Olon Ovoo makes headlines once more
Last week’s news was the State Bank’s takeover of Khadgalamj Bank due to insolvency. The Head of Just Group, and major stakeholder of Khadgalamj Bank, Sh.Batkhuu told journalists in a press conference that his default on the bank’s loan was due to the fact that he was misinformed about the Olon Ovoo gold mine he purchased from Ts.Myanganbayar, director of Mongol Gazar.
Olon Ovoo has become a notorious mine in Mongolia, as three banks have now been bankrupted after financial involvement with the project. It is referred to in some circles as the “jinxed mine”. After every bankruptcy, the state took control of the banks; Anod Bank JSC in 2008, Zoos Bank JSC in 2009, and Khadgalamj bank last week.
We sat down with the Head of the Geology Department at the Mineral Resource Authority, D.Bold, to find out how the Olon Ovoo mine reserve was approved, and how the estimated reserve can be changed.
-It is said that it is common that during mine exploration, for the proven reserve of a mine to change. For instance, Mongolia’s estimated coal reserve has increased, placing the country among the top ten coal rich nations of the world. So how is a reserve approved and announced?
-Every nation has an organization or an agency registering all the reserves of its mineral resources. The Mongolian Mineral Resources Professional Council, adjacent to the Mineral Resource Authority, is responsible for registry of mineral resource reserves in Mongolia. The Mineral Resources Professional Council goes to the mine field in question to prove the reserve at the request of organizations. This information is made available to the public.
-Is it true, that the proven reserve of Olon Ovoo was false? How likely, or common, is it for proven reserves of mines to be false? Is it possible to increase the proven reserve to increase the value of the mine, or decrease it to evade tax?
- The Mineral Resources Professional Council has specialists and engineers dedicated to assessing the evaluations and reports. When the proven reserves of mines are false, these people are held accountable. As for the Olon Ovoo mine, I cannot say whether the proven reserve was false or not. It is possible to find out what the initial reserve amount was and how much excavation has been executed, but only if a request is made to do so. At the moment, no official request by an organization or an individual has been made to confirm the amount of reserve. There are instances when during a mining operation, the reserve estimation would increase.
-Have there been any complaints made regarding estimated reserves, other than Olon Ovoo?
-I don’t know whether such complaints were made before I took office. Since I got this job, I’ve received no complaints regarding reserve estimation.
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