Mongolia offers one of the world’s true long term mining opportunities for Canadian Mining Suppliers with a stable democracy, and limited internal capacity for supporting its industry growth. The just signed Oyu Tolgoi underground mine project is looking for 2,000 suppliers to carry out the development program to spend $USD 1B each year over the next 5 years.
Mining Sector Overview 2015
- There are over 8,000 individual deposits in Mongolia, containing a wealth of over 440 different minerals. Of these, around 600 deposits and outcrops have been fully explored and their extent determined.
- These include over 180 gold deposits, 5 copper and molybdenum deposits, a lead deposit, 5 tin deposits, 10 steel iron deposits, 4 silver deposits, 42 deposits of brown and coking coal, 42 fluorspar deposits, 12 salt and 10 sodium sulphate deposits, 6 semi-precious stone deposits, 9 crystal deposits and over 200 deposits of minerals used in production of construction materials, as well as a wealth of rare-earth metals.
- Over 200 deposits are already being exploited. The vast majority of currently active individual mining operations are in gold deposits, with copper, coal, salt and other minerals making up the remainder.
- Mining is central to Mongolia’s economic ambitions with the giant Oyu Tolgoi mine run by Rio Tinto making up 44 percent of the country’s exports.
- Mongolia is ranked second in the world in terms of copper reserves, with the Oyu Tolgoi copper deposit and the Erdenet mine.
- The Erdenet copper mine, 1978, producing nearly 24 million tons per year with reserves r up to 40 years. This mine is 51% owned by the Mongolian Government and 49% by the Russian Government.
- Mongolia is the largest exporter of coal to China, surpassing Australia and taking 34% of total share by volume in total Chinese coking coal imports. Coal has become a key export commodity in recent years, taking the lead from copper in terms of Mongolia’s biggest export.
- Mongolia has recently taken a number of steps to demonstrate its commitment towards developing its resources, including the introduction of a new Foreign investment law, a reduction of gold royalties to 2.5%, and an end to a moratorium on giving out new licenses.
Oyu Tolgoi Mining Opportunity
In October 2009 the Government of Mongolia, Ivanhoe Mines and Rio Tinto, reached a joint investment and development agreement for the Oyu Tolgoi copper and gold deposit beginning operations at the end of 2012. After almost 6 years in the making, the deal represented a landmark moment for investment in Mongolia. The open-pit mine at Oyu Tolgoi has been in operation since 2013 and produces around 200,000 tonnes of copper a year.
An announcement just released by Rio Tinto, Government of Mongolia and Turquoise Hill Resources. Oyu Tolgoi is 66pc owned by Turquoise Hills, which is 51pc owned by Rio Tinto, the mine’s operator. The remaining 34pc of the mine is owned by the Government of Mongolia.
The Oyu Tolgoi mine will be the sector’s key growth driver and account for around one-third of Mongolia’s economy once the mine reaches full production capacity in 2021.
CEO in waiting Jean-Sebastian Jacques hailed the project as truly global with involvement of numerous international parties akin to the UN. "Long-term copper fundamentals remain strong and production from the Oyu Tolgoi underground will commence at a time when copper markets are expected to face a structural deficit."
Twenty international banks and financial institutions have agreed to provide financing of $USD 4.4B. The project will spend $USD 5.5B. The UG development has spent $500M to date Oyu Tolgoi will be the world’s largest and foremost gold and copper mine.
UG copper content is three times higher than the open pit at 1.66 %. The UG mine will produce 5,000,000 tonnes of copper concentrate when in production. Will become one of the 5 largest copper mines in the world with a life expectancy of more than 75 years.
- The latest production technologies are being considered
- Domestic companies are preparing supply standards and plans looking for international partners
- Safety systems training and skills development according to global standards is critical to success
- A focus is on women as part of the workforce
- Considerable spending is in the area of transportation related expenses such as fuel and tires
- An additional 200 kms of tunnel will be built to a depth of 1,300 meters
- Five vertical shafts: 1,385m, 1,166m and 208 meters
- Two horizontal shafts are planned each 7.5 kms long and 35m apart
- An ore conveyor will be built in one of the horizontal shafts
- Construction of the UG tunnels will take 5-7 years
- A railway, road and air connections and a power plant are critical developments
- The Innovation Council of Mongolia, Inner Mongolia Entrepreneurs, University of Mongolia and local businesses are interested in partnering with Canadian companies and institutions
- The Ministry of Mining and a consortium of Canadian organizations and companies has signed a cooperation agreement to “strengthen capacity and organize training from 2016-2022
Benchmarking of Coal Reserves (Billion Tonnes)
Benchmarking of Copper Reserves (Billion Tonnes)
List of Strategic Mining Developments
|Deposit Name||Minerals||Location||Resources Present|
|Asgat||Silver||Bayan-Ulgii, Nogoonnuur||6402.6 thousand tons (351.09 g/ton Ag)|
|Boroo||Gold||Selenge, Bayangol||24.523 thousand tons of 1.6 g/ton Au|
|Baganuur||Brown Coal||Ulaanbaatar, Baganuur||600m tons|
|Burenkhaan||Phosphate||Khovsgol, Alag-Erdene||192.24m tons|
|Dornod||Uranium||Dornod, Dashbalbar||10 560 thous. tons|
|Erdenet||Copper Molybdenum||Orkhon, Bayan-Undur||1200m tons of 0.51% Cu, 0.012% Mo|
|Gurvanbulag||Uranium||Dornod, Dashbalbar||16467 thousand tons of 0.175% U308|
|Mardai||Uranium||Dornod, Dashbalbar||924.6 thousand tons of 0.119% U308|
|Nariin Sukhait||Coal||South Gobi, Gurvantes||125.5m tons|
|Oyu Tolgoi||Copper molybdenum||Dorngovi, Mandakh||10.63m tons oxide of 0.32% Cu, 0.011% Mo and 241.1m tons of sulfate of 0.53% Cu, 0.018% Mo|
|Shivee Ovoo||Brown Coal||Govisumber, Shiveegoi||646.2m tons|
|Tavan Tolgoi||Stone Coal||South Gobi, Tsogttsetsii||6420m tons|
|Tsagann Suvarga||Copper Molybdenum||Dornod, Mandakh||10.64m tons of oxide of 0.42% Cu, 0.011% Mo. 240.1m tons of sulfate|
|Tumortoi||Iron Ore||Selenge, Khuder||229.3 m tons of 51.15% Fe|
|Tumurtein Ovoo||Zinc, Lead||Sukhbaatar, Sukhbaatar||7689.4 thousand tons of 11.5% Zinc|
- The mine has faced criticism from environmental groups because of its high water needs in what is one of the driest regions in the world. Lack of infrastructure
- Low per capita income
- Insufficiently developed regulatory frameworks and institutional constraints
- Limited access to financing
- Skills shortages
- Calls for greater resource nationalism
- Anti-foreign investor sentiment amongst the public
- Mongolia Wikipedia
- Canadian Embassy
- Mongolian Government
- Mongolian National Mining Association
- Mineral Resources Authority Mongolia
- Mongolian Chamber of Commerce
- Business Council of Mongolia
- Oyu Tolgoi LLC
- Mongolian Exporters Association
- Asian Development Bank
- Khan Bank
- Mongolian Opportunities Partners