t, thous.USD 6,724 654,333 6,324 446,364
Copper concentrate thous.t, thous.USD 650 948,901 1,378 2,573,622
Japan thous.t, thous.USD 4.7 12,892
Republic of China thous.t, thous.USD 650 948,901 1,373 2,560,7230
Zinc ores and concentrate thous.t, thous.USD 131 119,085 100 113,167
Republic of China thous.t, thous.USD 131 119,085 100 113,167
Molybdenum ore and concentrate t, thous.USD 3,879 28,649 4,030 35,677
Republic of Korea t, thous.USD 1,177 9,049 682 7,863
Republic of China t, thous.USD 2,132 15,556 3,170 26,360
Mexico t, thous.USD 211 1,683
Hong Kong t, thous.USD 322 2,114
Russian Federation t, thous.USD 35 247 142 1,025
United States of America t, thous.USD 36 429
Gold, unwrought or in semi-manufactured forms t, thous.USD 7,558 309,826 10,041 405,244
Canada t, thous.USD 3,562 134,072
United Kingdom t, thous.USD 3,997 175,755 9,387 379,966
France t, thous.USD 0.3 10
Switzerland t, thous.USD 654 25,268
Coal thous.t, thous.USD 18,188 1,115,982 19,481 848,597
Republic of China thous.t, thous.USD 18,188 1,115,943 19,461 847,173
Russian Federation thous.t, thous.USD 0.6 39 20 1,424
Source: Monthly mining industry statistics by MRAM, Dec 2014 and Jan 2015
Sources: Monthly mining industry statistics, MRAM, Jan 2015 Geology and mining industry booklet, first half of 2014, MRAM
20 > Mongolian Mining Projects Report 2015 MINING EXPLORATION AND PRODUCTION > 21
Processing and concentration
One-hundred and five plants operate throughout Mongolia processing minerals other than coal, with 20 plants conducting mineral
processing that do not require a special licence. Of those plants:
› 15 are involved in primary gold mines, eight of which have started operations
› 36 processing plants are involved in iron ore and 13 of them are processing in a wet environment. The remaining plants process iron ore
through the dry magnetic separation method
› 20 mixed metal plants operate in Mongolia. Six of these plants are for lead-zinc, four are for copper-molybdenum, five are for copper-
gold and five are for other commodities
› Out of 18 fluorspar plants, nine processing plants do not possess special licences
› One silver, one zinc and one molybdenum processing plant are in operation
› There are 11 tungsten and tin processing plants.17
Coal mining and processing
Coal is currently Mongolia’s most important commodity and Tavan Tolgoi has the one of the largest untapped coal reserves in the world.
As of February 2015, 160 economic entities own 244 special licences for coal mining. In 41 coalfields covering 198 special permits for coal
mining, 53 open pit mines are being used, which are made up of one state-owned, two majority state-owned, three local
government-owned and 47 privately owned coal mines.18
Figure 5: Coal mining and processing statistics, 2009-14. Thousand tonnes
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2009 2010 2011 2012 2013 2014
Production
Sales
Export
13,326
13,196
7,551
25,253
25,296
18,241
32,994
30,584
22,526
31,139
26,001
20,470
33,341
25,821
18,188
24,449
27,305
19,513
MINING EXPLORATION AND PRODUCTION > 21
Sources: Monthly mining industry statistics, MRAM, Jan 2015. Geology and mining industry booklet, first half of 2014, MRAM
2.4. MINING INFRASTRUCTURE ISSUES There are a range of infrastructure issues to be considered
before investing in mining in Mongolia.
Climate
The extreme climate of Mongolia impacts the quality of road,
rail and air transport in the mining sector. Mongolia is effectively
frozen for six months of the year (October to March), with
temperatures regularly descending below -40ºC. At the other
end of the spectrum (April to September), summer temperatures
in the Gobi Desert can reach over 50ºC. The summer is also a
relatively wet season and can bring sudden river flooding and
impassable roads. This makes for a challenging operational
environment, where some areas frequently cannot be accessed
for long periods of time and a lack of preparation can have serious
consequences. The most reliable form of transport for heavy
haulage is rail, although this is not without its challenges.
Transport hubs and shipping
Mongolia is a landlocked country and there are issues
getting people and freight in and out of the country. There
are essentially three main transport hubs: Chinggis Khaan
International Airport in Ulaanbaatar, Sukhbaatar Railway Station
at the Mongolian-Russian border, and Zamyn Uud Railway
Station on the Mongolian-Chinese border. Sea freight to
Mongolia passes through either Tianjin in China (1,344 km from
Ulaanbaatar) or Nakhodka (4,037 km from Ulaanbaatar), both of
which have a bonded warehouse for Mongolian freight. From
these ports the bulk of the freight is sent by rail, the remainder
by road.
Roads
Mongolia’s roads connect only a tiny fraction of the country,
making travel within the country often lengthy and hazardous.
All roads are subject to major surface damage due to the severe
seasonal changes that include flooding, snow drifts and ice.
These poor road conditions affect driving ability, and are often
compounded by a disregard for road rules.
Railways
The Mongolian rail network comprises 1,815 km of broad gauge
track, of which 1,110km is the Trans-Mongolian line that runs
north-south and links Russia to China. Another
239 km represents a separate Eastern Mongolian network
that connects with the Russian network. The balance of 477
km consists of spur lines of these two main lines, one of which
connects the Erdenet Mine to the Trans-Mongolian line.
The railroad and rolling stock are jointly owned and operated
by a Mongolian-Russian joint venture. The diesel locomotives
and rolling stock are Russian, which together with the track
are generally reliable. A considerable amount of freight runs
through Mongolia from Russia to China and vice versa,
including timber, oil, coal, copper–molybdenum, iron ore,
manufactured goods and consumer products.
Rail projects in Mongolia have been heavily influenced by geo-
politics. The Mongolian rail track gauge is the same as Russian
broad gauge, while China uses narrow gauge. Consequently
all rail stock requires a change of gauge at the Chinese border,
causing freight delays.
Aviation
All airports in Mongolia experience frequent closures due to
extreme weather conditions, including strong winds, sand
or snow storms, or visibility problems caused by excessive
air pollution. Air charter services using turboprop aircraft are
available out of Ulaanbaatar to service exploration and mining
projects, and the quality of the planes and pilots is good with
most having Russian training and qualifications.
Airfreight to Mongolia is expensive and costs can be as high as
US$30 per kilogram depending on the route and carrier. The
main carriers are Mongolian Airlines (MIAT), Air China, Aeroflot,
Turkish Airlines and Korean Air. All have wide-bodied aircrafts.
These carriers have regular services to Beijing, Seoul, Osaka,
Tokyo, Irkutsk, Moscow, Berlin and Frankfurt.
Communications
The telecommunications network covers all 21 provincial
centres (aimags) and most of the districts (soums) of Mongolia.
Domestic and International calls can be made from anywhere in
these areas via fixed land lines. There are four mobile operators
providing services using GSM, CDMA and 3G technologies.
These mobile networks cover all aimag and soum centres.
Calling outside of mobile and fixed line networks is possible
using satellite telephones. Broadband Internet is available in all
aimags and some soum centres, but it can be a challenge to
access the Internet in remote parts of Mongolia.
Power
Electricity is generated by five coal-fired power stations, but can
be unreliable with blackouts in the capital and other centres.
Power is 220-240W. Finding reliable power outside these
centres or away from the main transport arteries is problematic,
as the distribution infrastructure is poor by world standards and
the network suffers from a lack of maintenance.
