Mongolia Business and Mongolian Daily Business News

photo courtesy of meforum.mn

Prime Minister S.Batbold held a meeting with Tavantolgoi project task group. Guidelines and procedures for using the deposit was approved by the Parliament resolution No.40 in 2008 and accordingly a  task group comprising of Ministry of Mineral resources and energy, Ministry of Finance, Ministry of Environment and tourism, Ministry of Justice and Domestic Affairs and State Property Committee has been established. PM highlighted the importance of creating legal regulations by the Parliament and the Government for constructing chemical and steel metallurgic plants based on strategic deposits, which would contribute greatly to the Mongolian economy, creating necessary infrastructure and producing VAT included products. According to the Minister of MRE, south Gobi infrastructure plan for constructing railroads, power plants and water resources necessary for Tavantolgoi utilization is ready for submission to the Government. The resource estimate of the deposit has been changed as results of hiring Canadian Norwest company as a project technical Consultant and Sanh resources may be increased by USD 5 billion. Upon resource increase, the amount of tax income and advance payment to the state budget shall go up as well.

In accordance with the Parliament Guidelines, initial export shipping from Tavantolgoi shall commence by 2012. For this, it is important to start overburden stripping this summer, notes the Minister of MRE. As per the project investment, the task group has been imposed two alternatives by the Parliament: to establish joint plants involving domestic and foreign investors and the Mongolian state shall take up 51 percent; or the deposit will be left 100 percent state owned and involve international operator companies via product-sharing procedures. However, PM expressed his position that Tavantolgoi deposit should be 100 percent state owned and the second alternative was the right option. Currently 11 consortiums of Russia, China, Japan, Brazil and South Korea expressed their proposals and bid selection will be held this summer. Then it is vital to set up a quote on which company should mine what amount, in case operator companies are involved.

According to the project, initially 100 MWt and then 200, 300, 600 MWt capacity power plants will be constructed and the project future will depend on the railroad route direction. There are two competing options: Tavantolgoi-Zuunbayan-Sainshand broad railroads, and Tavantolgoi-Oyutolgoi-Gashuunsuhait narrow railroads. For solution of this issue, Ministry of Road, transport and tourism is developing a program on infrastructure. As per water resource and supply related to using the deposit, the Ministry of Environment and tourism should start projects such as Orkhon Gobi and Kherlen Gobi for the purposes of searching for other sources, accumulating surface water and channeling from Khangai region. PM suggested the task group to finalize Tavantolgoi project before the Spring session of the Parliament. The Government and the Parliament will finalize investors’ agreements within spring session (June).

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