By G.Iderkhangai
President Ts. Elbergdorj’s speech at the recent Economic Forum was marked by his concern that iron ore was being transported to China day and night. It would indeed be sad if we run out of the reserves when we finally set up the capacity to process iron ore. One is reminded of the Mongolian saying, “Putting on the coat after the rain is gone”.
The President’s concern was not new. Earlier, too, during a visit to Darkhan and Selenge aimags, he had discussed the unfortunate situation with citizens and assured them that the National Security Council would shortly discuss the matter. There is popular expectation that something will be done soon to arrest the growing control exercised over our national reserves by our southern neighbour.
The only way not to lose all our iron ore reserves to foreigners is for Mongolia to build a metallurgy complex as soon as possible. Three years ago the Government announced that one would be built at the heavy industry complex in Sainshand but there has been no real progress at all. Related ministries and agencies say they are conducting all kinds of studies and preparing plan documents. At this pace, there is reason to worry that the complex might not see the light of day before we run out of the reserves of this strategic mineral.
Parliament included several iron ore deposits in the list of strategically important mineral deposits in Mongolia that it prepared in 2007 but several other deposits, all owned by Chinese companies, were left out.
The largest iron ore deposit in Mongolia is at Bayangol in Selenge. The aimag authorities transferred the ownership of this 250-million-ton deposit to Dornii Gobi Company. Since then it has been traded a few times and now belongs to Bold Tumur Yuruu Gol Company. Today, their daily export to China amounts to100 trains of iron ore. The ore that is mined and sold is of the best grade. The company built its own 98-km railway to Dulaankhaan to meet its transport needs.
The Darkhan metallurgical plant owns the licence of the Selenge iron ore deposit, which has 230 million tons of reserves and is listed as a strategic deposit. Earlier, the licence was held by a little known Chinese company, BLT, which mined significant amounts of first-grade ore. However, the Darkhan plant does not have the resources to do any extraction work itself, so the mining at the deposit is done by several companies, all Mongolian and including Erdes Holding. Approximately 300 trains of ore are exported every day. Incidentally, BLT has sued the Government of Mongolia for cancelling its licence and an international court is expected to give its decision soon.
Altain Khuder exports through the Burgastai port the iron ore from Tayannuur deposit in Tseel soum, Umnugovi aimag, using 80-ton trucks for the purpose.
Fifteen of the 30 companies that own iron ore deposit licences are active and export to China. Export figures have increased dramatically in the last two years, to meet China’s seemingly insatiable hunger. The Darkhan plant exported 1.098 million tons in 2011, and hopes to raise this to 6 million tons this year. Bold TumurYuruuGol plans to export 8 million tons a year. With just two companies exporting 14 million tons of iron ore annually, for how much longer can Mongolia meet China’s demand?
Where to build There is no clarity on how much iron ore Mongolia has. Unconfirmed estimates put the reserve at 2 billion tons but the present confirmed amount is only 600 million tons. Of this, 450 million tons are in deposits in Darkhan and Selenge aimags, including Tumurtei, Khust-Uul, Bayangol and Tumurtolgoi deposits in two soums of Selenge, within 30-40 km of one another. Many feel proper utilisation of these mines should begin without delay, to earn revenue before the economic benefits from either Tavan Tolgoi or the Sainshand industrial complex start coming in.
However, transferring the licence of these deposits to the Darkhan Metallurgical Plant may not be a good idea. That plant can process only 100,000 tons of scrap metal a year and many feel it would be wrong and foolish to expect such a small plant to make the best use of several deposits.
A team from the Mongolian Mining Journal and Hugjil Studio visited the Darkhan plant to make an on-site study. Many of the senior managers were away on business, but we got to meet to M.Avirmed, Director of Industry and Technical Department, and asked him a few questions.
He told us the plant had been built to process scrap metals from ore mined at Tumurtei, Tumurtolgoi and Bayangol. A combination of uncertainties following the democratic revolution in the 1990s and technical difficulties at the same time affected the plant’s operation. Even with a capacity of 100,000 tons of iron, it could produce only 7,000-8,000 tons. When the Mineral Law was passed in 1997, the plant lost control of Tumurtei and Khust-Uul deposits which went into the hands of Chinese private companies. Things have recovered and the plant has begun to make profits following some technical upgrading. The greatest problem it faces today is lack of scrap metal. With scrap metal reserves exhausted, it has asked other companies to conduct exploration work in deposits under its licence.
The Tumurtolgoi deposit, which has 28 million tons of reserve, has been in use since 2009, while work on Tumurtei mine began last October. A wet processing plant built by China last year now makes it possible to process 1 million tons of iron ore from Tumurtei. This year’s target is to mine 5 million tons from Tumurtei and dry process it. There is also a plan to use new technology to extract metal from its ore by smelting. Mr Avirmed was confident that by 2015, they would not be using scrap metals, but would annually produce up to 180,000 tons of iron from extracted ore. The price of pure ore is usually 2-3 times higher than that of the dry processed kind.
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By G.Iderkhangai