MONGOLIA TO BUILD THE WORLD'S FIFTH LARGEST URANIUM MINING PLANT

A.Khaliun

On January 17, the Government of Mongolia signed and ratified an investment agreement with the French company Orano Mining. This isa major milestone in the development of the country's uranium sector. It paves the way for the launch of a large-scale uranium project operated by Badrakh Energy LLC, a Mongolian- French joint venture.

The Mongolian government developed its own financial model based on the internationally recognized FAST standard and used it to independently verify the investor's financial projections. Following this validation, the final agreement ensures that Mongolia will receive no less than 51% of the direct economic benefits from extraction of the strategic uranium deposit each year.

In recent years, the European Union has reached consensus that nuclear energy plays a central role in reducing greenhouse gas emissions and combating climate change. In 2022, the EU officially classified nuclear energy as a form of green energy. As a result, global demand for uranium has continued to rise. In 2017, one pound of uranium was priced at $17; today, that figure has surged to $70.

How have things progressed in the three months since Mongolia signed its second- largest investment agreement-after Oyu Tolgoi-with a key "third neighbor"? To find out, we spoke with D. Dalaijargal, Executive Director of the state-owned Mon-Atom LLC, the government's implementing agency for the project.

It has been a few months since the investment agreement was signed. What progress has been made so far, and what is the current focus of your work?

According to the investment agreement, uranium mining is scheduled to begin in the first quarter of 2028, with an annual production capacity of 2,500 tons. This will establish Mongolia as the site of the world's fifth-largest uranium mining facility. The project is also expected to create approximately 1,600 new jobs.

To support construction of the uranium plant, a 100-kilometer power line and 160 kilometers of improved road infrastructure will be developed, along with an expansion of the Zuunbayan railway. Additionally, a new residential area will be established in Zuunbayan soum, where approximately 700 workers will live and operate during the early phase of the project.

To initiate these developments, international open tender has an been announced, with the selection process expected to be completed by June- July. Prominent Mongolian companies such as Bodi Group and MCS Group have expressed interest in participating. Furthermore, subcontracting tenders worth approximately $600 million are planned to be announced in Mongolia over the next two to three years.

Has Mongolia conducted a new evaluation of its uranium reserves?

During the socialist era, Soviet researchers estimated that Mongolia's uranium reserves totaled around 1 million tons. However, this figure still requires further study and confirmation.

Uranium is a natural resource, much like gold, copper, and coal, but its distribution is more limited. In fact, only 15 countries worldwide have been identified as having significant uranium deposits.

Uranium is, first and foremost, a radioactive mineral. Additionally, it serves as a key fuel for nuclear energy, which is why governments typically keep it under their control.

The French Orano Mining Group is 90% owned by the state.

Uranium is extracted using advanced technology, which is controlled by only seven countries worldwide. Naturally, uranium exists in the form of sand, but its value increases significantly once it is enriched and transformed into fuel for nuclear power plants. The five permanent members of the UN Security Council- Russia, China, the United Kingdom, France, and the United States are the nations that possess uranium enrichment technology.

France plans to process and enrich the yellowcake extracted from Mongolia into nuclear fuel, which will then be converted into energy and supplied to eight neighboring countries-namely the UK, Germany, Italy, Spain, Switzerland, Luxembourg, and Belgium. Similar to how Mongolia receives energy from Russia during peak evening shortages, other countries also rely on France for energy For instance, the UK obtains 20% of its energy, and Germany gets 30% of theirs from France.

How will France transport the yellowcake extracted from Mongolia?

The yellowcake will be shipped to France via China. With over 50 nuclear power plants currently under construction in China, an agreement will be made between France and China for the transportation of the product. A certain percentage of the yellowcake will be allocated to China as part of the agreement between the two countries. Since yellowcake is compact in size, the logistics of transport will be relatively straightforward.

If Mongolia had a nuclear power plant, the amount of yellowcake needed to provide energy for one year would be equivalent to one small truckload. Remarkably, just 1 kg of enriched uranium can produce the same amount of energy as 14 tons of coal. Uranium is an incredibly high-energy product. However, Mongolia will focus solely on mining and exporting primary raw materials, rather than processing them domestically.

In order to conduct a project feasibility study, uranium was extracted in Mongolia. Has the extracted yellowcake been exported?

