MP Kh.Badamsuren, the head of the working group on drafting the amendment of the Mineral Law of Mongolia.
Q: Recently, There are some talks about uraium?
MP Kh.Badamsuren: Recently, media is interested in uranium issue. Thanks to the geological research and exploration, Mongolia has quite good reserve of uranium. It will increase in the future. There are three deposits which are included in the list of strategically important deposits in Dornod aimag. Uranium demand is relatively high in the world market. We have chance to exploit our uranium reserve and we have such a demand also.
Radio active substance and uranium issue is under the control of the international organization in the world. Therefore, Mongolia needs to determine its state policy on uranium and form its legal environment. The Government of Mongolia made decision to establish the Nuclear Energy Agency and has independent organization in charge of this issue. It is real step and we need to advance more rapidly and swftly in this field.
Q: Can you give s brief background of Mongolia’s reserve, especially the strategically important deposits?
MP Kh.Badamsuren: Mongolia has vast history of geology exploration and research and rich in minerals. Mongolia has not been discovered or explored fully. Over 1000 deposits and 8000 mineralization are detected throughout the world. Mongolia approved the list of 15 deposits as strategically important in 2006. We can divide them into two categories. The first part, Erdenet and other deposits that are under mining operation now. The Government included the measures in its Action Plan of upgrading and updating technology and equipment of Erdenet copper and molybdenum mine, Baganuur, Shivee-Ovoo coal mines and increasing the level of production by developing into the end products with added value. added production. The copper smelting factory will be built at Erdenet. Liquid fuel technology must be introduced into the production and this must be studied. Therefore, we need detailed calculation and research in this part.
The second category, there are strategic deposits that are pending for their realisation for long ago. Most of all, there is a huge goal of building the Mining-Metallurgy-Energy Complex based on Tavan Tolgoi cokcing coal deposit and Oyu Tolgoi copper-gold deposit that are considered as the world class deposits, in 2009-2012.
Q: How about Tsagaan Suvarga deposit?
MP Kh.Badamsuren: Basically, the deposits that can become the basement of the regional industrial development which are in the west and east region of Mongolia, must be realized into the economy circulation with the involvement of the state policy and coordination.
Q: The draft resolution on guideline of making investment agreement on Oyu Tolgoi and Tavan Tolgoi deposits was adopted by the State Great Khural. Is it correct move to reject draft laws of amending the Mineral Law of Mongolia?
MP Kh.Badamsuren: The legislation issue in the mineral sector and mining industry and its business environment is the most interested issue not only for Mongolians, but for the foreign countries and organizations that are interested in cooperating with us in this sector. It has been so long since the expectation within the public is established. It is the most critical issue to be solved. Therefore, the State Great Khural made resolution to establish our working group. We are trying to appracoih from every aspects of the issue in a complex way. It is time for the legislation of the mineral resource sector to take into the consideration as fully and profoundly as possible. In order to win some time, the tsate Great Khural issued a resolution to give power of starting negotiation on the investment agreement to the Government. But due to the budget hearing and discussion, we lost some time, but the resolution of the State Great Khural unlocks the deadlock in Tavan Tolgoi and Oyu Tolgoi investment agreement issues.
Q: Being as the head of the working group, how would you evaluate the value and quality of this alternative?
MP Kh.Badamsuren: Most of all, it is the alternative to win time and the exit of the deadlock. It is the time already to start certain and clear dialogue It will also help in solving the investment agreement issues. It is the genuine step in reaching national level of understanding and consensus on the exploitation of strategically important deposits.
Q: So, what is the procedure of concluding investment agreement now?
MP Kh.Badamsuren: It will start at the level of the Government. The agreement is the launch of so much works, therefore, it also requires so much attention and it is not easy. After the agreement, it will take 3 years of building mine and facilities. Also, much time is needed to build railroad, roads and electricity lines. Coal price is relatively stable in the world market. Hence, we need to realize Tavan Tolgoi as earlier as possible. There are so many works of building new cities and towns next to these deposits.
Q: Is it good to change the legislation of leading sector in the economy?
MP Kh.Badamsuren: The legislation of every industry-business must be clear stable. The sector will develop based on this. Unfortunately, our mineral sector is not like this. The peculiarity of the sector has its effect also. This sector is vulnerable and risky and demands much bigger capital. Therefore, it cannot be like “weather in spring” (changes instantly). It was discussed before the election and it took so much effect from the pre-election emotion. The expected amendments must not be made in rushy way, because these amendments shall be robust and healthy that can regulate the sector for long. It is not necessary to solve the issue that is vital to the country’s development before the election. Asa for now, the State Great Khrual shall decide principal and major policy issues in 2008-2009.
