Recent news

• Mining is an eternal theme for mankind

  Among the guests at the ceremony held on 2 November to present the Local Mining Journalists Awards was P. Ochirbat, the first President of Mongolia after the transition from socialism. We give below a summary in his own words of what he told the awardees.  Specialised mining journalism was introduced in Mongolia by a talented woman, L. Bolormaa, when she founded the Mongolian Mining Journal. It published reports and features on Mongolian mining in Mongolian and English but apart from the contents, its appearance was also of international standards. The English section carried information on our mining sector throughout the world. Over the years this brainchild of L. Bolormaa has informed people about developments in the Mongolian mining industry, celebrated the fame of Mongolian miners and respected their hard work. That is true journalism.  
• Limelight on local journalists

  Over the last few years, The Mongolian Mining Journal and its affiliate Journalism for Development NGO have been working to enhance the capacity of journalists working in the provinces. On 2 November, a milestone was placed on that road to better journalism when the first “Local Mining Journalists Awards” were given away at a ceremony in Ulaanbaatar.  The happy occasion, culmination of months of hard work by both trainers and trainees, was inaugurated by Mongolia’s first President, P.Ochirbat, who is also a celebrated name in the country’s mining sector. In his brief but impassioned address (published elsewhere in this issue), he said human society would not have developed to its present stage, and would not develop further, without mining.  “Even with rapid digitalization, technology will always need minerals.
• Baganuur JSC E. Nominchuluun, CEO, writes: 

  Baganuur JSC has been operating for 41 years, since 1978. Its corporate culture as a state-owned company was formed in what now seems different times, but in 2014, in cooperation with GIZ, we prepared the Strategic Paper on Social Responsibility, which introduced fresh concepts. It is this document that provides the guidelines for the corporate social responsibility activities that we now follow.  When in 2018 Erdenes Mongol evaluated the progress and performance of the responsible mining system towards reaching five key goals, Baganuur’s rating was 39 percent. Considering that we had started on this only recently this was quite creditable, and since then we have improved our compliance with international standards and requirements.  
• The 8 who want to make Mongolian mining more responsible

  The “Join for Responsibility” campaign initiated by the Mongolian National Mining Association (MNMA) and implemented together with the Ministry of Mining and Heavy Industry received a big fillip last June when eight leading mining companies of the country signed a memorandum of understanding (MoU) on the Voluntary Code of Practice for Responsible Mining. MNMA expects its initiative to encourage mining companies to follow best practices and be “responsible” and now the move by their more successful peers is certain to popularize and strengthen the concept of responsible mining in both theory and practice.  The eight companies – Oyu Tolgoi, Erdenet Mining  Corporation, Monpolymet, Energy Resources, Aspire Mining represented by its subsidiary Khurgatai Khairkhan, SouthGobi Sands, Terra Energy and Baganuur
• “Human development comes before environment”

  N. Batbayar, Head of the Mining Inspection Department of the Specialized Inspection Agency, tells G. Iderkhangai that much of the present emphasis on responsible mining is misplaced. In any case, why should only mining companies be “responsible”?  Everybody wants to have more responsible mining in Mongolia.  With your work experience, do you think it is a realistic expectation?  I have always found it strange that responsibility should be demanded of only one sector. Only mining companies are expected to pursue transparent and responsible policies and activities. Should this not be applied to units in all sectors? Also, in general talk about responsibility in mining, the emphasis is always on the environment and relations with the government, and on exactly what has been given to the local community, but rarely is it considered what contribution mining has made to the economic prosperity of the country.
• Turquoise Hill sees Parliament resolution as “a positive step in the right direction”

  After a period of uncertainty, the Oyu Tolgoi underground project ends the year on a high note. Belying apprehensions, in late November the Mongolian Parliament gave an unconditional go-ahead to continuing with the work under the existing agreements – admittedly with the proviso that the Government must try to derive more benefit from them for Mongolia – and construction of shaft 2 -- the major shaft to transport underground ore to the surface – was complete. Ulf Quelmann, CEO of Turquoise Hill Resources, was present at the ceremony on 13 December to inaugurate operations of the shaft, and MMJ spoke to him on the state of the project and the mood of the investors.
• 2020 holds promise but beware of too big a State role 