In accordance with our legislation, product samples were required for the feasibility study. Between July 2020 and March 2022, 10 tons of uranium were mined for this purpose. These 10 tons have not been exported and remain in Mongolia.

What kind of waste is generated during the extraction of uranium, and how is it neutralized?

The primary waste generated during the extraction of uranium consists of items like gloves, masks, containers, packages, plastic bags, and barrels used in the process. There are specific protocols for properly disposing of and neutralizing these materials, including safe destruction and incineration. No other significant waste is produced during the extraction process.

Mongolia has a Law on Waste. The waste generated from uranium mining is classified similarly to other mining waste. In Mongolia, there are numerous types of waste, which are categorized into hazardous and non- hazardous. Hazardous waste includes materials such as fuels, lubricants, rubber tires, batteries, accumulators, and their fluids, among others.

The French side has allocated $60 million for waste disposal over the next 30 years. During the contract negotiations, we didn't just discuss waste disposal from the plant with the investors. We proposed building a waste processing plant to address waste management issues in Ulaanbaatar. The estimated budget for this project is around $30 million. This is a long-term solution that Mongolia will benefit from in the future.

Besides the joint project with France, what other projects are being discussed in the uranium sector?

The Russian company "Rosatom" has submitted an application to mine the Mardai deposit in Dornod aimag, which was utilized during the socialist era. The Mardai area consists of four groups of deposits-Mardai, Nemer, Dornod, and Gurvanbulag-totaling more than 50,000 tons in reserves. During the socialist period, the Russians worked primarily on the Mardai deposit. At present, most of the special licenses for these deposits are owned by the state.

The Czech Republic, Kazakhstan, and China have also submitted requests to mine uranium in Mongolia. Kazakhstan's President, K. Tokayev, made a formal request during his visit to Mongolia in October 2024.

In addition, a decision has been made to restore the special license for the Gurvansaikhan and Ulziit uranium deposits located in the Ulziit soum of Dundgobi aimag. These deposits were previously owned by the Czech- invested Gurvansaikhan company. The matter was discussed and resolved at the heads of state level during President U.Khurelsukh's state visit to the Czech Republic in March.

After overcoming many obstacles and resistance since the beginning of uranium exploration in Mongolia, France has finally signed an Investment Agreement after 28 years. Why was the French side so patient?

France generates nearly 100% of its electricity from nuclear energy, making uranium a critical strategic resource. Currently, France mines uranium in countries such as Niger and Canada and supplies electricity to eight neighboring European countries. It also holds. ownership of four uranium deposits in Kazakhstan, which have been in operation since the 1990s. However, these reserves are expected to be depleted by 2029. As a result, Mongolia is viewed as a key future supplier that could ensure stable uranium resources for the next 40 years.

Badrakh Energy LLC holds three special exploitation licenses in Dornogobi aimag covering the Zuuvch-Ovoo, Dulaan-Uul, and Umnut uranium deposits. The Zuuvch-Ovoo deposit contains 93.291 tons of uranium reserves, while Dulaan-Uul holds 6,260 tons. Given the scale of these reserves, the project holds significant strategic importance for both Mongolia and France. Partnering with France presents a valuable opportunity for Mongolia to gain entirely new knowledge, expertise, and technological know-how in the uranium sector.

Despite the investment agreement, there are still protests against the project. Has the local community's understanding improved?

Mongolia is about to mine uranium for the first time in its history, and with that comes many unknowns, suspicions, and concerns. Naturally, fear arises when there is a lack of information. From 1985 to 1995, the Soviet Union mined uranium in the Dashbalbar, Sergelen, and Bayandun soums of Dornod aimag. During that 10-year period, 500,000 tons of uranium were extracted and transported to Russia.

This project has been under discussion for a long time. Over the years, the residents of Ulaanbadrakh soum have developed a solid understanding of uranium and the importance of the project. The economic impact is expected to be significant. A new city will be built in Zuunbayan, and Mongolia will benefit from the introduction of modern technologies, the transfer of knowledge, and the application of scientific advancements. This represents meaningful progress for the country.

Mongolia is preparing specialists in six to seven professional fields that are entirely new to the country. In addition to nuclear physicists, there will be growing demand for mining engineers. water engineers, hydrochemists, geologists, and other experts. The project is expected to create high-paying jobs, with monthly salaries ranging from 8 to 12 million MNT. We are actively working with the local community to share accurate, transparent information about the project, and encouraging local children to pursue careers in these emerging professions.