22 > Mongolian Mining Projects Report 2015 MINING EXPLORATION AND PRODUCTION > 23
Water
Mongolia is an arid country; the northern and western regions
may enjoy 250-400mm of annual rainfall and surface flows
occur, but mean annual rainfall in the southern Gobi Desert is
limited to 70mm. Under these conditions groundwater presents
the best, and in some instances only, water source.
Several projects and mines under development have established
water security from groundwater sources, following significant
investment and time in exploration and testing, as is demanded
under local regulations and to meet international standards.
Some sources lie more than 50 km from the project centre.
2.5. MINING BUSINESS AND INVESTMENT OPPORTUNITIES
There are a number of opportunities for Australian companies
in the Mongolian mining sector. Australian goods and services
have a good reputation in the Mongolian market, and there is
strong brand awareness across all segments of the market.
Equipment and consumables supply
Opportunities exist for Australian suppliers to supply larger
Mongolian, foreign-owned and joint-ventured projects at the
higher end of the market, as these companies have higher
operational standards and are quality conscious. Small, mid-sized
local operators tend to be more price sensitive and purchase a
greater volume of their equipment and consumables from China,
although there is a growing appreciation for quality versus cost
in this segment of the market. To take full advantage of these
opportunities it is critical to establish a market presence.
Technical services
There are opportunities for technical services in the Mongolian
mining sector, particularly in the fields of engineering, geology,
hydrology, geophysics, mine software, technical training and
environmental management. Foreign miners currently employ
the majority of these services, but there are successful examples
of Australian companies working with Mongolian miners and the
Mongolian Government.
Vocational training
With regards to large scale mining projects and the agreements
between mining companies and the government, a ratio of
Mongolian worker to foreigners has been stipulated, which
has created demand for skilled workers. Mongolia’s vocational
training sector is adapting to meet the needs of modern mining,
but the present system is still based on theoretical learning.
Opportunities exist for the provision of education for trades,
followed by mine safety and operations. Opportunities also exist
to partner with local TVET institutions, government and mining
companies that require skilled labour. Key areas that require
development are: curriculum development, teacher training and
management of facilities, staff and students.
Higher education
Opportunities exist for foreign universities with a strong mining
focus to partner with local institutions to help raise the standard
of learning and better equip graduates to meet the needs of a
modern mining sector. A common remark from foreign mining
companies is that Mongolian graduates would benefit from a
bridging year at institutions in countries such as Australia, to raise
them to the standards acceptable to modern mining companies.
Direct investment
Mongolia has some of the most significant mineral deposits
in the world. Only 30 per cent of the country has been fully
geologically surveyed, and of this more than 6,000 significant
deposits of 80 different minerals have been discovered. This
situation alone makes Mongolia one of the more attractive
countries for green field exploration and mining.
Non-mining opportunities
As the mining sector lifts the wealth and development of
Mongolia, increasing demands will be placed on other sectors
to meet the needs of these projects and an advancing economy.
Large mine sites in the South Gobi region and the equally
prospective reserves in the northern region, require a vast range
of supporting infrastructure and services. Examples include
mine-to-market rail design, construction and operations, urban
planning, and health and medical infrastructure and services.
MINING EXPLORATION AND PRODUCTION > 23
2.6. KEY MINING AND INWARDS INVESTMENT AUTHORITIES
Ministry of Mining
The Ministry of Mining develops and implements mining sector-related legislation, policy and strategy, as well as providing information,
recommendations and support to the Minister and Government in all relevant matters. Furthermore, the Ministry provides oversight and
analysis on sector policy, planning, coordination and policy implementation. It also conducts outcome assessments and ensures effective
use of budget and investments as well as coordination within the sector.
Ministry of Mining organisational chart
Address: Government Building 12, United Nations Street 5/2, Ulaanbaatar, Mongolia
Phone: +976 51 263 506
Fax: +976 11 318 169
Website: www.mram.gov.mn
Email: [email protected]
Minister
Deputy Minister
State Secretary
Department of State
Administration
Department of Policy
Implementation and Regulation
Department of Monitoring, Evaluation and Internal Audit
Department of Oil Policy and Coordination
Department of Strategic Policy
and Planning
Minister’s Office
Inte
rnat
iona
l C
oop
erat
ion
Div
isio
n
Min
ing
Div
isio
n
Econ
omic
and
Fin
ance
D
ivis
ion
Geo
logy
Pol
icy
Div
isio
n
Mineral Resources Authority
Petroleum Authority
24 > Mongolian Mining Projects Report 2015 MINING EXPLORATION AND PRODUCTION > 25
Mineral Resources Authority of Mongolia
The Mineral Resources Authority of Mongolia (MRAM) is an implementing agency of the Government of Mongolia. Its purpose is to
support the administration of the mineral resources in formulating development of policy, to provide required information and create a
favourable environment to increase investment in the mining sector. MRAM also provides services related to exploration and mining
licenses in order to implement the governing Minerals Law.
The MRAM works in concert with other government agencies on environmental matters related to mining.
MRAM organisational chart
Address: Government Building 12, Barilgachdyn Talbai 3, Chingeltei District, Ulaanbaatar, Mongolia
Phone: +976 51 263 926
Fax: +976 11 310 370
Website: www.mram.gov.mn
Email: [email protected]
General Director
Deputy Director
Inte
rnat
iona
l C
oop
erat
ion
Div
isio
n
Inte
rnat
iona
l C
oop
erat
ion
Div
isio
n
Administration and
Management Division
Legislation Division
Geological Division
MiningDivision
Coal Division
Monitoring and Statistics
Division
Concil of Director
MINING EXPLORATION AND PRODUCTION > 25
Invest Mongolia Agency
Invest Mongolia Agency (IMA) was established in 2013 with a wide program to promote and facilitate business investment in
Mongolia. IMA aims to create a business-friendly environment for investors and to assist both foreign and domestic investors in
planning their investments and guiding them through the process.
