Эрдсийг эрдэнэст
Ирээдүйг өндөр хөгжилд
Mining The Resources
Minding the future


S.Narantsogt, CEO of Erdenes Mongolia LLC, discussed strategically important initiatives, including the establishment of an industrial complex outlined in the medium-term strategic plans of the Erdenes Mongolia group. He also highlighted the investment agreement with the French state-owned company Orano Mining.

B. Ariunaa


One of the central goals of the government’s New is Revival Policy the rejuvenation of the industrial sector. Erdenes Mongolia’s strategic plan for the next four years outlines numerous strategies to accomplish this objective. Among these , a prominent is the establishment of industrial and technological parks across six different locations. Your presentation at the PDAC 2024 conference has captured the interest of investors. Could you please introduce this project for our readers?

As part of the industrial revival initiative, we plan to establish plants for production of value-added mining and agricultural products in stages.

• The copper processing complex. We plan to establish the Erdenet Industrial and Technology Park in Bayan-Undur and Jargalant soums of Orkhon aimag. This comprehensive park will include metallurgical, chemical, metal construction, and energy facilities aimed at manufacturing a range of products, including cathode copper, elemental sulfur, precious metals, copper products, and energy.

 • The steel production complex. The Darkhan Industrial and Technological Park will be constructed in Darkhan and Khongor soums of Darkhan-Uul aimag. The park will feature metallurgical plants aimed at manufacturing cast iron, steel billets, construction fittings, metal structures, and agricultural equipment spare parts.

• The Fluorspar processing complex. The Bor-Undur Industrial and Technological Park will be established in Bor-Undur soum of Khentii aimag. The park will feature fluorspar enrichment, processing, and chemical plants, focusing on the production of 97% fluorine concentrate, hydrogen fluoride, and aluminum f luoride.

• The coke chemical complex. As part of the medium-term business plan “A6-20” of Erdenes Tavantolgoi JSC, a coke chemical complex with capacity to process 30 million tons of coal per year will be established.

• The Coal Chemical Complex. The Baganuur Coal-Chemical Plant, designed to produce 0.5 million tons of methanol per year through coal gasification and synthesis, will be put into operation in its first stage

• The Construction Material Production Complex. The Khutul Industrial and Technology Park, set to be established in Saikhan soum of Selenge aimag, will manufacture cement, lime, and various building materials. Utilizing the infrastructure and resources of six major mining and beneficiation companies, facilities will be established both to produce raw materials and to process them into final products. The projects offer significant opportunities for the development and expansion of existing capabilities, and their feasibility has been thoroughly assessed. This is why they are prominently included in our company’s medium-term strategic plan.

Additionally, the 2024-2028 medium-term strategic plan of the Erdenes Mongolia Group clearly states: “Logistics centers that comprehensively solve the transportation, logistics, and storage infrastructure of raw materials and final products will be established at newly established Industrial Technology Parks, mines, industrial sites, and major commercial border crossing points”.

While the government aims to increase the private sector’s role in the economy, criticism persists that it is too involved in business, limiting opportunities for private enterprises. Can the projects outlined in your strategy address or mitigate this criticism?

The strategic plan reflects the involvement of both the government and the Erdenes Mongolia Group in the establishment of industrial and technological parks. By developing infrastructure in six designated locations, the plan aims to construct plants for mineral processing and the production of industrial raw materials.

The private sector will have the opportunity to engage in further processing and production of final products. Specifically, this entails private sector investment in providing reliable raw materials, establishing transportation and logistics systems, and developing infrastructure to support the plants to be built in the industrial technology park.

• The copper processing complex. We plan to establish the Erdenet Industrial and Technology Park in Bayan-Undur and Jargalant soums of Orkhon aimag. This comprehensive park will include metallurgical, chemical, metal construction, and energy facilities aimed at manufacturing a range of products, including cathode copper, elemental sulfur, precious metals, copper products, and energy.

Can it be understood that companies within the Erdenes Mongolia Group will create the fundamental conditions that facilitate the industrial development and attraction of investment?

In short, yes. We’re talking about not just implementing one project, but rather establishing a cluster where the public and private sectors collaborate to fully process mineral resources and manufacture final products.

Do the fundamental conditions necessary for successful project implementation exist?

