Investors would prepare better feasibility studies than the Government

N.Algaa, Executive Director of the Mongolian National Mining Association, tells MMJ that any decision on where the copper smelter will be can be taken only after comparing a number of feasibility studies and that the Government has no role in this very important exercise.

Parliament has resolved that Mongolia will have a copper smelter. Where should it be built?

A feasibility study is very important to decide on the location. It should take into account the economic aspects of smelting and also regional development and other issues. Speaking mainly as a technicaI person I mention some factors that have to be considered.

The process of copper smelting produces some byproducts. Some crystalline quartz is needed to dispose of the waste generated when the concentration is processed in the smelter. The deeper the copper is bound in the ore, the more quartz is required. Traditional technology gets the quartz from deposits of low grade gold. One major consideration for us is to determine where we find the quartz and how much it will cost to transport the quartz to the smelter.
Secondly, the smelting process involves heavy sulphuric dioxide emission. This is a very hazardous substance and has to be neutralizd by being separated into sulphuric acid and gypsum, used in construction. It can also be converted into sulphur, in yellow powder or capsule form.

The amount of byproducts will obviously increase as production rises. The sulphuric acid can be stored in tankers and sold. But it is very hazardous and corrosive and its transport in high quantities is correspondingly very risky. Even with special storage methods it will be difficult to sell it to Russia or China, the only two places where we can take it by train. And, remember that if 500,000 tonnes of concentration is processed, the emission will contain a huge quantity of sulphuric acid.  However if phosphorus is combined with sulphuric acid, we get superphosphate, widely used as fertilizer. There are phosphorus deposits in Burenkhan, Khuvsgul. Since superphosphate can be easily sold in both China and Russia, it will be more practical to have the smelter in Erdenet, where the phosphorus from Burenkhan can be brought easily. 

Are there quartz deposits near Erdenet?

There are. Low gold grade deposits of Bumbat in Zaamar have never been developed. There is the Nariin gold deposit also. There are quartz seams at places like Bornuur, Sujigtei and Narantolgoi, where usually ninjas work. All these are located near Burenkhan and if the smelter is built in Erdenet, both quartz and phosphorus will be easy to reach.

It will take billions of dollars to build a smelter. So is this factor being duly considered before we decide to have one in the proposed Sainshand industrial complex?

There is a lobby for building a smelter in Sainshand but it is not clear how the problems I have mentioned will be solved there. The feasibility study should review all these aspects in detail. It would be better to have several studies so that policy and decision makers can compare different opinions.

Almost half of the freight revenue earned by the railway comes from transporting copper concentrate from Erdenet. Will this not be drastically reduced when a smelter is built?

Of course, the railway will face difficulties, but why should we let that impinge on our need to have a smelter? The railway must learn to fend for itself instead of being kept dependent on carrying copper from Erdenet to stay healthy.  All businesses should make their independent plans to be profitable. How much burden can, or should, be thrust on Erdenet? At the moment, it consumes most of the electricity generated in the country, keeps the railway happy, and provides tax revenue for the state.

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