General Director
Project Assessing Concil
Promotion Consulting Division
Investment Policy,Assessment
Division
Administration Human Resources
Division
Concession, Public-Private
Partnership Division
Address: 8th floor, Government Building 11, Sambuu Street 11, Ulaanbaatar, Mongolia
Phone: +976 11 326 040, +976 11 320 706
Fax: +976 11 318 169
Website: www.mram.gov.mn
Email: [email protected]
26 > Mongolian Mining Projects Report 2015 MINES AND EXPLORATION PROJECTS > 27
Invest Mongolia Agency organisational chart
SECTION 3
3.1. OPERATING MINES
Copper
1. Erdenet Mine Copper and Molybdenum
2. Oyu Tolgoi Mine Copper and Gold
Coal
3. Baganuur Mine Thermal Coal
4. Baruun Noyon Uul Mine Coking Coal
5. Khushuut Mine Coking and Thermal Coal
6. Naryn Sukhait Mine Coking Coal
7. Ovoot Tolgoi Mine Coking Coal
8. Shivee Ovoo Mine Thermal Coal
9. Tavan Tolgoi Mine Coking Coal
10. Ukhaa Khudag Mine Coking Coal
11. Ulaan Ovoo Mine Thermal Coal
Iron Ore
12. Bargilt Mine Iron Ore
13. Bayangol Mine Iron Ore
14. Tumurtein Gol Mine Iron Ore
15. Tumurtei Mine Iron Ore
Gold
16. Bayan Airag Mine Gold and Silver
Fluorspar
17. Bor–Undur Mine Fluorspar
MINES AND EXPLORATION PROJECTS > 27
Copyright © 2015, Oyu Tolgoi
Operating Mine 1
Name of mine Erdenet Mine
Mineral mined Copper (Cu) and Molybdenum (Mo)
Location Bayan-Undur Soum, Orkhon Province, 400 km northwest of Ulaanbaatar
OwnershipErdenet Mining Corporation is 51 per cent owned by the Mongolian Government and 49 per cent owned by the Russian Government
Operator of mine Erdenet Mining Corporation LLC (EMC)
Web address www.erdenetmc.mn
Production commenced 1978
Mining operation (mining equipment)
Conventional shovel-truck open pit mining
Excavators: LIEBHERR-994B, EKG-10, EKG-15,
Haulage: BelAZ-75130, BelAZ-75473 and BelAZ-7648
Loaders: Komatsu WA800 and WA-600, LIEBHERR L-581
Drills: SBSH250
Grader: CAT 16H
Dozer: Komatsu D275A; 824G, WD500
Mineral reserves and ore grade Estimated reserves: 1.5 billion tonnes
Production capacity
Mining: 28.9 million tonnes of ore per year
Processing: Over 530 thousand tonnes of copper concentrate and 3,000 tonnes of molybdenum concentrate per year. The mine has a Solvent Extraction Electro Winning Plant capable of producing 3,000 tonnes Cu cathode annually. In July 2015, Erdenet announced it increased processing capacity by 6 million tonnes annually, and its processing capacity will reach 32 million tonnes of ore per year
Total number of employees Approximately 6,000
Infrastructure Erdenet is connected by railway to the East-Siberian railway network and to the Chinese railway network. It is also connected by a paved road to the provinces of Bulgan, Darkhan and Ulaanbaatar. The infrastructure surrounding Erdenet is well developed
Production for 2014 29.4 million tonnes of ore
Contact
Name: Mr D. ChuluunbatPosition: Chief of Ulaanbaatar Representative Office Address: Peace Avenue 14, Ulaanbaatar, MongoliaEmail: [email protected]: + 976 11 320 561Mobile: + 976 99 114 903
28 > Mongolian Mining Projects Report 2015 MINES AND EXPLORATION PROJECTS > 29
Operating Mine 2
Name of mine Oyu Tolgoi Mine (open pit)
Mineral mined Copper (Cu) and Gold (Au)
LocationKhanbogd Soum of South Gobi Province, approximately 550 km south of Ulaanbaatar, 80 km north of the Mongolia-China border
Ownership34 per cent is owned by the Government of Mongolia, while the other 66 per cent is held by Turquoise Hill Resources -51 per cent of which is owned by Rio Tinto
Operator of mine Oyu Tolgoi LLC
Web address www.ot.mn
Production commenced 2013
Mining operation (mining equipment)
Conventional shovel-truck open pit mining
Excavators: Bucyrus 495HR and Bucyrus 340
Haulage: Komatsu 930E
Loaders: Komatsu WA 1200
Drills: Atlas Copco PV351 and Sandvik DR580
Grader: CAT 16M
Dozer: Komatsu DT375 and DT475
Mineral reserves and ore gradeMeasured and indicated at CuEq 0.37 per cent, Cu 14,616,714klbs; Au-7,674koz; Measured and indicated at CuEq 0.22 per cent, Cu 772,148klbs; Au-821koz
Production capacity
Mining: 76.9 million tonnes material mined in 2014
Processing: 100,000 tonnes of ore per day. In July 2015 it was announced that Turquoise Hill expects Oyu Tolgoi to produce 175,000 to 195,000 tonnes of copper and 600,000 to 700,000 ounces of gold in concentrates in 2015
Total number of employees 6,939 as at 31 January 2015
Infrastructure
There is limited public infrastructure. All major infrastructure for operation was developed in the construction phase (2010-13). This includes: paved roads from the mine to the Chinese border, water pipelines, power lines to the Chinese grid, a central heating plant and an international standard airport
Production for 2014 148,400 tonnes of copper and 589,000 ounces of mined gold
Contact
Name: Mr Greg Courts
Position: Procurement Leader
Address: Monnis Tower, Chinggis Avenue 15, Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: +976 11 331 880
Fax: +976 11 331 890
MINES AND EXPLORATION PROJECTS > 29
Operating Mine 3
Name of mine Baganuur Mine
Mineral mined Thermal coal
Location Baganuur District, 120 km east of Ulaanbaatar
Ownership Mongolian Government owns 75 per cent and 25 per cent is privately owned
Operator of mine Baganuur JSC
Web address www.baganuurmine.mn
Production commenced 1978
Mining operation (mining equipment)
Excavators: ESH20/90, ESH15/90,ESH10/70, ESH13/50, EKG10, EKG8Dump trucks: BelAZ-7555, CAT 777, KOMATSU-HD405Drills: Sandvik D45KS, Russian SBR A-160
Mineral reserves and ore grade 600 million tonnes of B type brown coal
Production capacity
Mining: 4 million tonnes of coal per year
Processing: N/A
Total number of employees 1,117 as at 31 Dec 2014
Infrastructure Connected by paved road and railroad to Ulaanbaatar. Fully supplied with electric power, water and heating
Production for 2014 3.6 million tonnes of thermal coal
Contact
Name: Mr G. Erdenebaatar
Position: Chief Engineer
Address: Baganuur LLC, Baganuur District, Ulaanbaatar 12150, Mongolia
Email: [email protected]
Telephone: + 976 70 210 114
Mobile: + 976 99 020 918
Fax: + 976 70 213 130
30 > Mongolian Mining Projects Report 2015 MINES AND EXPLORATION PROJECTS > 31
Operating Mine 4
Name of mine Baruun Noyon Uul (BNU) Mine
Mineral mined Coking coal
Location Noyon soum, Southgobi Province, 850 km from Ulaanbaatar
Ownership Guildford Coal Limited, Australia
Operator of mine Terra Energy owns and operates BNU
Web address www.guildfordcoal.com.au; www.terraenergy.mn
Production commenced 2014
Mining operation (mining equipment)
Excavators: CAT320, CAT 390 and CAT6030 Haulage: CAT777D and CAT773E Drill: Sandvik Dozer: CAT D9 Grader: CAT M988
Mineral reserves and ore grade JORC resources for BNU consist of 15.26 Mt measured, 8.77 Mt indicated and 3.04 Mt inferred
Production capacity
Mining: 1.5 million tonnes of coal per year
Processing: None, feasibility study is in process
Total number of employees 311 (including contractors)
Infrastructure The project is located in a region where infrastructure is developing. However, mining activities are increasing and will be the key to the region’s economic and infrastructural development
Production for 2014Shipping to China started in August 2014. 23,000 tonnes of coal has been shipped to the buyer. In April 2015, BNU shipped 93,400 tonnes of coal to China
Contact
Name: Ms L. Nomin-Erdene
Position: Deputy Administration Manager
Address: Sunroad Building 6th Floor, Sukhbaatar District,
9-1 Narnii Zam, Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: + 976 75 750 915
Mobile: + 976 99 017 861
MINES AND EXPLORATION PROJECTS > 31
Operating Mine 5
Name of mine Khushuut Mine
Mineral mined Coking coal and thermal coal
LocationDarvi soum of Khovd Province, 1500 km west-southwest of Ulaanbaatar and 310 km northeast of the Yarant border crossing between Mongolia and China
Ownership Mongolia Energy Corporation Limited
Operator of mine MoEnCo LLC
Web address www.moenco.mn
Production commenced 1971
Mining operation (mining equipment)
Open cut mine with conventional shovel and truck fleet operated by contractor miners: Monnis Mining Equipment LLC (Mongolia) and Shin Jiang Lu Di Van LLC (China)
Mineral reserves and ore grade 141 million tonnes of coal
