Recent news

• ‘Revenge’ of Oil

  Oil’s position is getting stronger despite the green transition. We thought that cheap oil would gradually work itself out of the global energy market through green policies, and decreased revenue for oil producers would follow. But the reverse is currently the case. Oil is regarded as a dirty fuel, and the enemy of nature due to its impact on climate change.  But now, its positioning looks very attractive. All countries are eager for oil. It is quite certain that only sufficient oil will ease global inflation. Major oil producers are now key global actors.  The EU’s determination to reverse dependence on Russian fossil fuels (oil, gas, and coal) is only exacerbating these circumstances. Currently, the EU is discussing its sixth package of economic sanctions against Russia. However, they are divided on whether a total embargo on oil will happen despite announcing the ‘RepowerEU’ plan to entirely cut Russian energy imports within five years. i.e. by 2027.
• A. BILGUUN: BUILDING AN INDUSTRIAL-SCALE GOLD SECTOR WITH MINIMUM ENVIRONMENTAL IMPACT BY USING HARD-ROCK DEPOSITS

  Gold exports have risen sharply in the last two years and reached more than a billion dollars. Gold exports are expected to get a big share in total exports again this year, offsetting the inevitable decline in exports of coal and other minerals. B. Tugsbilegt, reporter of MMJ, talked to A.Bilguun, Vice President for Business Development of Erdene Resource  Development Corporation, about what Mongolia should pay attention to support the gold sector in the future. Global gold prices are rising. Do you think the high prices would have a positive effect on the Mongolian economy? What can a country like Mongolia, seeking economic recovery, do to take full advantage of favorable market conditions? The recent rise in gold prices is unlikely to have a positive effect on Mongolia. First, the rising gold prices mean high inflation around the world. For Mongolia, which imports most of its consumer goods, this is affecting costs.
• STATE-OWNED COMPANIES WILL COMPLETELY CHANGE

  The Ministry of Finance and the Government Agency for Policy Coordination on State Property and Regulation (GAPCSP) are very busy with frequent visits to Erdenet and Darkhan. After the Khutul’s “Cement and Lime” plant was taken over by the state, the government renewed the charter of Erdenes Mongol company and terminated the concession agreement with QMC of the Darkhan Metallurgical Plant. The new management team of Khutul’s “Cement and Lime” State Joint Stock Company promised to launch an IPO in 2023 and turn the company into a listed, publicly controlled and open joint stock company. Before that, the company needs to finish paying all taxes to the government. However, the Darkhan Metallurgical Plant, which wasn’t able to build a mining and metallurgical complex for eight years, is now owned by the state, along with the strategically important Tumurtei, Tumurt-Ovoo and Khustai deposits.
• J.Zoljargal:  Rising energy prices will expand Mongolia’s coal potential

  Even though the price of coal is reaching its peak in the international market and drives the growth of our country’s exports, there are still delays to process shipments at the border due to the pandemic. At the same time, a number of Mongolia’s commodity export railways are being finished. Journalist from MMJ, B.Tugsbilegt, spoke with J. Zoljargal, the Executive Director of the Mongolian Coal Association. Rising coal prices show that there is great opportunity, but Mongolia’s coal exports are still declining. In the first two months of the year, coal exports were 3 million tonnes less than in the same period last year. At the time of the mining boom, there was speculation that our country would reach the level of Canada and Australia. The difference is that they have a market with multiple direct access routes to the sea, whereas our market is very small and has a very poor logistics system.
• Joint ‘starving game’

  The West is set to refuse Russian cheap, high quality commodities. And Russia thirsts for western materials. This is a game of ‘let’s starve together’. When a small economy is hit by sanctions from a big economy, the small economy is usually expected to compromise. But when there are sanctions between bigger economies, mutual retaliation aggravates the situation.  There is no sign of any joint compromise between our northern neighbor and western parties. These hard days are indicating the bleak outlook for this and coming years.
• An independent law is needed for developing the extractive industry report

