New landmark rises on Southern Gobi
Towards the end of last year, an important event took place in the history of modern mining in Mongolia. It was the completion of a production shaft, one of the key infrastructure facilities of the Oyu Tolgoi Underground Project, with its headframe tower rising to the sky.
On the vast plains of Khanbogd, two distinct landmarks now catch our eye. First is Mt. Khanbogd, proud to be blessed by the sun. This sacred mountain, created by God, contains the best of minerals, and is also a storehouse of history and legends, a slice of human culture. God only knows how and when it was created and what it has seen since then. The second landmark, not far away from the sacred mountain, is the Oyu Tolgoi tower – built only recently by human intelligence and hard work. It looks mesmerizing, especially at dawn and dusk. I ask for your forgiveness for daring to compare these two “creations”, but, as it is said, there is always some connection between things.
Economy faces coronavirus challenge
We have often noted how the US-China “trade war” can, even if obliquely, affect Mongolia’s exports to its southern neighbour, but just when the two countries announced a truce in mid-January and raised hopes of smooth sailing in the new year, came news of an unexpected threat – the coronavirus. The infection from this virus, almost crippling life in China and threatening to spread worldwide, is endangering the global economy, and nearer home, Mongolia’s trade with its biggest and almost sole export destination.
S. Enkhtuya, CEO, writes:
That eight of the largest mining companies have come together to join the Voluntary Code of Responsible Mining has great importance in that this will enthuse other companies to join them in strengthening the case for responsible mining. It will also create pride among citizens working in mining as opening the way for raising the sector’s reputation in the public mind.
Khurgatai Khairkhan LLC
Z. Gan-Ochir, CEO, replies to questions sent by MMJ:
How does your company see the importance of joining the Voluntary Responsible Mining Code?
Mining is the main lever of Mongolia’s economic development. It accounts for one third of the state budget. If mining stops, not only will 60,000 people become unemployed, but also public services such as schools and hospitals will be seriously inconvenienced. Thus mining cannot be allowed to stop. That being the case, it is crucially important that the extractive industry operates with responsibility. This is why we are happy to be part of the Join for Responsibility initiative. We hope the campaign will go a long way in correctly explaining to the people the role and activities of the mining sector and thus giving it its deserved space in society.
The English contents of The Mongolian Mining Journal now available on MNB World
The Mongolian Mining Journal, the first journal in Mongolia to specialize in economic and mining topics, has signed a cooperation agreement with the Mongolian National Public Radio and Television (MNB)’s MNB World channel. Under this, the English-language contents of The Mongolian Mining Journal are now featured regularly in a programme on MNB World TV channel starting from January 2020, allowing the journal to add television viewers to its print and online readership. The editorial team at The Mongolian Mining Journal, popularly known as MMJ, has more than 11 years of experience in covering mining, economic and business topics.
Oyu Tolgoi LLC
Armando Torres, CEO, replies to questions sent by email:
Why do you consider the Memorandum of Understanding (MoU) on the Voluntary Code of Practice for Responsible Mining to be significant?
I believe this MoU lays out a strong foundation to promote best practices of responsible mining across the mining industry and streamline cooperation among major mining companies in Mongolia.
What is the next step for your company after signing the MoU?
We see it as an opportunity to share our best practices with our mining peers, broader stakeholders and the public and also to learn from others. Together with our partners of the MoU, we will support development of responsible mining in Mongolia by fostering a better understanding of what the industry needs to do in order to create mutual trust and shared responsibility for responsible mining in society.
Natural resources are for the people, not politics
Almost two months have passed since the Constitution was amended to include a provision mandating that profits from underground resources would be put into the National Wealth Fund to be distributed equally among the people of the country. The passage of the amendment was preceded by a prolonged period of debate, often acrimonious, on the exact words and terminology to be used but there was never any dispute that natural resources were state property and the results from their exploitation should be for the public good.
Ch. Munkhbat, President and CEO, talks to B.Tugsbilegt
Why did you think it was important to join the Voluntary Responsible Mining Code?
Studying the Mongolian National Mining Association initiative, we felt its implementation could lead to a significant reduction in irresponsible mining, developing responsible mining instead. We cannot continue with the kind of mining that only degrades the land by digging, or with how “ninjas” work. Eight of us working together can do a lot for responsible mining. The mining sector takes many risks as it is and cannot afford to have the public against it. It must consider the attitude of citizens in areas where there is mining.
We are the only coal company in Mongolia which is registered in two stock exchanges. Stock exchanges require a company to operate in a transparent manner and its reports and financial statements to be open to the public quarterly.
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.