Production capacity
Mining: 2 million tonnes of coal per year
Processing: 1 million tonnes per year
Total number of employees Approximately 1,000
Infrastructure 311 km heavy-duty road from the pit to the Mongolia-China border
Production for 2014 100,000 tonnes
Contact
Name: Ms Indraa Khurts
Position: Procurement Manager
Address: 3th Floor, Tushig Centre, Seoul Street, Sukhbaatar District,
Ulaanbaatar 14250, Mongolia
Email: [email protected]
Telephone: + 976 77 110 567
Fax: + 976 77 110 510
32 > Mongolian Mining Projects Report 2015 MINES AND EXPLORATION PROJECTS > 33
Operating Mine 6
Name of mine Naryn Sukhait Mine
Mineral mined Coking coal
LocationGurvan Tes Soum of South Gobi Province, 849 km southwest of Ulaanbaatar and 56 km north of the Mongolia-China border
Ownership Mongolyn Alt (MAK) Corporation
Operator of mine Mongolyn Alt LLC
Web address www.mak.mn
Production commenced 2007
Mining operation (mining equipment)
Excavators: Bucyrus RH 170 and Bucyrus RH 120
Haulage: BelAZ 75306 and BelAZ 75131
Drills: Sandvik D75, D45KS
Mineral reserves and ore grade 229 million tonnes of semi-soft metallurgical coal resources
Production capacity
Mining: 14 million tonnes of coal per year
Processing: N/A
Total number of employees 350-450
Infrastructure 96 km of power transmission line was completed between Ceke and the Mongolia-China border in 2007. 55 km of paved road was also commissioned between the Shivee Khuren borders to Naryn Sukhait in 2010
Production for 2014 4 million tonnes
Contact
Name: Mr B. Alterdene
Position: Senior officer
Address: Peace Avenue 14, Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: + 976 75 759 700
Mobile: + 976 99 206 089
Fax: + 976 70 107 481
MINES AND EXPLORATION PROJECTS > 33
Operating Mine 7
Name of mine Ovoot Tolgoi Mine
Mineral mined Coking coal
LocationWithin the administrative units of Gurvantes and Noyon Soums in the Umnugobi Aimag (South Gobi Province). The mine is located approximately 40 km from the Shivee Khuren-Ceke border crossing at the Mongolia-China border
Ownership SouthGobi Resources Ltd
Operator of mine SouthGobi Sands LLC
Web address www.southgobi.com
Production commenced 2008
Mining operation (mining equipment)
Conventional open-cut mine Hydraulic excavators: 2 units Liebherr 996 and 3 units Liebherr R9250Haul trucks: 22 units MT4400AC (218 tonne capacity) and 2 units Terex TR100 (91 tonne capacity)
Mineral reserves and ore gradeMeasured and Indicated: 193 Mt coal
Inferred: 24 Mt coal
Production capacity
Mining: 9 million tonnes of coal per year
Processing: N/A
Total number of employees Approximately 350
Infrastructure Connected to China by paved highway
Production for 2014 1.6 million tonnes of coal per year
Contact
Address: 8th Floor, Monnis Building, Orgil Stadium 22, 15th Khoroo,
Khan-Uul District, Ulaanbaatar 17011, Mongolia
Email: [email protected]
Telephone: +976 70 070 710
Fax: +976 70 070 720
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Operating Mine 8
Name of mine Shivee Ovoo Mine
Mineral mined Thermal coal
Location Gobi Soum, Gobi Sumber Province, 260 km south east of Ulaanbaatar
Ownership 90 per cent owned by the Government of Mongolia and 10 per cent by other shareholders
Operator of mine Shivee-Ovoo JSC
Web address www.shivee-ovoo.mn
Production commenced 1990
Mining operation (mining equipment)
Excavators: ESH25/90, ESH 11/70, EKG5A
Dump trucks: 16 units BelAZ-7555, CAT 777, KOMATSU-HD405
Drill: 2 units Sandvik D45KS, Russian SBR A-160
Other: Dozers, graders etc.
Mineral reserves and ore grade 646.5 million tonnes of B-2 type brown coal
Production capacity
Mining: 2 million tonnes of coal per year
Processing: N/A
Total number of employees 510 as at 31 Dec 2014
Infrastructure Connected by paved road and railroad with Ulaanbaatar. Fully supplied with electric power, water and heating
Production for 2014 2 million tonnes of thermal coal
Contact
Name: Mr Enkhbayar
Position: Head of Procurement Department
Address: Shivee Ovoo soum, Gobi Sumber Province, Mongolia
Telephone: +976 70 546 464
Fax: +976 70 546 464
Email: [email protected]
MINES AND EXPLORATION PROJECTS > 35
Operating Mine 9
Name of mine Tavan Tolgoi Mine
Mineral mined Coking coal
LocationTsogttsetsii Soum, South Gobi Province, 540 km south of Ulaanbaatar, and 270 km north of the Mongolia-China border
OwnershipErdenes Tavan Tolgoi LLC -100 per cent owned by Mongolian Government through Erdenes Mongolia LLC
Operator of mine Erdenes Tavan Tolgoi LLC and Mongol Uurkhaichid consortium of Khishig Arvin Industrial, Mera and Mongolian National Operator LLC
Web address www.erdenestt.mn
Production commenced East Tsankhi section started in 2011
West Tsankhi section started in 2013
Mining operation (mining equipment)
Conventional shovel-truck operationExcavators: Liebherr R 9350Haulage: Terex MT4400
Mineral reserves and ore grade A reserve of 6 billion tonnes coal, of which 1.4 billion is coking coal and 4.6 billion is thermal coal
Production capacity
Mining: The scale of production will reach full capacity in 2016 with production of 20 million tonnes per year
Processing: a technical and economic feasibility study for the coal enrichment plant with capacity of 20 million tonnes was approved by the Ministry of Mining, Mongolia
Total number of employeesErdenes Tavan Tolgoi JSC employs 129 people at the head office in Ulaanbaatar and 439 at the mine site
Infrastructure
Water supply: water will be sourced from Balgasyn Ulaan Nuur, located 70 km north-west of Tavan Tolgoi
Road: coal is transported to customers by road
Railway: 217 km heavy haulage railway linking the Tavan Tolgoi mine to Mongolian-China border is under construction
Production for 2014 5.7 million tonnes of coal was exported
Contact
Name: Mr P. Gereltsansar
Position: Head of Foreign Relation and Public Relation Division
Address: Finance Center, Jigjidjav Street 8, Chingiltei District,
Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: + 976 70 118 585
Fax: + 976 70 119 595
36 > Mongolian Mining Projects Report 2015 MINES AND EXPLORATION PROJECTS > 37
Operating Mine 10
Name of mine Ukhaa Khudag Mine
Mineral mined Coking coal
LocationTsogttsetsii Soum, South Gobi Province, 560 km south of Ulaanbaatar, and 240 km north of the Mongolia-China border
Ownership Mongolian Mining Corporation
Operator of mine Energy Resources LLC and Thiess Australia
Web address www.energyresources.mn
Production commenced 2009
Mining operation (mining equipment)
Excavators: Liebherr 996, Liebherr 9250, Hitachi 3600, Hitachi 1200
Dump trucks: CAT 793, CAT 785, CAT 777
Drills: Sandvik D45KS, Atlas Copco DP, Cat MD6290
Mineral reserves and ore grade
Coal reserve as at 31 Dec 2012
Coking coal: 236 million tonnes
Thermal coal: 80 million tonnes
Total: 316 million tonnes
Production capacity
Mining: 15 million tonnes per year
Processing: 15 million tonnes of coal per year
Total number of employees 1,950 as at 31 Dec 2014
Infrastructure
18 MW power plant, 15 mln tonnes processing plant, a water supply system is in operation at the mine and there are 245 km of industrial purpose paved roads to the Mongolia-China border
Social infrastructure facilities for the mine employees and local residences including an apartment complex, school and kindergarten and a modern miners camp with various in-house service facilities
Production for 2014 4.6 million tonnes
Contact
Name: Ms B. Bayarmaa
Position: Vice President, Procurement & Contract Management
Address: 16th floor, Central Tower, Sukhbaatar District,
Ulaanbaatar 14200, Mongolia
Email: [email protected]
Telephone: + 976 70 122 279
Fax: + 976 11 322 279
MINES AND EXPLORATION PROJECTS > 37
Operating Mine 11
Name of mine Ulaan Ovoo Mine
Mineral mined Thermal coal
Location 120 km west of Sukhbaatar province and 5 km north of Tushig soum centre
Ownership Redhill Mongolia LLC, a subsidiary of Prophecy Development Corp
Operator of mine Redhill Mongolia LLC
Web address www.prophecydev.com
Production commenced 2010
Mining operation (mining equipment)
Excavators: 4 Dump trucks: 6 Others: dozers, graders, loaders
Mineral reserves and ore grade
Over 200 million tonnes of measured and indicated reserves.