  The Mongolia’s Extractive Industries Transparency Initiative (EITI) 2020 report has been released. Due to the pandemic in 2020, the report was based only on 60 companies engaged in gold, copper and coal production. This is the 15th report prepared by Mongolia since joining the initiative. Grant Thornton Audit LLC was appointed as the Independent Administrator for the report. The company prepared a reconciliation report of the material payments made by companies to the Government in 2020 and the revenue stream received by the Government in accordance with the EITI 2020 standards between 6 August 2021 and 25 November 2021.
• “We will be working to promote Canadian Green Mining solutions and initiatives in Mongolia”

  The global mining sector feels that it has to make ‘green transition’ more rapidly despite the world economy is suffering difficulties due to the pandemic. Canada is regarded as one of the best players in terms of sustainable mining. MMJ’s B. Tugsbilegt talks to Catherine E. Ivkoff, Ambassador of Canada to Mongolia, about the two countries’ cooperation opportunities in the green mining field and other issues.  Could you please introduce yourself briefly to our readers at the beginning of our interview? Thank you for inviting me to this interview. I am pleased to talk with you. I arrived in Mongolia in December 2019 to begin my assignment as Ambassador of Canada.
• G.Yondon: Mining license holders will bear greater responsibility

  Interview with G.Yondon, Minister of Mining and Heavy Industry, on the development of the mining sector, changes in legislation, mining industry outlook, transportation and logistics issues in 2022. This year marks the 100th anniversary of the mining industry in Mongolia, with a lot of associated work. The mining sector has a big goal to move from just mining to also processing.  Discussion on draft laws to create a new legal framework have been continuing for a long time. If the draft laws are approved, what changes will take place in this sector? The transition to a new social and economic system was not easy, but as a result of successful  implementation of long- and short-term programs to develop the geological and mining sector, this now generates more than 20% of GDP, 70% of industrial output, more than 90% of export earnings, about 80% of foreign direct investment, and about 30% of state budget revenue.
• Further development of mining depends on exploration

  Any changes related to the issuance of mineral licenses has a positive or negative impact on the development of the mining sector. Under the 1997 Minerals Law, whoever applied first obtained a license. In addition, the license was revoked on only three grounds, and there were no restrictions on transferring or using licenses as collateral. Some industry experts argued that the 1997 law on licensing was the most liberal, transparent, and well-protected in terms of ownership rights. Between 1997 and 2004 when this law was effective, about 6,000 exploration licenses were issued for 40% of Mongolia’s territory, and exploration activities took off.
• AT WHAT STAGE IS THE “BILLION TREE” NATIONAL MOVEMENT?

  Mongolia has announced a national campaign to plant “Billion Trees” as part of a global green revolution to combat global warming and reduce the impact of climate change. President U.Khurelsukh announced at the 76th session of the UN General Assembly in September last year to the heads of state and government of 83 countries that  “Mongolia launched a movement to plant billion trees by 2030 to address global climate change”. This statement by the President was received by Mongolians in two ways. Some people supported it by saying “It’s a timely decision because about 80% of our land is affected by desertification.” Some criticized: “it’s impossible to achieve it, there is no research, no analysis”. 
• Mongolian mining poised  for big changes as it enters its second century 

  The mining sector is preparing to celebrate its centenary this year, as it was on 25th December 1922 that the People’s Government had decided to nationalize the Nalaikh coal mine.  The last thirty of these 100 years have been epoch-shaping. This followed Mongolia’s transition to a market economy which led to the privatization of state property and emergence of private companies. However, Mongolia did not have sufficient domestic resources to invest in this capital-intensive industry. So, it had no choice but to create an investment-friendly environment, and seek foreign investment. Most of Mongolia’s   foreign investment has been made in the mining sector. As N. Algaa wrote in his book “Will Mongolian Mining Sector Retreat or Move Forward”, geological expeditions, and a few wolfram and tin mines owned by the state were privatized. However, gold mines were excluded from the privatization list.
• S. Batbold: Despite the pandemic, our transport and logistics sector has continued to advance

