U.Borchuluun, Director of Geology and Research Department, Mineral Resource Authority and member of the Mineral Resource Council, tells G.Iderkhangai there should be no controversy on the Tavan Tolgoi reserves. Why is there no clarity on the Tavan Tolgoi reserves? There are indeed many who have reservations about the generally accepted notion that Tavan Tolgoi has 6.4 billion tons of reserves. It has been a long controversy and many professionals have been engaged in it. There are a number of survey reports, as also both preliminary and detailed exploration reports of work on many areas in each of the three parts: the Tsankh, Ukhaa Khudag, and Bortolgoi. Their estimates vary. The Russian Giproshaht Institute prepared a feasibility study of the Tavan Tolgoi deposit in 1989-1990 based on previous evaluations and estimates and put the total reserves at 6.4 billion tons. This is what was entered into the state registration.
However, reserves estimation methods have changed, and now we also need to classify the reserves. There would be two basic categories, one that is ready to be mined and the other that needs additional exploration. These are sometimes called balance or non-balance reserves. When added, these two make up 6.4 billion tons. The economic cooperation council headed by Moscow at the end of the 1980s wanted mining in Tavan Tolgoi to start without delay and so declared it was a ready deposit and there was no need for any further studies. However, there should be more drilling and other geological efforts to upgrade the reserves of Tavan Tolgoi into the Production category. Some has already been done.
Have detailed studies been made in the Tsankh area?
Yes, detailed studies found production category reserves and also proven reserve of A and B categories. Mining can start there as soon as a feasibility study is made. Reserves estimates usually rise as mining proceeds.
What did Norwest find? Norwest is a well-known Canadian-American company and was hired by Energy Resources LLC in the beginning of 2000 when it held the Tavan Tolgoi licence. Norwest concluded that the reserves could reach 7 billion tons by JORC and so the figure of 6.4 billion tons was very much acceptable. This should settle the issue. What we still need before starting mining the Tsankh is a fresh feasibility study as both the economic and operational costs have changed.
Has the Mineral Resource Council discussed the Tavan Tolgoi reserves issue?
Some time ago, Erdenes MGL submitted a feasibility study of the eastern Tsankh but the Council found the material it contained did not meet the requirements for approval. The deposit has been or will be exploited in 2-3 different parts and one has to be very clear on what area has what reserves, how much of that are ready reserves etc. For example, mining started in Ukhaa Khudag only after a feasibility study was made of Ukhaa Khudag exclusively. The Council wants a similarly clearly demarcated feasibility study before approving it.
It should be also be clarified how much the respective reserves of Daitsuki LLC and the “Small” Tavan Tolgoi LC are. The Council wants that information from Erdenes MGL. We hope Erdenes MGL would submit before long a revised study setting out reserves estimates as per the guidelines from the Mineral Resource Council.
Operations should begin as soon as possible. Even if it starts on a small scale, it will over time become a very project, mining 15-20 million tons of coal per annum, and with processing and many other plants. We need a well-done feasibility study, use of modern technology at all levels, and proper infrastructure.