Type: thermal coal
Rank: subbituminous A
Production capacity
Mining: 1 million tonnes per year
Processing: 800 tonnes of coal per day
Total number of employees 59 as at 31 Dec 2014
Infrastructure Haul road to railroad siding, railroad siding 125 km, water, phone, internet
Production for 2014 95,000 tonnes of coal
Contact
Name: Mr Christopher M Kravits
Position: General Mining Manager
Address: 8th floor, Monnis Tower, Chinggis Avenue, Ulaanbaatar 14240,
Mongolia
Email: [email protected]
Telephone: + 976 11 331 669
Fax: + 976 11 312 721
38 > Mongolian Mining Projects Report 2015 MINES AND EXPLORATION PROJECTS > 39
Operating Mine 12
Name of mine Bargilt Mine
Mineral mined Iron ore
Location Bor Undur Soum, Khentii Province, 320 km southeast of Ulaanbaatar
OwnershipMongolrostsvetmet Mining Corporation LLC is owned by Mongolian Government and Russian Government by 51 and 49 per cent respectively
Operator of mine Bor Undur Mine (MonRos)
Web address www.mongolros.mn
Production commenced 2011
Mining operation (mining equipment)
Open pit mining
Excavator: EKG 5A
Haulage: BelAZ
Drill: SbSh-250
Dozer: Caterpillar
Mineral reserves and ore gradeReserves: 45 million tonnes
Grade: 34.8 per cent iron ore
Production capacity
Mining: 2 million tonnes per year
Processing: wet and dry magnetic separation, 450,000 tonnes of iron ore concentrate
Total number of employees 100
Infrastructure The Bor Undur mine has transport, railway, administration and maintenance infrastructure
Production for 2014 442,000 tonnes iron ore concentrate
Contact
Name: Mr N. Enkhbaatar
Position: Head of Export and Procurement Department
Address: Mongolrostsvetmet, Bayanzurkh Distruct, Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: + 976 11 458 072
Mobile: + 976 99 117 827
Fax: + 976 11 458 380
MINES AND EXPLORATION PROJECTS > 39
Operating Mine 13
Name of mine Bayangol Mine
Mineral mined Iron ore
Location Yeruu Soum, Selenge Province, which is 340 km north of Ulaanbaatar
Ownership Dorniin Gobi LLC and Lung Ming Investment Holdings
Operator of mine Boldtumur Yeroo Gol Co. Ltd
Web address www.bteg.mn
Production commenced 2008
Mining operation (mining equipment)
Open cut mine
Excavators: WEK 12,CAT 385C and VOLVO EC700B
Dump trucks: TEREX 100 and TEREX 50
Loader: VOLVO L350F
Drills: CDM30, ROC L8, SWDE 200 and SWDB 200
Dozer: SD 22
Mineral reserves and ore gradeA total definite reserve is 120 million tonnes of iron ore but potential to reach 150 million tonnes
Grade: 43-45 Fe
Production capacity
Mining: 6 million tonnes per year
Processing: dry and wet magnetic separation
Total number of employees 1,300 as at 31 Dec 2014
Infrastructure The mine site is provided with improved road access, high voltage power lines and a railway spur
Production for 2014 4.9 million tonnes of iron ore
Contact
Name: Mr M. Sukhbaatar
Position: Vice Director
Address: Baruun Selbe-20, Chingeltei District, Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: + 976 11 330 053
Mobile: + 976 99 112 363
Fax: + 976 11 330 053
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Operating Mine 14
Name of mine Tumurtein Gol Mine
Mineral mined Iron ore
Location Khuder Soum, Selenge Province, 381 km north of Ulaanbaatar
Ownership Erdes Holdings LLC
Operator of mine Erdes Group LLC
Web address www.erdes.mn
Production commenced 2008
Mining operation (mining equipment)
Excavators: CAT-3455, CAT-375 and Hyundai-500
Dump trucks: BelAZ and Terex TR-50
Drills: Titon-500
Grader: CAT-D9
Mineral reserves and ore gradeReserves estimated: 16.4 million tonnes
Grade: 48.37 per cent iron ore
Production capacity
Mining: 1 million tonnes per year
Processing: two processing lines of dry magnetic separation with capacity 120-150 tonnes per hour
Total number of employees 150-200
Infrastructure Connected to Dulaankhaan railway station by improved road and a high voltage transmission line to the national power grid
Production for 2014 900,000 tonnes of iron ore
Contact
Name: Mr L. Natsagdorj
Position: Director of Manufacturing
Address: New Century Plaza, 6th Floor, Chinggis Avenue,
Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: + 976 11 331 107
Mobile: + 976 99 114 731
Fax: + 976 11 331 102
MINES AND EXPLORATION PROJECTS > 41
Operating Mine 15
Name of mine Tumurtei Mine
Mineral mined Iron ore
LocationKhuder soum of Selenge Province, 130 km north-east from Darkhan-Uul Province, approximately 560 km north of Ulaanbaatar
Ownership State-owned Darkhan Metallurgical Plant Co. Ltd
Operator of mine Darkhan Metallurgical Plant Co. Ltd
Web address www.dmp.mn
Production commenced 2011
Mining operation (mining equipment)
Excavators: Hitachi EX-2600B, EX-1200
Loaders: Luigong
Haulage: BelAZ-75131, Howo-A60 trucks
Drills: Sandvik D550, Sunward SWD-165
Grader: CAT16M
Dozers: CATD10 and CATD9R
Mineral reserves and ore grade
Indicated Resource: 57 million tonnes
Inferred Resource: 100.6 million tonnes
Probable Reserve: 71.6 million tonnes
Total: 229.2 million tonnes
Production capacity
Mining: up to 3 million tonnes per year
Processing: 3 million tonnes of iron ore per year
Total number of employees 278
Infrastructure
36.7 km of railway from Khandgait station of BTEG LLC to Tumurtei mine is under construction. A 16 MW substation was built at the Eruu soum and connected a 49.7 km of 110/6 KV power transmission line from the Eruu substation to the Tumurtei mine. There is also a terminal for loading iron concentrate at the Khandgait station, which was built in 2014
Production for 2014 941,000 tonnes
Contact
Name: Mr. K. Enkhchuluun
Position: Deputy Director of Development Strategy
Address: Darkhan Metallurgical Plant, Industrial Area, Darkhan City, Mongolia
Email: [email protected]
Telephone: + 976 70 374 203
Mobile: + 976 99 990 861
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Operating Mine 16
Name of mine Bayan Airag
Mineral mined Gold
LocationDurvuljin soum of Zavkhan aimag, in the North-Western part of Mongolia, approximately 1,200 km west of Ulaanbaatar
Ownership Bayan Airag Exploration LLC
Operator of mine Bayan Airag Exploration LLC
Web address www.bayanairag.com
Production commenced 2014
Mining operation (mining equipment)
Conventional shovel-truck open pit mining
Excavators: CAT-390D; CAT-320D; CAT-345D
Haulage: САТ-773E
Drills: Atlas Copco RockT-35
Grader: CAT160K
Dozer: CAT-D8R and CAT-D8N
Mineral reserves and ore gradeEstimated reserves: 5 million tonnes of ore
Grade: 2.2 grams of gold per tonne
Production capacity 980,000 tonnes of ore for around 50,000 ounces of gold per year
Total number of employees Approximately 380 as at 31 Mar 2015
Infrastructure
Processing plant Heap leach pad 12km Borefield/water supply system 3.6MW Diesel station and overhead power lineReagent storage, liquor tank, ponds, workshop, laboratory Camp with capacity for 400 people
Production for 2014 Mining: 550,000 tonnes of ore
Contact
Name: Bill Colvin
Position: CEO
Email: [email protected]
Name: Enkhtuvshin Yura
