A SOLUTION TO BOOSTING REAL INCOME: THE BORTEEG DEPOSIT

By A. Khaliun

Industry representatives have noted that, as climate change policies gain momentum worldwide, coal demand and prices are expected to decline after 2030. In response, many countries are pursuing policies over the next five years to bring their coal deposits into commercial development and fully tap their export potential, aiming to maintain stable economic returns, revenues, and profits.

By Resolution No. 103, dated November 14, 2025, Parliament tasked the Government, under the framework of the Law on the National Sovereign Wealth Fund, with bringing the unused sections of the Tavan Tolgoi deposit group into commercial development.

Although Mongolia has coal reserves totaling 35 billion tonnes, it is among the countries seeking to bring its resources into commercial development before coal demand declines and prices fall. To this end, the Government has set a goal of intensifying coal exports over coming years. Accordingly, the management of Erdenes Tavan Tolgoi JSC, the license holder of the Borteeg deposit, has been tasked with preparing the deposit for commercial development.

Within the Tavan Tolgoi coal deposit group, the company holds licenses for the Bortolgoi, Onchkharaat, Oortsog, and Borteeg deposits. The Borteeg deposit contains an estimated 424 million tonnes of coal reserves, of which 95% is soft coking coal with a calorific value of 6,000-6,500 kcal, while the remaining 5% consists of thermal coal averaging around 5,000 kcal. In terms of quality, the deposit is classified as soft coking coal, with an ash content of approximately 22-25%.

A feasibility study for the Borteeg deposit was completed in 2020, and detailed exploration was carried out in accordance with JORC standards. An updated feasibility study is currently being finalized and is expected to be completed in the first quarter of 2026.

In connection with preparing the Borteeg deposit for commercial development, an international Expression of Interest (EOI) is scheduled to be issued by February 2026.

Prime Minister G. Zandanshatar stated that, to prepare the Borteeg deposit for commercial development in the near term, letters of interest should be sent to potential investors. The responses will be reviewed, and the findings presented to Parliament. He noted that Parliament's resolution calling for the development of unused deposits and the signing of long-term contracts, along with the accompanying policy support, is creating a favorable environment for operations.

The Prime Minister emphasized that the top priority is to secure the most beneficial contract for Mongolia, free of conflicts of interest or errors. He stressed the importance of maximizing coal exports from the Borteeg deposit and, where possible, adding value through processing. During the Government meeting on January 7, he instructed relevant ministers and officials to organize this work urgently and efficiently.

At the same Government meeting, a Working Group was established to prepare the Borteeg section of the Tavan Tolgoi deposit for commercial development and to select investors. The Working Group will be responsible for providing transparent information to investors, organizing the selection process, collecting proposals, and presenting them to both the Government and Parliament.

To increase production, Erdenes Tavan Tolgoi JSC plans to bring the Borteeg deposit into commercial development and hold an open selection process among foreign investors, while retaining ownership of the deposit license.

Coal sales are planned to be conducted at exchange prices in accordance with the Law on the Mining Products Exchange.

Moving forward, more detailed economic assessments will be conducted to bring the Borteeg deposit into commercial development within 2026 and generate one billion USD in new revenue.

Once the cross-border railway is completed, 15 million tonnes of coal from the Borteeg deposit are expected to be exported annually, on top of the 30 million tonnes currently mined from the western and eastern Tsankhi deposits, thereby making a tangible contribution to Mongolia's economy, Erdenes Tavan Tolgoi JSC CEO N. Tserensambuu reported.

China remains the sole buyer of Mongolia's coal. With the increasing share of renewable energy in China's energy mix, combined with the intensification of climate change policies, there is a significant risk that coal demand and prices could decline sharply after 2030.

Amid heightened global economic uncertainty, the price of Mongolia's main export product, coal, averaged $70 per tonne in the first six months of 2025, dropping sharply by 40% compared to the same period the previous year. Falling coal prices cut into government revenues, leaving Mongolia's consolidated budget for 2025 with a MNT 1.2 trillion shortfall.

Since conditions showed no improvement in 2026, the national budget for that year assumed an average coal export price of $70 per tonne and projected exports of 90 million tonnes. As the Government increasingly senses that coal is being gradually pushed out of the market, it is acting with urgency, placing special emphasis on intensifying coal exports over the next 5-10 years. This urgency is reflected in accelerated efforts to bring the Borteeg deposit into commercial development.

The implementation of the Borteeg project will increase the benefits that citizens derive from the country's natural wealth and strengthen the National Sovereign Wealth Fund. It will also expand the financial resources and policy space needed to address pressing social and economic challenges.