Specifically, it can be inferred that several preconditions have been established. Firstly, Mongolia possesses abundant mineral resources available for processing and export. The mining sector constitutes over 90% of total exports. However, for decades, Mongolia has been exporting its minerals in raw form at very low prices, without undergoing primary processing. Consequently, Mongolia is unable to compete in the market and enhance the value of its mineral resources, as raw, unprocessed coal and ore are still exported directly from the mine site.

To increase the extraction and sale of minerals such as coal, copper, and iron ore, and to add value by selling them at higher prices, industrialization is imperative. Numerous successful cases demonstrate how economies have expanded through the development of enrichment and processing sectors, as well as chemical and metallurgical industries, leading to the creation of value-added products based on mineral resources. A recent example is the Inner Mongolia Autonomous Region in China, where industrial parks were established in major mining areas, facilitating rapid industrial development.

As a result, the GDP of this region increased 13-fold over 20 years. In 2002, it amounted to approximately $24 billion, and by 2022, it had surged to about $330 billion—an extraordinary achievement. The development of factories and workshops in the form of parks led to a significant increase in the share of the heavy industry sector in the GDP, soaring from $8 billion to $162 billion, marking a 20-fold increase.

We have the potential to follow a similar development path. Consider just one example: our country ranks among the top three in the world in terms of fluorspar reserves. However, we currently export over 600,000 tons of ore annually with a content of less than 60%, earning only $30-40 million. By establishing an Industrial and Technology Park in this region and enriching the aforementioned amount of ore to produce aluminum fluoride, we have the potential to earn over $150 million.

Secondly, it is crucial to develop the processing industry. Constructing an industrial technology park in a desolate valley lacking infrastructure or human resources may seem like a dream. However, within the six designated locations for our Industrial Technology Park, strategic deposits, urban areas, and major state-owned factories already exist. These locations, where infrastructure, labor force, and social infrastructure have reached a certain level of development, offer significant potential for further enhancement.

The timely implementation of surface water supply projects such as “Orkhon-Ongi” and “Kherlen-Toono” is crucial for safeguarding the ecology and promoting the development of heavy industry in the Gobi region. Mongolia must prioritize the execution of its surface water projects and consider restrictions on the use of underground water for industrial purposes in the future. Similar practices are already in place in China.

Thirdly, the legal and investment environment is well-established. In the past year, the Law on the Legal Status of Industrial Technology Parks underwent revision and received approval, offering specific support and tax incentives for their operation. Furthermore, Government Resolution No. 257 of 2023 established the Erdenes Industrial and Technology Park LLC to oversee the integrated management of industrial parks. However, there remains a need to further enhance the legal framework, drawing from the best practices and standards of other nations.

Last year, Erdenes Mongolia Group, in collaboration with Deloitte from the United States, conducted aerial geophysical research covering 10,000 hectares at the Asgat silver deposit. The report was presented during the PDAC-2024 conference, delivering positive news for the economy. Can I consider this as an outcome from the PDAC conference last year?

During last year’s PDAC conference, a Memorandum of Understanding was concluded between the US State Department and Mongolia’s Ministry of Mining and Heavy Industry, focusing on collaboration in the development and management of the mineral resources sector. As part of this agreement, funded by the US State Department, Deloitte and Erdenes Mongolia LLC collaborated on field research and aerial geophysical mapping at the Asgat silver deposit. Leveraging the findings, we are currently formulating proposals and recommendations for future exploration and research endeavors in the deposit.

If I understand correctly, the aerial geophysical survey was conducted by “Geosan” LLC, and the findings are currently being analyzed by the Deloitte team. Can you update on progress of the detailed additional study of the Asgat deposit?

During collaborative field research at the Asgat deposit, three zones of interest were identified, and the existence of the ore body was confirmed. Initial sample analysis suggests promising prospects for silver and copper deposits. The research f indings were presented at the recent PDAC-2024 conference, providing a significant catalyst for the development of detailed plans for future geological and exploration activities.

In general, attracting direct investment immediately after presenting projects at an international conference can be challenging. Cooperation typically requires multiple presentations, leveraging all available opportunities, and engaging through various channels. The ongoing research on the Asgat silver deposit serves as just one example of this process.


What is the progress of the Working Group’s efforts to finalize an investment agreement between the Government of Mongolia and the French state-owned company, “Orano Mining”?