Position: Managing Director
Email: [email protected]
Address: 7th Floor, Central Tower, Great Chinggis Khaan’s Square 2,
Sukhbaatar District, Ulaanbaatar 14210, Mongolia
Telephone: + 976 77 116 100
MINES AND EXPLORATION PROJECTS > 43
Operating Mine 17
Name of mine Bor-Undur Mine
Mineral mined Fluorspar (CaF2)
Location Bor Undur Soum, Khentii Province, 320 km southeast of Ulaanbaatar
OwnershipMongolrostsvetmet Mining Corporation LLC is 51 per cent owned by the Mongolian Government and 49 per cent owned by the Russian Government
Operator of mine Bor Undur Mine (MonRos)
Web address www.mongolros.mn
Production commenced 1982
Mining operation (mining equipment)
Underground mining by shrinkage stopping
Mineral reserves and ore gradeReserves: 15 million tonnes of fluorspar
Grade: average 31 per cent CaF2
Production capacity
Mining: 500,000-600,000 tonnes of CaF2 ore per year
Processing: 120,000-140,000 tonnes of CaF2 acid grade concentrate
Total number of employees 1,100
Infrastructure Bor Undur mine has transport, railway, administration and maintenance infrastructure
Production for 2014 47,000 tonnes of fluorspar concentrate
Contact
Name: Mr N. Enkhbaatar
Position: Head of Export and Procurement Department
Address: Mongolrostsvetmet, Bayanzurkh Distruct, Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: + 976 11 458 072
Mobile: + 976 99 117 827
Fax: + 976 11 458 380
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MINES AND EXPLORATION PROJECTS > 45
Copyright © 2015, Xanadu Mines
3.2. PLANNED MINES
1. Gatsuurt Mine Gold
2. Ovoot Mine Coking Coal
3. Oyu Tolgoi Underground Mine Copper and Gold
4. Tsagaan Suvarga Mine Copper and Molybdenum
46 > Mongolian Mining Projects Report 2015 MINES AND EXPLORATION PROJECTS > 47
Copyright © 2015, Oyu Tolgoi
Planned Mine 1
Name of mine Gatsuurt Mine
Mineral mined Gold
Location Mandal Soum, Selenge Province, 90 km north of Ulaanbaatar
OwnershipCenterra Gold Inc is a North American gold mining and exploration company. It owns 100 per cent of Gatsuurt exploration property
Operator of mine Centerra Gold Mongolia LLC
Web address www.centerragold.com
Development
Site preparation is complete, awaiting approval to commence mining. Centerra reported on 18 June 2015 the Mongolian Parliament rejected and returned to the Mongolian Government for further assessment a proposal that the Mongolian state interest in Gatsuurt be either a 34 per cent ownership or a special royalty. This took place after the project was designated as a mineral deposit of strategic importance by the Mongolian Parliament in January 2015
Mining operation (mining equipment)
Mining is planned using conventional open pit methods with standard North American equipment. The primary excavator for operation is a 12m3 hydraulic excavator in a backhoe configuration. This machine will load a fleet of 95-tonne haul trucks. Blasthole drilling will be carried out using a 45,000 lb drill, drilling 152 mm diameter holes
Mineral reserves and ore grade
On 31 December 2013, probable reserves for the Central and Main Zones combined were estimated at 1.6 million ounces of contained gold. Measured and indicated resources were estimated at 398,000 ounces of contained gold and inferred resources were estimated at 440,000 ounces of contained gold. Estimated reserves: 17.1 million tonnes, Ore grade: average 2.9 gm/tonne
Production capacity
Mining: 35,000 tonnes per day (ore and waste) sulphide ore
Processing: 4,800 tonnes per day
Infrastructure Development covers two sites: Gatsuurt mine and modification in and around the Boroo mill. Infrastructure will comprise of new facilities at Gastuurt and expanded facilities at Centerra’s Boroo Gold Mine
Contact
Address: 12th Floor, Bodi Tower, Sukhbaatar Square, Ulaanbaatar, Mongolia
Contact: Media Relations Officer
Email: [email protected]
Telephone: + 976 11 317 798
Fax: + 976 11 316 100
MINES AND EXPLORATION PROJECTS > 47
Planned Mine 2
Name of mine Ovoot Mine
Mineral mined Coking Coal
Location North-western Mongolia
Ownership Aspire Mining Limited
Web address www.aspiremininglimited.com
Comment
Aspire is the owner of the Ovoot Coking Coal Project, the second largest coking coal project by reserves in Mongolia. Ovoot has reported reserves as of July 2013 of 255Mt by JORC (2012) standards. Plans for the mine consist of initially producing 5 Mtpa, increasing to produce up to 10 Mtpa of high quality coking coal over a 21 year life of mine. Aspire was granted a mining licence in August 2012 and received approval for its Mongolian Feasibility Study by MRAM in 2013.
In August 2015, a resolution was passed by the Cabinet of the Government of Mongolia authorising the Government’s Investment Agency to execute a concession agreement with Aspire’s subsidiary Northern Railway LLC to build and operate the Erdenet to Ovoot railway. The concession is for an operational period of 30 years with 100 per cent of the railway to be transferred to the Mongolian Government after 30 years. This concession presents Ovoot with a transport path to markets including China and Russia.
Under the concession, Northern Railways will need to satisfy a number of conditions to commence construction of the railway within 18 months. These conditions include: completion of the rail bankable feasibility study; execution of an EPC contract; all licences, permits and approvals have been granted by the Government of Mongolia; financing agreements have been executed; and all contracts required for commencement of construction have been executed. In September 2015, Aspire mentioned that preliminary findings from a scoping study indicate that there are no technical obstacles to building a efficient high-capacity rail connection from Ovoot through to the Russian city Kyzyl.
Contact
Name: Mr Matt Crompton
Position: Infrastructure Manager
Email: [email protected]
Address: Altai Tower, 3rd Floor, Room 302, Chinggis Ave-8, 1st Khoroo,
Sukhbaatar District, Ulaanbaatar Mongolia
Telephone: +976 70 116 828
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Planned Mine 3
Name of mine Oyu Tolgoi Underground Mine
Mineral mined Copper and Gold
LocationKhanbogd Soum of South Gobi Province, approximately 550 km south of Ulaanbaatar city and 80 km north of the Mongolia-China border
Ownership34 per cent of OT LLC is owned by the Government of Mongolia, while the other 66 per cent is held by Turquoise Hill Resources -51 per cent of which is owned by Rio Tinto
Operator of mine Oyu Tolgoi LLC
Web address www.ot.mn
Comment
Oyu Tolgoi was discovered in 2001 and consists of a series of deposits containing copper, gold, silver and molybdenum. The Oyu Tolgoi deposits stretch over 12 km and contain an estimated measured and indicated mineral resource of 46.8 billion pounds of contained copper and 25.3 million ounces of contained gold, and an estimated inferred mineral resource of 51.5 billion pounds of contained copper and 36 million ounces of contained gold.