  Future road and railway development projects must include road crossings and passes for wildlife, and ensure collaboration between road engineers and wildlife experts to develop the right solutions and determine optimal locations.
• Establishing a wealth fund with Erdenes Mongol’s dividends

  Erdenes Mongol is officially en route to becoming a wealth fund, as the Government seeks to get the Parliament to approve its draft Law on the National Wealth Fund. While the full draft law has not yet been made public, the main issues that it covers were presented. In the past, there have been questions around how Erdenes Mongol could be transformed into a wealth fund and whether this would increase the financial burden in the mining sector. It has become clear from the statement of O.Batnairamdal, Deputy Minister of Mining and Heavy Industry,  that the creation of this new wealth fund will not put additional financial burdens on the mining sector. Under the draft law, Erdenes Mongol will also undergo a structural change.
• A plan to transform Erdenes Mongol LLC into the Development Fund

  ​​​​​​​The Ministry of Mining and Heavy Industry is planning to draft, for government discussion, a law on the National Wealth Fund, for parliamentary approval before the end of 2021. The establishment of the Wealth Fund has been under discussion since 2008 and has intensified since the constitutional amendment came into effect in May 2020.
• 2021 was the year of successful infrastructure projects

  Mongolia’s mining sector is entering the new year, overcoming many challenges caused by the COVID-19 pandemic. Repeated quarantines and border closures slowed down many ongoing and new projects and put them at risk. However, the government and relevant ministries took a number of important steps to address these issues.
• Negotiations succeed to agree the railway border crossing point

  For a landlocked country, railways are a most important strategic infrastructure to export minerals. At the Cabinet meeting on 17 November 2021, the point of intersection of Gashuunsukhait-Gantsmod railway was determined. MMJ spoke to N. Udaanjargal, CEO of Tavan Tolgoi Railway LLC on the long-awaited agreement and the construction of the railway.
• We need to look at the benefits of dynamic growth to be effective in the future

  The negotiations are, indeed, slow going over more than ten months, but the scope and content of the project are big. Thus, this could take anywhere between 1-2 years. From my perspective, the negotiations are running relatively effectively since the parties have exchanged proposals several times during this period.
• Metadata in the Mining Industry

  Metadata are data about data. However, if you challenge the conventional explanation of metadata, it is probably more like a room key. If this piece of metal is lying on the street, there is a good chance it will end up in the garbage or in the sewer system. However, if someone happens to pick it up and has a clue about where the key is from and who owns it, it can be more easily located. Most modern digital cameras export a fairly large amount of metadata such as manufacturer and model, exposure and resolution, date and time, and GPS, as soon as you click the shutter button. These types of metadata hardly cause any harm or benefit when floating in the background.
• N. Tavinbekh: Full domestic energy self-reliance is a main target

  Energy sector has been experiencing years of hardship. Of course, Covid-19 has affected the energy sector. It has been a while since the government decided to zero out electricity and heating tariffs in order to boost the economy. This decision had an impact on energy sector load. How is the energy load now?  Mongolian energy consumption grows at about 4-6 percent per annum. In 2020, total electricity and energy consumption was 8,850.50 million kW/h.  Domestic production from power plants, renewable sources and diesel power plant accounted for 80.7 percent and the remaining 19.3 was imported.
• Green economy and green energy:  much more to do

  Alongside the COVID-19 pandemic, the energy crisis has begun to affect the world. By October, gas prices in Europe had increased fivefold due to supply shortages. Oil supply shortages have also followed. The current instability of world’s economies is largely due to the pandemic, but there are many other contributory factors. At the heart of the crisis lies the challenge of reducing greenhouse gas emissions while ensuring a reliable supply of energy. Countries have imposed several short and long quarantines over the past two years to prevent infection spread.  A consequence has been disruption of business relations between countries and reductions in production which, in turn reduced energy consumption.