  The year that is coming to a close has been a momentous one for Mongolia in that 19 years after its adoption, major amendments were made to the democratic constitution. Issues pertaining to mineral resources dominated the public discourse and rightly so, as mining continues to be our main industry. Since it contributes so much to the economy, it is only natural that political decisions affecting mining would be closely watched and debated.  2019 started with political instability with demands for the government to resign and the Speaker of Parliament to be dismissed. After about six weeks of uncertainty, a new Speaker took over and the Ministers for Transport and Education left the government. At the fag end of 2018 the government had asked the army to seize the licences of large deposits and the
• Royalties removed, revived

  When all royalties-related regulations in the Mineral Law were struck down mainly on a technical ground by the Constitutional Court on 30 October, the Finance Minister was in a fix as he did not know what impact this would have on his budgets for this year and the next. The Government was losing MNT4.6 billion per day from the day of the court order, directly affecting budget revenue this year, and making it uncertain where the projected income of MNT1.3 trillion from royalties in the 2020 budget would come from. A revised set of regulations, correcting the procedural lapse, could be put in place only on 22 November, and since they are to be applied with retrospective effect, the Minister must be smiling again.
• “Challenges are more opportunity than problem”

  Ben Chalmers, Senior Vice President of The Mining Association of Canada, was in Mongolia in September to spread awareness about the concept of TSM or Towards Sustainable Mining. B. Tugsbilegt finds out from him more about TSM, and how it would help mining meet stricter standards of emission reduction, water management and such environmental challenges. Reducing greenhouse gas emission is not yet a priority area of concern for Mongolian miners but this will surely change as the world gears for climate change. What are the things to which they should pay special attention? There can be no doubt that mining should pay attention to climate change. One way we can do this is to use a system like TSM to manage our energy usage effectively and to set emissions targets.
• Amendments lead to responsibility 

  The future will remember 14 November, 2019 as a momentous day in the history of post-transition Mongolia when the 64 members present in parliament unanimously voted for the first substantive changes to the Constitution since its adoption 20 years ago, thus concluding five months of public debate on ushering in a new era in public affairs.   The opposition, with a strength of 12 in the 76-member House, stayed away from the voting, but several of the amendments adopted had been proposed by it and the public perception of the overall amendment exercise is that it has been an act of national consensus. Nobody knows what the future holds, but for the moment, people are relieved that a prolonged period of uncertainty is over and that the important reforms would allow a government to “function in a more orderly manner”, in the words of the Speaker of Parliament.   
• “No exploration licence without prior local approval” 

  S. Purevsuren, a journalist with The Dundgoviin Amidral, talks to O. Bat-Erdene, Governor of Dundgovi aimag, on the current mining situation there, and how mining is benefiting the local community. Could you give us some current data on mining in Dundgovi aimag?  When the year began, there were altogether 213 licences registered, covering 783,000 hectares or 10.5 percent of the total territory of the aimag. Of these, 98 were for extraction, spread over 13 soums, and 115 for exploration, spread over 15 soums.   Of the 98 extraction licences, 30 are for fluorspar, 24 for coal in 7 deposits, 17 for gypsum in 3 deposits, 5 for construction materials, 7 for iron-zinc, 5 for gold, 2 for limestone and one each for nonferrous metal, graphite, lithium, and perlite. These are held by 74 entities, 40 of them domestically owned, 17 foreign and Mongolian joint ventures, and another 17 fully foreign invested. 
• “It is everybody’s silence that is making  the situation worse and worse” 

  B. Ulziibayar, Chairman of the Board of Directors of the Mongolian Association of Securities Dealers (MASD), answers questions from MMJ on Mongolia’s current economic situation, investment environment, future of the mining sector, the stock market, and other issues.  How do you see the current economic situation? Mongolia is not a rich country. We are a market economy and the demand for money being more than its supply, bank interest rates are high here. The demand can be met if money is poured into the economy, in the form of, say, loans and public funding. Receiving foreign investment also supports the economy in this.
• A matter of ownership

  Trained as a non-ferrous metal engineer and later earning a law degree, N. Algaa was first Executive Director and then President of the Mongolian National Mining Association, before joining Dat Consulting LLC as Executive Director. The Mongolian Mining Journal has interviewed him on several occasions, and we are happy that he will be writing a series of articles for us giving his analysis of and views on developments in the minerals sector. This is the first one and was written in August.
• The 2020 budget: Spending splurge but are we sure we have the money?