Q: It seems to me that we lost so much time on dreaming each single deposits and wholly in sector.
MP Kh.Badamsuren: Tavan Tolgoi is ready to mine. Its reserve was determined almost 40 years ago. Local coal mine was established on this projects and coal quality is proven It has reserve of 6 billion tons of good quality cal. It is enough for 300 years if mine 20 million tons each year. 20 million tons of capacity is not that small number. Today, Mongolia produces 10 million tons o coal each year. So, the State Great Khural must make decisive move for this deposit.
Q: How about Oyu Tolgoi?
MP Kh.Badamsuren: It has been almost 10 years since this project was discovered. Ts feasibility study is almost done. But this deposit is big; therefore, it might need further feasibility study. As for now, its reserve is enough for starting world class mine. But, these two projects are under pending situation. Oyu Tolgoi has reserve of 2.3 billion tons of copper ore; 30 million tons of copper, 1000 tons of gold in the ore. Erdenet copper mine’s reserve was 10 million tons of copper. It is three times bigger than Erdenet? As for gold, mining industry mined over 200 tons of gold in its 86 years of history. Hence, beign as the professional in this field, I think and believe that this advantage of Mongolia is the key to our development.
Q: MP Ts.Davaasuren said that copper grade of Oyu Tolgoi is leading the world. Is it true?
MP Kh.Badamsuren: Yes. MPs talked about technology and facilities of mining projects and product share issues. Oyu Tolgoi copper grade is one of the main discussions. Once the professional level of question rose, I should reply in professional way. Copper grade is 1% and it is high result. It is true that copper grade is the main index. But it is now under the ground, our talk is now on the ground (smiles).
But the copper grade in the genuine sales ore is the most important. It depends on many aspects and factors. Generally it depends on the geology mountain-technical condition and angle of ore body intrusion and its thickness. Also the waste management and pollution of the mining process must be considered. Another important issue is ore body structure and its enrichment quality. This deposit will be mined in two ways underground and open pit. Therefore, it will mined in the depth of 1500 meters and just imagine that its temperature is about +30 regardless winter and summer seasons.
Q: MPs were commenting about that Mongolia cannot mine the deposits alone. Does Mongolia need to cooperate with somebody?
MP Kh.Badamsuren: Japanese, Chinese, Russians, Koreans and countries from the west are interested in Mongolia. Mongolia needs to measure many times and cut once. Therefore, the principle of the State policy and position is expressed in the resolution draft. We will cooperate with everyone whom agrees and respects our policy and principle. We will cooperate with ones who can bring benefit to the nation and its people. Basically, we can exploit the deposits alone. But we should understand it in complex way. There are some issues that can be the basis of establishing mining industry. The main issue is to train human resource, selecting the correct technology and facilities, building infrastructure and cities. Finally, investment, financing and sales of the product are the key issues. Such a huge responsibility and duty we have at the moment. We should evaluate our capacity whether we can do it or not? As for now, Mongolia’s capacity is limited especially in the sense of finance. But it is only the matter of time. Later, we can do it. We should work hard for it.
Q: According to the law if the state funded exploration budget, the state should acquire up to 50% and if the private investment funded exploration budget the state is entitled to acquire up to 34%.
MP Kh.Badamsuren: We were mean to this deal and lost so much opportunity. If the state ownership is high, our responsibility is high and our risk will be high. We should provide fund equal to our ownership. Of course, Oyu Tolgoi and Tavan Tolgoi are the world class projects and deposits, therefore many other side issues must be considered. Mongolia should put the national interest when deciding the faith world class. At any case, the income of Mongolian ownership must be over 51% of the deposits. This is the main principle. If we will be more stubborn or reluctant, we will lose more time. It might be looked as simple to the observers.
Q: Can 1.5 million MNT of the Grant of the Motherland be provided?
MP Kh.Badamsuren: It will take 3-5 years until the building of the mine. It will require much more time for providing benefit. 1.5 million per each citizen is the huge amount. Therefore, we are studying closely the possibilities of providing it. We should approach in wise and patient manner in this issue. Especially, we can gain more profit when we produce value added production, otherwise we will remain poor again f we dig and sell out.
Even distribution of it has to b wise. The main thing is to form the financial source for it. It is obvious that the main source for it will be the factories and industries that to be built based on the strategically important deposits.
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what! Finally, mongolia will get 50 on oyu tolgoi and 51 in TT? So then if mglia will issue sovereign bond it will rock!? But need to be wise and cautious in its acts!