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Geology, mining and petroleum activities updates

Trans. by B.MENDBAYAR

The Ministry of Mining held the monthly Transparent Mining press conference on August 27, and provided updates on the nation’s large scale geology, mining and petroleum activities. Below are some highlights from the conference.

Oyu Tolgoi’s unresolved issues

Oyu Tolgoi LLC’s mining and marketing activities are advancing normally, but there are two technical issues left unresolved between shareholders. The first is Oyu Tolgoi’s underground mine funding issue. In order to start underground development work, Oyu Tolgoi has been asked to clarify its feasibility study of the underground mine and have it approved by the Minerals Council. Oyu Tolgoi has delivered its resource statement and specialists are reviewing on it. The second issue is the unpaid tax dispute. This dispute is between the General Department of Taxation and Oyu Tolgoi and will be regulated by specific laws. The parties are working actively to reach an agreement and appealed for a dispute settlement council.
The parties are actively cooperating to resolve funding for Oyu Tolgoi’s underground mine construction by September 30.
110 million USD in debt to Chalco remains

Last spring, Erdenes Tavan Tolgoi JSC stated its plan to resolve its remaining 140 million USD debt of 350 million USD it borrowed from Chalco, a Chinese state-owned company, by the end of May. But the deadline was further extended due to coal price decreases. During the Transparent Mining conference, CEO of Erdenes Tavan Tolgoi JSC Ya.Batsuuri said, “Approximately 110 million USD in debt remains to be paid to Chalco. Last year, we established a temporary contract with Chalco and had been selling our coal at a relatively reasonable price. But the contract expired on July 1, and we started to work under a basic contract. We can’t keep trading our coal at about ten dollars per ton. So we are negotiating to either expand the temporary contract or to sell our coal to other southern neighbor’s companies at a higher price and pay our debt from the income.”

Mining sector statistics

As of the first seven months of 2014, exploitation of copper concentrate reached 565,700 tons, coal 12.6 million tons, gold 4.3 tons, fluorite 222.9 tons, iron ore 3.7 million tons, zinc concentrate 56,400 tons and petroleum exploration was four million barrels. Compared to the same period of 2013, exploitation of copper concentrate increased by 45.4 percent, iron ore 18 percent, fluorite concentrate 51.9 percent and oil 53.9 percent. As of the first seven months of 2014, Mongolia exported 10.4 million tons of coal, 703,900 tons of copper concentrate, 1,800 tons of molybdenum concentrate, 176,600 tons of feldspar, 3.1 million tons of iron ore, 53,200 tons of zinc and 3.8 million barrels of petroleum.
Compared to export figures from the same period of 2013, the export of coal increased by 25.8 percent, petroleum by 45.7 percent, and copper concentrate doubled. A total of 624.7 billion MNT was added to the State Budget from mining sector tax income.
32 days of petroleum reserves

As of August 27, 2014, Mongolia has an approximately 32-day supply of petroleum reserves, and a 36-day supply of A-80 gasoline reserves, 30-day reserve of AI-92 gasoline reserves, a 35–day reserve of diesel fuel, and 26-day supply of TC-1.

Nearly 2,800 mining licenses active

As of August 22, there are a total of 2,782 licences active at the national level, 1,351 of them are exploitation licences and 1,431 are exploration licences. These licences account for 7.6 percent of Mongolia’s total territory.
During the conference, Minister of Mining D.Gankhuyag said, “Companies which had been waiting for Petroleum Law amendment approval sent 21 proposals to establish exploration contracts. Seventeen of the proposals are non-conventional oil and coal-bed methane projects.”
In order to increase transparency in the gold trade, improve gold exploitation and increase foreign exchange reserves, a soft loan of 200 billion MNT was granted to gold miners through Golomt Bank and Trade and Development Bank. As of the first half of this year, 3.8 tons of gold was traded to the Central Bank of Mongolia, up by 61 percent.

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Posted by on Aug 28 2014. Filed under Business & Economics. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

1 Comment for “Geology, mining and petroleum activities updates”

  1. Most countries including developed ones are looking at reducing corporate taxes, encouraging foreign and local investment, and working hard to establish a consistent, fair and equitable environment for businesses to succeed. This on-going dispute over OT is a lose-lose situation for all. investors in OT and also the great Mongolian people. The government needs to wise up and start honoring the investment agreement and tell the world that Mongolia is open for business – this will spur foreign investment and trade that will bring great wealth to the people via the multiplier effect. Stop looking at short term returns, and think what OT would do for Mongolia.

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