While China barred the import of Australian coking coal, an interesting competition was on to fill the large space thus left vacant in the Chinese market, the world’s largest. Data from December, 2020 show China imported no coking coal at all from Australia, 1.5 million tonnes from Mongolia, and 1.1 million tonnes from Russia, some 700,000 tonnes more than the monthly average. A China-based coal news agency, Today Think Thank, has wondered if Australian coal entered China through a third country. Even with the year-end ban, figures for 2020 as a whole show that Australia was the major coking coal exporter to China, accounting for 35.5 million tonnes or more than half of China’s total import of this major component of steel manufacture.  The ban is unlikely to be lifted in the first quarter of the year, though in January China did allow some ships carrying Australian coking coal that were stuck in ports to unload their cargo.    

Several factors are behind the MSE being so active since the beginning of the new year. Banks have lowered their interest rate on savings with them, thereby pushing citizens and companies to look for new places where their investments will earn better returns. Some of this money has been put into the stock market and this has kept us busy. Also, most commercial banks will become public ones, and this means a lot of preparatory work for us, but, of course, before they offer their shares to the general investor, their accounts and balance sheets have to be properly audited and their credit ratings done by international agencies.

Oyu Tolgoi is at a turning point, with clear indications that conditions would be created to allow Mongolia to benefit more from the project. In a change of stance, Rio Tinto has announced that it is open to revise and modify the project agreement. While once the company’s then CEO, Jean Sebastien Jacques, insisted that any negotiation had to be only within the existing agreements, the present CEO, Jakob Stausholm, has expressed his readiness to make changes in them.   Rio Tinto’s flexibility could very well be due to the fact that the project becomes more attractive as it gets closer to the start of sustainable production at the underground mine. Extraction cost is relatively low, ore content is high, and as a green metal, copper is a prize asset for any diversified miner. 

Artisanal and small-scale gold mining (ASGM) is a significant source of livelihood for millions worldwide. The industry is diverse and can range from individual panners to larger and more mechanized operations. Often an informal business, ASGM is the chief source of income for many rural, low-income communities in the developing world for whom alternative jobs pay less. Globally, the sector accounts for approximately 20% of the gold supply, making it around a USD 35 billion per year industry. Poorly practiced and unsupported by governments, ASGM can be a source of significant negative social and environmental impacts, including the widespread use of mercury, a highly toxic metal. However, when governed well and conducted responsibly and with appropriate environmental safeguards, ASGM can generate significant income and positive social and health benefits for miners and their surrounding communities.

It is heartening to see that the gold sector is being developed in the proper professional way, following strict business principles. Mongolian gold export was the highest ever in 2020, and because prices were high, gold earned almost the same as copper concentrate and coal. In a way gold glittered in the gloom of the pandemic.  Aware of gold’s contribution to the foreign currency reserve and thus helping keep the MNT stable, the government is putting a priority on increasing both extractable gold reserves and production and also building a refinery.   The market has never been better than it was in 2020. In August, the price reached $2067/oz, beating the previous highest recorded in 2011. The year’s average price was $1769.6/oz.  

Given that revenue from mining is the mainstay of the Mongolian economy, it is important to create conditions that would help bring more investment in our exploration and extraction sectors, so that in time we have more mineral resources to export. One way to do this is to follow methods and processes consistent with the global best practice when putting a value on mineral deposits and mining operations. Investment in both exploration and extraction will come only when potential investors can be sure that the object of their interest has been reliably valuated, using internationally accepted methods and codes. Apart from bringing foreign investors into Mongolia, this would also help domestic companies place their assets in stock markets, both international and local.

The Mining Sector Policy 2020-2024 which forms part of the Government’s Action Plan was developed in cohesion with Vision 2050, a document of long-term development. The Khurelsukh government was in power for only seven months so it will not be right to talk about its success or failure in implementation of the policy, except in very general terms, but we could look at the status of certain individual projects, remembering that the entire period was marked by unforeseen economic and social difficulties generated by the pandemic.  The Government must be credited for ensuring that mega projects such as the oil refinery, development of the Oyu  Tolgoi underground mine, and construction of the railway moved forward without interruption. This showed that the focus is shifting from extraction to export of value-added products. However, we heard nothing about the copper smelter.

Last year was not good for Mongolian coal, with exports earning almost $1 billion less than in 2019. This year, too, exports are not expected to top the 28.6 million tonnes in 2020, which was the lowest since 2017, when the figure stood at 33.4 million tonnes. According to the National Statistics Office, the total revenue from mineral exports in 2020 was $5.26 billion, down 17.6 percent from the previous year, mainly because of the decline in coal exports. The loss to the country would have been greater if gold had not come to the rescue. The more than 30 tonnes sold by The Bank of Mongolia earned around $1.8 billion, offsetting the loss from coal`s underperformance. However, gold is unlikely to repeat its feat in 2021. In any case, of the 30 tonnes exported last year, only 23.6 tonnes had been bought by the central bank during the year, the rest comong from its reserves.

Discover Mongolia-2019 Minerals and Mining Business Summit. September 27, 2019 Shangri La Hotel, Ulaanbaatar, Mongolia

9th Coal Mongolia 2019 International Coal Trade, Investment Conference and Exhibition, September 5-6th, 2019, Ulaanbaatar

It was heartening to see at the latest PDAC (The Prospectors and Developers Association of Canada) convention how Mongolia commanded the attention of many of the 25,843 attendees from more than 130 countries at the world’s premier annual mineral exploration and mining event, held in Toronto from March 3 to 6. 

Photo by R.Delger /MMJ/