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Transparent Mining reports on the nation’s mining activities

By B.KHASH-ERDENE

The Ministry of Mining organized the monthly Transparent Mining press conference last week, which provides updates on the large scale mining and geological projects taking place in Mongolia. The following are some of the highlights from the press conference.

Oyu Tolgoi copper shipments increase exports by as much as 40 percent

The six billion USD Oyu Tolgoi copper and gold projects, the biggest project undertaken in Mongolia, started copper concentrate exportation on July 9.
The Oyu Tolgoi copper concentrator plant began operations earlier this year and has the capacity to produce 100,000 tons of copper concentrate a day. According to the company, the concentrator plant has worked at full capacity since June 20. Oyu Tolgoi LLC, a unit of Rio Tinto, the world’s second biggest miner, plans to produce 36 million tons of copper concentrates a year and export one million tons. The company plans to increase production to 54 million tons by 2018.
Oyu Tolgoi copper production increased domestic copper production by 80 percent , is believed to account for 30-40 percent of total exports, and increased gross domestic products by 20 percent, according to the Ministry of Mining. The Oyu Tolgoi copper and gold mine, puts Mongolia among the top fifteen copper producing nations in the world.
The government of Mongolia signed Oyu Tolgoi’s investment agreement three years ago with international investors, which was one of the biggest mining deals in Mongolia’s history.

Erdenes Tavan Tolgoi to ship 3.6 million tons to repay debt to CHALCO

The Ministry of Mining said that all operations at the state owned Tavan Tolgoi coal mine have been progressing as planned. This mine is now fully operational, as its western block was opened in February this year.
In 2011, Erdenes Tavan Tolgoi, the state owned company in charge of the mine, excavated one million tons of coal. In 2012 the company produced 2.5 million tons. By the end of 2012, the company had exported 2.5 million tons of coal. Erdenes Tavan Tolgoi is increasing production steadily each year and plans to produce 20 million tons a year by 2016.
The company plans to excavate six million tons of coal from the eastern block (tsankhi) this year. As of the Transparent Mining conference, the company has excavated 834,300 tons of coal and exported 372,000 tons from the eastern block. Erdenes Tavan Tolgoi plans to excavate 2.5 million tons of coal from the mine’s western block this year. At the moment, they have excavated 128,000 tons of coal.
Erdenes Tavan Tolgoi exports its coal to Chinese state owned steel manufacturer, CHALCO. The company pays its 350 million USD advance from CHALCO through coal shipments. As of the Transparent Mining conference, Erdenes Tavan Tolgoi owes more than 170 million USD to CHALCO. Starting from the third quarter of this year, Tavan Tolgoi coal rates to CHALCO will become 47 USD per ton, which means the company will ship 3.6 million tons in order to repay its debt to CHALCO. Officials stated that it was possible to repay the debt within the year.

Petroleum refinery to be operational by the first half of 2016

The Ministry reported that it plans to open a petroleum refinery by the first half of 2016, and has begun making all the necessary preparations. At the moment, plans and schemes for the project are being prepared in accordance to the Mining Ministry’s contract with Japan’s Toyo Engineering and Marubeni Corporation, which are cooperating on pre-feasibility studies.
The Ministry also reported that the environmental impact assessment has been made, and approved by the Ministry of Environment and Green Development on July 9. The Ministry is currently working to meet the standards of the Japanese International Cooperation Bank, which will provide funding for the petroleum refinery.
The Mining Ministry is planning to refine all the petroleum excavated from Mongolia in the refinery and it is holding meetings with China and Russia to arrange the raw material supply.

Petroleum import and export

The Mongolian government has approved 30 fields for oil exploration and 21 are currently conducting projects related to petroleum. On average, Mongolia produces around 18,017 barrels of petroleum, which is 2,411 tons, and exports 16,860 barrels, or 2,257 tons.
This year, Mongolia will produce and export 4,543,350 barrels (608,000 tons), and so far has produced 2,491,096 barrels (334,000 tons) and exported 2,364,052 barrels (317 tons) of petroleum. This puts Mongolia’s petroleum production completion at 54 percent and export completion at 52 percent.
The government keeps petroleum reserves in case of sudden fuel price fluctuation, insufficient supply and emergency situations. At the moment, the General Emergency Management Agency is keeping 12,700 tons of fuel in reserve. By July 23, the total reserves at private fuel importers totalled 100,000 tons, which is 42 days worth of supply.

Mongolia coal reserve one of the top ten in the world

The Ministry of Mining announced that during the Mineral Resource Specialized Council meeting of 2013, 81 reports of geological surveys were discussed.
According to the geological surveys, Mongolia has a total of 173.3 billion tons of coal in reserve. The surveys suggested that Mongolia had 21.5 billion tons of proven coal reserve, and by the first half of 2013, 2.6 billion tons will be added to the proven reserve, placing Mongolia among the top ten coal rich countries in the world.

Mongolia-China Coal Trade and Cooperation 2013 conference

The Mongolia-China Coal Trade and Cooperation 2013 conference took place on July 1 and 2 at Hohhot, China. The conference focused mainly on coal production, consumption, Mongolia-China coal trade direction, and trade development.
The following directions were given during the meeting of the two nations:
Firstly, to create a long term sustainable strategy and plan for both nations’ coal trade and cooperation, and form the necessary legal framework. During the meeting, transportation of coal through roads and railways, coal production capacity, and use of Chinese routes for sea outlets were discussed.
Secondly, direction was given to form a working group from the Ministry of Mining and Inner Mongolia to sort out Mongolia-China coal trade, cooperation on related customs, tax, investment, transportation, border ports and visa policies. Both parties agreed to increase the capacity of borders by using donations from China.

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