The open cut mine is already producing significant and increasing amounts of copper concentrate but the majority of the value of the deposit particularly with regards to copper and gold (estimated by some to be 80 per cent) lies underground. Development of the underground mine had taken place but was suspended in 2013. In May 2015, the development of the underground mine took moved forward with the signing of the Oyu Tolgoi Underground Mine Development and Financing Plan by the Government of Mongolia, Turquoise Hill Resources and Rio Tinto.
In September 2015, the Mongolian Minerals Council approved the revised schedules for the 2015 Oyu Tolgoi Feasibility Study. These revised schedules on the underground project were submitted to the Mongolian Minerals Council on 27 August. The next step before a final decision is made on the project by Oyu Tolgoi’s stakeholders is to complete project financing, which is expected to be finalised before the end of 2015.
Contact
Name: Mr Greg Courts
Position: Procurement Leader
Address: Monnis Tower, Chinggis Avenue 15, Ulaanbaatar, Mongolia
Email: [email protected]
Telephone: +976 11 331 880
MINES AND EXPLORATION PROJECTS > 49
Planned Mine 4
Name of mine Tsagaan Suvarga Mine
Mineral mined Copper and Molybdenum
Location Mandakh Soum, Dornogovi Province, 560 km from Ulaanbaatar
Ownership Mongolyn Alt (MAK) Corporation LLC
Operator of mine Mongolyn Alt
Web address www.mak.mn
Development Overburden started in 2012, the total project period is 17-20 years
Mining operation (mining equipment)
Excavators: Bucyrus RH 170, RH 120
Haulage: BelAZ 75306
Drill: Atlas Copco DML
Other: Caterpillar graders and bulldozers
Mineral reserves and ore gradeTotal proven reserves are 250 million tonnes of primary sulphide ores equivalent to 1.6 million tonnes of copper and 66,000 tonnes of molybdenum
Production capacity
Mining: The production capacity of the open pit is 14.6 million tonnes per annum ore and 14.4 million tonnes per annum of overburden removal
Processing: The processing plant will have a capacity of 14.6 million tonnes per annum sulphide ore, and produce 316,000 tonnes per annum copper concentrate and 4,400 tonnes per annum of molybdenum concentrate
Infrastructure 220 km from Sainshand railway, 160 km from Oyu Tolgoi power line
Contact
Name: Mr. B. AlterdenePosition: Senior officerAddress: MAK LLC, Peace Avenue 14, Ulaanbaatar, MongoliaEmail: [email protected]: + 976 75 759 700
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3.3 MAJOR EXPLORATION PROJECTS
1. Cogegobi (Areva): Uranium
2. Haranga Resources: Iron Ore
3. Kincora Copper: Copper-Gold
4. Xanadu Mines: Copper-Gold
MINES AND EXPLORATION PROJECTS > 51
Copyright © 2015, Xanadu Mines
Exploration Project 1
Company Areva Mongol via its exploration subsidiary Cogegobi
Web address www.mongolia.areva.com
Exploration projectsCogegobi is carrying out geological and exploration work in the Dornogobi and Sukhbaatar provinces, in south-eastern Mongolia. The most advanced projects are the discovery of the Zoovch Ovoo and Dulaan Uul deposits
Comments
AREVA has been in Mongolia since 1997 and is now represented by AREVA Mongol, which is co-owned by AREVA (66 per cent) and Mitsubishi Corporation (34 per cent). Areva Mongol’s exploration operations are conducted by Cogegobi, which holds 22 exploration licences covering more than 6,000 square km in the sedimentary basin of the Gobi desert. There are:
• 9 licences in the Sainshand basin• 13 licences in the Dariganga and Erdenetsagan regions.
Cogegobi first discovered the Dulaan Uul uranium deposit with 6,270 tonnes of resources in 2011, and then the Zoovch Ovoo deposit with an estimated 54,390 tonnes of resources. It was officially registered in 2013 as a strategic deposit by the Mineral Resources Professional Council of Mongolia and feasibility studies of Dulaan Uul and Zoovch Ovoo were approved by the Council in February 2015.
In October 2013, Areva Mongol and Mongolia’s state-owned Mon-Atom signed an agreement to establish a joint venture strategic partnership called Areva Mines LLC. In doing so, 34 per cent of the shares of the joint venture were transferred to Mon-Atom.
Areva Mines will mine uranium from the Dulaan Uul and Zoovch Ovoo deposits and produce it via in-situ recovery (ISR) technology.
Contact
Name: Sarnai Galindiv
Position: Corporate Affairs Director
Address: ICC-International Commercial Center, Jamyangun Street 9,
Sukhbaatar district, 1r khoroo, Ulaanbaatar City, Mongolia
Telephone: + 976 11 320 698 - ext 104
Email: [email protected]
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Exploration Project 2
CompanyHaranga Resources Limited (Haranga) is an ASX-listed company, focused on iron ore exploration and development
Web address www.haranga.com
Project name Selenge iron ore project
Location
The project is located in the large industrial region of Darkhan-Selenge, where key infrastructure such as railway, electricity and water supply are well developed. The main trans-Mongolian railway, which provides direct access to to China and Russia, is connected by local sub-rail spurs
Comments
As a result of extensive exploration work, the iron ore-banded Magnetite System (known as BMS) was discovered in Selenge which formed three clustered deposits, namely Bayantsogt, Dundbulag and Undur Ukhaa.
The combined total resource is 254 million tonnes of iron ore at an average in-situ grade of 17.2 per cent (for 44 Mt of contained iron metal) based on a 12.5 per cent iron ore cut-off grade, of which 99.7 per cent is in the measured and indicated categories.
The company is working on infrastructure, engineering and technical solutions for a mine and processing plant. The water and electricity supply can be provided within 15 km from the mine and a scoping study to connect the Selenge project to Shariin Gol railway within only 45 km distance is underway.
In June 2015, Haranga announced that its 80 per cent owned subsidiary Haranga Khuder LLC, which holds the mineral exploration licences and pre-mining operations agreement for its Selenge iron ore project in Mongolia, had been granted a mining licence by the MRAM, covering 3,480 hectares. The mining licence is valid for 30 years.
Contact
Street address: Level 1, 330 Churchill Avenue, Subiaco WA 6008, Australia
Postal address: PO Box 540, Subiaco WA 6904, Australia
Telephone: + 61 8 9200 4415
Fax: + 61 8 9200 4469
Email: [email protected]
MINES AND EXPLORATION PROJECTS > 53
Exploration Project 3
CompanyKincora Copper Limited is a mining exploration and development company, based in Vancouver, Canada and listed on the TSX-venture exchange
Web address www.kincoracopper.com
Exploration projects Bronze Fox copper-gold project
LocationThe Bronze Fox copper-gold deposit is located in southeast Mongolia, 200 km from the Chinese border, approximately 140 km northeast of the Oyu Tolgoi project
Comments
There are three types of potential mineralisation hosted in the Bronze Fox project area. They are porphyry style of copper-gold-molybdenum (Cu-Au-Mo), structural controlled hydrothermal Au, and shear zone Au.
Current exploration work is mainly concentrated on porphyry Cu-Au-Mo targets and structural controlled hydrothermal Au, noting that approximately a third of the historic drill holes have returned internals of at least 1g/t Au.
