Interview
B. Dulguun: Electronic coal trading is piloted successfully
The government has approved a temporary regulation for the open electronic trade of coal for export. This will be effective until the “Law on Mineral Commodity Exchange” comes into force, i.e. until the end of June of this year. During this period, the government has assigned the electronic trading of coal through the Mongolian Stock Exchange, and the Financial Regulatory Commission has been tasked with overseeing electronic trading.
N.Tserenbat: The future of Oyu Tolgoi depends on well educated and skilled Mongolians
G.Iderkhangai, editor for The Mongolian Mining Journal, spoke with N.Tserenbat, CEO of Erdenes Oyu Tolgoi LLC.
The members of the working group shared their views on many issues, and some progress is being made
You were appointed by the Board of Directors of Erdenes Oyu Tolgoi LLC (1 October 2021) as the CEO of the company. In the subsequent eight months, shareholders have made a number of major decisions. As a result of the agreement reached between the government working group and the Temporary Committee on one side and the investors on the other side, the Oyu Tolgoi underground mine finally began production after 26 months. As the CEO of a state company that owns 34% of the Oyu Tolgoi project, how would you assess the work you have done in this short period?
B. Tsengel: It’s time to reform state-owned companies
G.Iderkhangai of The Mongolian Mining Journal, spoke to B. Tsengel, Director of the Government Agency for Policy Coordination on State Property and Regulation (PCSP), about current issues facing state-owned companies.
We will establish a unified reporting mechanism for state-owned and partial state-owned legal entities
No major changes have been made to the Law on State Property since its enactment in 1996. The law is expected to be changed. What principal changes will be made?
First of all, my greetings to the readers of your magazine. Since 1990, Mongolia has moved from a centrally planned to a market economy, allowing many forms of ownership. Subsequently,
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.
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.
“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.
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.
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.
N.Enkhbayar: Improving Mongolia’s technical expertise is the key to its development
MMJ spoke with the economist N.Enkhbayar about opportunities to expand Mongolia’s economy, global technology trends, and the implementation of major projects as well as the potential to attract foreign direct investment.
How do you see the current state of the Mongolian economy and foreign investment?
In 2010 Mongolia’s economy “rocketed”. At that time, foreign investment exceeded GDP by almost 110 percent. Currently, the foreign investment stands at $2.7 billion, that does not reach even 20 percent of the GDP. Our politicians consider the 5 to 6 percent annual economic growth reported by statistical indicators as good. For us researchers, this is a small number and is considered insignificant for a small economy to grow at this rate for 30 years.
D. Erdenechimeg: Legal reform will be a part of long-term development plan reflecting complex social, economic and environmental issues
In connection with the amendment to the Minerals Law, E. Odjargal talks to D. Erdenechimeg, Manager of the Governance Program, Open Society Forum, and a member of a sub-working group for the draft law, on regulations such as enforcement of Article 6.2 of the Constitution, licensing and local relations.
What is the status of the revision draft of the Minerals Law?
Last January, the Ministry of Mining and Heavy Industry (MMHI) established a working group to develop a draft law on bringing minerals laws into conformity with the Constitution. Two sub-working groups were established: one to provide policy guidelines for the team developing the revision draft of the Minerals Law, and the other to carry out a package of studies under the Law on Legislation.
“Poorly regulated artisanal mining benefits no one, pushes people into criminality”
Tugsbilegt spoke to Andre Xavier, Honorary Assistant Professor at the Norman B. Keevil Institute of Mining Engineering at the University of British Columbia, about a recent study titled “Assessment of the Social and Economic Impact of COVID-19 on Women Artisanal Miners in Zaamar Soum of Tuv Province in Mongolia”. What was the context of the project?
There are over 40 million artisanal miners globally, and with most of them forming vulnerable communities, the World Bank has been working in this area for many decades.
MSE BOSS SEES EXCITING TIMES AHEAD
Several factors are behind the MSE being so active since the beginning of the new year. Banks have lowered their interest rate on savings with them, thereby pushing citizens and companies to look for new places where their investments will earn better returns. Some of this money has been put into the stock market and this has kept us busy. Also, most commercial banks will become public ones, and this means a lot of preparatory work for us, but, of course, before they offer their shares to the general investor, their accounts and balance sheets have to be properly audited and their credit ratings done by international agencies.
BoM to continue financial support to gold miners
In 2020, the Bank of Mongolia (BoM) bought 23.6 tonnes of gold, 8.3 tonnes more than in the previous year, helping raise the country’s foreign exchange reserve to $4.5 billion, 4.2 percent more than what it was a year earlier. The amount of the difference is enough to meet import needs of the country for 11 months. P. Erdenetuya, Director of the Treasury Department at Mongolia’s central bank, tells L. Nomintsetseg more about how the BoM buys precious metals and how it plans to support gold mining.
“It would take more than just a year to mitigate the losses”
Talking to E. Odjargal before the lockdown in November, S. Bold, Senior Economist at the Asian Development Bank (ADB), comments on whether Mongolia needs a new wealth fund, and on the economic situation during and likely after the pandemic.
What do you think of the proposed national wealth fund?
Mongolia already has the necessary legal environment for proper management of its mineral resources revenue. What it needs is to pay more attention to see that the laws are followed and money actually goes into these savings funds and stays there. The Fiscal Stability Law was passed in 2010 to protect the state budget against fluctuations caused by mining “cycles” but in fact, an amount not lower than 5 percent of the GDP, mandated in the law as amended in 2017, has not been put into the Fiscal Stability Fund, let alone the 10 percent envisioned in the original.
“We would get the required amounts in time”
T.Munkhbayar, Executive Director of Erdenes Silver Resource LLC, tells G.Iderkhangai how his company, working with its own money, is moving towards fulfilling the responsibility given to it by the Government. He also clears up certain popular misconceptions about the deposit and its potential.
What are the main things your company has done so far?
Our company was set up in June, 2019 as a daughter company of the fully state-owned Erdenes Mongol Group to act in due course as a reliable source of revenue for the state budget. We self-finance our operations at the Salkhit silver and gold deposit, without any financial support from the Government. We have been organizing activities for our staff to improve their knowledge and skills so that mining operations can begin without delay and we can post profits before long.
“It is impossible to develop heavy industry without solving the issue of water”
G.Yondon has brought a lifetime’s experience of working in senior positions in the mining sector to his new charge as Minister of Mining and Heavy Industry. This gives him an insider’s understanding of the importance to properly develop the sector. The pandemic was a baptism of fire, and in this interview, he tells G. Iderkhangai about how things are improving, and about the policies that would direct the path the sector takes in both the short and the long terms.
“Corruption must be kept out of our wealth fund”
First, let us be clear about how much money we are talking about. Our economic size is $13 billion, and 30 percent of this comes from the mining sector. We have less than MNT1 trillion in the Future Heritage Fund, and the draft budget for 2021 estimates that another MNT1.2 trillion would go there. If the average fresh accumulation in it is MNT1 trillion every year, in 2030 the fund will have MNT10 trillion or $3.5 billion at today’s rate.
Now the government wants another and a new wealth fund, made up with profits from operating strategically important deposits. What it means is that part of the revenue from mining will go into the proposed fund and the other part to the Future Heritage Fund. We do not know how the revenue would be shared, but if it is a 50:50 split, then the Future Heritage Fund and the new fund will each get an estimated $1.7 billion.