  Taking full advantage of the surge in mineral exports, the ruling Mongolian People’s Party has prepared the 2020 budget as a typical election year exercise, hoping to impress voters by generous public expenditure. No one should be surprised that all IMF warnings not to give in to electoral compulsions and pleadings to stick to a tight fiscal policy and improve fiscal discipline have been ignored.  The Finance Minister may well say that the budget shows a rise in revenue also and even if he spends more, at 5.1% of GDP the estimated deficit is still within acceptable limits.
• New ‘Coal in Asia’ segment to be launched at the 6th Mining Investment Asia 

  Coal is a dominant fuel in the rapidly growing economies of South East Asia even amidst a global move towards clean energy. Within the Asian region, India, China and Indonesia play major roles both as consumers and producers of coal. Hence, ‘Coal in Asia’ seeks to focus on what lies ahead for coal in the region and the key drivers for transformation. Major national and private coal mining companies are confirming their participation, with key stakeholders such as Indonesia Coal Mining Association (APBI-ICMA) already supporting this event.
• What was said at Discover Mongolia 2019 

  We give below some salient points in the speeches and presentations at the last Discover Mongolia, as compiled by E.Odjargal at the 17th session of the annual international conference, intended to spread information and awareness about Mongolian mining and attract foreign investment. G.Nandinjargal, State Secretary in the Ministry of Mining and Heavy Industry, who formally opened the event:  “The Government of Mongolia is working on creating a friendly, open and transparent legal environment for investors, ensuring economic stability and creating a system that would protect business interests. Despite the need to diversify the economy, mining will undoubtedly continue to be Mongolia’s leading industry in the next 20 to 30 years. At present, data is available on mineral resources in 20% of the total territory of Mongolia.
• Redpath uses its global experience to meet OT Underground challenge

  Redpath Mongolia is celebrating the completion of 15 years of presence in Mongolia. Its biggest responsibility here has been the lateral development of the Oyu Tolgoi underground mine, and Scott Hayne, Executive Director, tells MMJ about the challenges that have cropped up and how he is confident that the company’s wide experience will lead it to success, with the help of a skilled and motivated Mongolian workforce.  Your company is well known in the global mining industry. How important are your Oyu Tolgoi operations in terms of your total responsibilities? What are some other global projects that you now have?  Redpath is currently involved with over 90 projects globally, spanning 13 countries. Our employee base in Mongolia accounts for just over 15% of Redpath’s workforce worldwide.  
• Being on the grey list is a red signal to the economy

  As if we do not already have enough economic worries, comes the announcement on 18 October that The Financial Action Task Force (FATF) has identified Mongolia as a “jurisdiction with strategic AML/CFT (anti-money laundering/combating the financing of terrorism) deficiencies”, a move that is commonly called grey listing. FATF is an intergovernmental organization to develop policies to combat money laundering and terrorism financing.  Being on the grey list is not as bad as being blacklisted; the two can be compared to being shown a yellow card and a red  card respectively in a football match, and FATF did say Mongolia has already developed an action plan to address the most serious deficiencies and has shown high-level political commitment to it. But until we come off the list, it has the potential to pose serious challenges to our economic growth.
• “2021 would see significant expansion and diversification in the activities of Erdenes Mongol”

  P. Gankhuu, CEO of Erdenes Mongol, tells G. Iderkhangai why it is right to keep the company directly under the Prime Minister and how the proposed mineral wealth fund, managed on purely professional principles, will work for the benefit of all Mongolian citizens. How do you see the future of projects which are joint ventures between the Government and the private sector?  Erdenes Shivee Energy and Beren Group have established a joint venture company called Erdenes Steel in Dornogobi aimag, with the two sides owning equal share.  The Development Bank is the financial guarantor for Erdenes Shivee Energy in the project, which plans to annually produce 300,000 tonnes of cast iron. 
• Turning the Development Bank into a bank for development

  E.Odjargal talks to G.Amartuvshin of Development Bank of Mongolia, and finds that only months after taking over as Executive Director, he is putting in place big changes and envisions radically different ways for the institution to work more professionally, free of political control. What are your priorities at DBM?  There are three.  First, to improve the internal organization and governance practices. Regulations and lending procedures have been streamlined. DBM used to be criticized for delay in acting on loan requests from companies and, often enough, these could not even be traced. Now the entire process has been made more transparent. Second, the credit quality. Six cases of unpaid loans have been transferred to the prosecutor.