The structural controlled Au mineralisation occurs along structure zones in Sophie North and Buchanan Heights prospects, all associated with breccia and also strong silicification, argillic, sericitic, and chloritisation alterations, sometimes with copper mineralisation (up to 1.86 per cent Cu). Shear zone gold potential appears in the Happy Geo zone, indicated by high-grade gold rock chip samples (up to 91g/t Au), soil gold anomalies (up to 1-2.5g/t Au), and large zones of argillic and sericitic alteration with trace sulphides, where further exploration work is warranted.
SWIR study results from early 2014 and ongoing mapping activities indicate that there is also possibility of a concealed porphyry and/or gold mineral system in the Happy Geo area.
In August 2015, Kincora provided an update on its exploration activities and mentioned that it will focus on surface exploration including infill mapping and geochemistry around the Bronze Fox and Tourmaline Hill Intrusive Complexes. A key objective will be refining discrete magnetic anomaly highs around the Bronze Fox Intrusive Complex.
Contact
Address: Khasvuu Building, Suite 301, 3rd floor, Transporters Street,
Peace Avenue, Sukhbaatar District, Ulaanbaatar 14210, Mongolia
Telephone: +976 70 100 095
Fax: +976 70 100 097
Email: [email protected]
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Exploration Project 4
CompanyXanadu Mines Limited is an ASX-listed company and maintains an active exploration and business development program
Web address www.xanadumines.com
Project Kharmagtai porphyry copper-gold exploration project
Location Kharmagtai is located in Omnogovi Province, approximately 420 km southeast of Ulaanbaatar
Comments
Kharmagtai is within the South Gobi porphyry copper province which hosts most of the known porphyry deposits in the South Gobi region of Mongolia, including the Oyu Tolgoi copper-gold operations (120 km south), the Tsagaan Suvarga porphyry copper-molybdenum development (170 km east) and Xanadu’s Oyut Ulaan porphyry copper-gold exploration project (260 km northeast).
Kharmagtai consists of multiple co-genetic gold-rich porphyry copper centres and tourmaline breccia pipes occurring within the Lower Carboniferous Kharmagtai Igneous Complex. Extensive exploration has to-date, identified significant shallow high-grade porphyry copper-gold mineralisation within the Altan Tolgoi, Tsagaan Sudal and Zesen Uul prospects, which are located within a 700 metre radius of each other.
A majority of the strongly mineralised porphyry complex lies under unexplored shallow post-mineral sediments. Porphyry mineralisation at Kharmagati is associated with widespread magnetite alteration and all the main prospects are associated with broad magnetic highs. A regional magnetic survey outlined numerous distinct circular magnetic anomalies in the vicinity of the Altan Tolgoi, Tsagaan Sudal and Zesen Uul prospects.
Xanadu reported in July 2015 that thirteen diamond holes had been completed for approximately 5205m in the drill program at Kharmagtai. Results indicated potential for a large scale mineralised breccia system alongside the established mineral resource. In September 2015, it mentioned that recent drilling has extended the longest continuous zone of mineralisation to date and reaffirmed the belief in the potential for the mineral system to host a large scale high grade copper-gold deposit.
Contact
Name: Mr Andrew Stewart
Position: Chief Executive Officer
Address: 2nd Khoroo, AOS Street, Military Town, Bayanzurkh District, Ulaanbaatar
Telephone: + 976 70 120 211
Fax: + 976 70 130 211
Email: [email protected]
MINES AND EXPLORATION PROJECTS > 55
SECTION 4LINKS AND RESOURCES
Government ministries
Ministry of Mining www.mm.gov.mn
Ministry of Environment and Tourism www.mne.mn
Ministry of Foreign Affairs www.mfa.gov.mn
Ministry of Defence www.mod.gov.mn
Ministry of Finance www.mof.gov.mn
Ministry of Justice www.moj.gov.mn
Ministry of Energy www.energy.gov.mn
Ministry of Industry www.mi.gov.mn
Ministry of Construction and Urban Development www.mcud.gov.mn
Ministry of Education, Culture and Science www.meds.gov.mn
Ministry of Labor www.mol.gov.mn
Ministry of Human Development and Social Protection www.khun.gov.mn
Ministry of Road and Transportation www.mrt.gov.mn
Ministry of Food and Agriculture www.mofa.gov.mn
Ministry of Health and Sport www.moh.mn
Government agencies and authorities
Embassy of Mongolia in Australia www.mongolianembassy.org.au
Invest Mongolia Agency www.investmongolia.com
Customs General Administration www.ecustoms.mn
Financial Regulatory Commission www.frc.mn
General Authority for State Registration www.burtgel.gov.mn
General Department of Taxation www.mta.mn
Mongolian Immigration Agency www.immigration.gov.mn
Industry associations
AustCham – Australia Mongolia Chamber of Commerce www.austchammongolia.com
Business Council of Mongolia www.bcmongolia.org
Mongolian National Chamber of Commerce and Industry www.mongolchamber.mn
Mongolian National Mining Association www.miningmongolia.mn
News and media
Business Council of Mongolia www.bcmongolia.org
Info Mongolia www.infomongolia.com
GoGo News http://mongolia.gogo.mn
News MN http://english.news.mn
M.A.D Mongolia Newswire http://mad-intelligence.com
UB POST http://ubpost.mongolnews.mn
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade.
The information provided is a guide only.
56 > Mongolian Mining Projects Report 2015 > 57
REFERENCES
1. World Bank Data on Mongolia, www.worldbank.org/country/mongolia
2. Monthly Mining Industry Statistics, Dec 2014 and Jan 2015, Mineral Resources Authority of Mongolia (MRAM)
3. National Statistical Office of Mongolia, www.1212.mn
4. National Statistical Office of Mongolia, www.1212.mn
5. Mongolia Outlook 2015, Asia Development Bank
6. Invest Mongolia Guide 2015, Invest Mongolia Agency
7. Mongolia Mining and Tax Guide 2012/13, Ernst and Young Mongolia
8. Ease of Doing Business in Mongolia 2015 report, World Bank Group
9. Invest Mongolia Guide 2015, Invest Mongolia Agency
10. Geology and Mining Industry Booklet, June 2014, MRAM
11. Monthly Mining Industry Statistics, Dec 2014 and Jan 2015, MRAM
12. High Level Overview of the Amendments to the Minerals Law (2014) by Minter Ellison LLP
13. Industrial minerals and selected rare metals in Mongolia 2011, MRAM
14. MRAM Information Circular 2015, MRAM
15. Exploration Special Report, 29 Sept 2015, Independent Mongolian metals & Mining Research
16. Mongolia Statistical Yearbook 2014, National Statistical Office of Mongolia
17. Geology and Mining Industry Booklet, June 2014, MRAM
18. MRAM Information Circular 2015, MRAM
19. For regulations governing bribery of foreign public officials: www.austrade.gov.au/Export/About-Exporting/Legal-issues/Bribery-of-
foreign-public-officials
In addition to using the above references, Austrade held interviews with Mongolian mining authorities and a number of mining project
developers, and undertook extensive desk research.
> 57
Copyright © 2015, Xanadu Mines
ABOUT THE AUSTRALIAN TRADE COMMISSION
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For more information please contact the Australian Trade Commission:
Mongolia
Address: 4th floor, Naiman Zovkhis Building, 21 Seoul Street,
Sukhbaatar District, Ulaanbaatar 14251, Mongolia
Telephone: +976 70 133 001
Fax: +976 70 133 014
Email: [email protected]
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Telephone: 13 28 78
Email: [email protected]
Website: www.austrade.gov.au
58 > MongoliaЦn Mining Projects Report 2015