The negotiations are progressing smoothly. The sub-working groups established by the Government of Mongolia have conducted 14 rounds of talks with investors, reaching mutual agreement on 50% of the total proposals submitted. Our approach adheres to Mongolia’s laws and the negotiation protocol signed in Paris, focusing on the fundamental principles of balancing the rights and interests of all parties involved.

Are you facing numerous challenges such as ensuring that each provision of the investment agreement meets the interests of our country and avoiding repeating the mistakes made with the Oyu Tolgoi project?

For us, finalizing an investment agreement in the uranium sector marks a new challenge and experience. While some countries have extensive experience in uranium joint ventures, this is new for our nation. Nevertheless, we are methodically addressing issues and hurdles, drawing lessons from the experiences of other countries. To safeguard our national interests, we are collaborating with international consulting firms specializing in economics, contracts, law, and environmental matters. the

The criticisms surrounding the Oyu Tolgoi agreement serve as a constant reminder of importance of approaching this Investment Agreement with seriousness and responsibility. As a result, we are prioritizing the establishment of a shared understanding with the investor, articulating our stance on every article and provision of the contract, and providing our comments and explanations accordingly.

 Investors are equally committed to addressing the matter earnestly. Achieving a shared understanding through this approach holds significance not only for obtaining approval of the Investment Agreement by the Government and Parliament but also for ensuring its stable implementation in the future. Consequently, reaching mutual agreement on crucial issues pertaining to the Investment Agreement and establishing common ground with the investor require considerable time and effort.

We experienced situations where Orano Mining unexpectedly altered clauses after all items had been agreed upon. In response, we promptly submitted requests for corrections in each instance.

This Investment Agreement will be concluded between the Government of Mongolia and the investors, and a company from the Erdenes Mongolia group will participate in its implementation.

How do international consultants assess the progress of negotiations?

After reviewing the recommendations from international consultants, it’s evident that our principles are sound, and we’re moving in the correct direction.

How are the economic benefits of the parties involved manifested in the investment agreement?

Uranium is a radioactive mineral, sparking debates about its risks to the environment, people, and animals. The project’s economic benefits are also important. For example, Mongolian stakeholders don’t have the power to negotiate changes to Mongolia’s tax laws or set up a different way to calculate mining royalties.

This is because altering the fundamental principles governed by tax laws could lead to adverse effects such as double impact on the interests of other investors and taxpayers, as well as potential serious negative consequences that may prompt a reevaluation of ongoing projects. Hence, reaching consensus on matters necessitating extensive negotiation and calculation takes time.


Erdenes Mongolia Group has signed a Memorandum of Understanding with South Korea’s Kum Yang company in the critical minerals sector. What is the group’s stance and future trajectory regarding exploration and research on rare earth minerals?

One of the key objectives of our collaborative strategy is to facilitate the exploration and utilization of rare earth elements while enhancing their value. Given Erdenes Mongolia LLC’s current emphasis on coal and copper mining and production, it’s essential to broaden our business scope and cultivate sustainable growth through a diversified financial strategy. The global demand for rare earth elements, lithium, and uranium—critical raw materials for electric vehicles, clean energy, and high technology, shaping the future-is consistently increasing. Hence, it’s imperative to formulate our future industrial development policy to address this significant demand.

The government is proactively engaging in collaborations with technologically advanced nations. During Prime Minister L. Oyun-Erden’s official visit to South Korea last year, both parties inked a Memorandum of Cooperation focusing on rare earth elements. As a preliminary step in this initiative, we f inalized a Memorandum of Understanding with South Korea’s Kum Yang LLC in January of this year, aimed at critical mineral research and human resource capacity development.

Moving forward, our aim is to enhance geological exploration and research through collaborations with technologically advanced countries, investors, and strategic partners. This effort is geared towards assessing the reserves of rare earth elements, lithium, and uranium-a pivotal objective outlined in the group’s medium-term strategy.

What are the future goals and plans of the group of state-owned enterprises possessing significant strategic deposits? Can governance stability be guaranteed?

There were times when Erdenes Mongolia experienced a lack of cohesive policy planning, insufficient coordination among companies, and weak governance. Since the beginning of last year, we have endeavored to integrate sound international practices into the governance systems of state-owned companies and promote collaborative planning rooted in business principles, independent from political influence. The newly appointed executive management team prioritized the task of defining the strategy. Over the past year, they have worked on defining the “roadmap” for state-owned mining companies to align with government policies cohesively.

Thank you for the interview.