BCM Mongolia: DP smells a rat, as MPRP focusses on Tavan Tolgoi

The impasse over Oyu Tolgoi has kept the other important issue of Tavan Tolgoi under wraps for long but now there are demands from various quarters in the MPRP, especially its Administrative Council, that work there should begin without much delay, if only to secure the funds to pay citizens the Motherland Grant. The DP, however, sees no reason to change the present sequence of signing agreements. The 6.5 billion tons of coal in Tavan Tolgoi is spread over five separate deposit areas, each with its own license. The demand now is to make an agreement with an investor for each deposit, instead of waiting for a comprehensive agreement with one of the many large international companies or consortiums. The Government has often said it would attend to Tavan Tolgoi only after the Oyu Tolgoi agreement issue is resolved. It is claimed that the Tavan Tolgoi project was prepared on the basis of detailed study, but actual information on how the mining would proceed is scarce. Impatient with the delay, and sensing popular discontent that the promised payment from mineral resources is not forthcoming, the MPRP now wants the first level of open pit mining to start in 2010 and the second in 2011. Simultaneously, the initial work on the refinery can be completed in 2011. USD2.5 billion is needed to start open mining and USD600 million to set up a refinery. Energy Resources has returned all licenses except that for Ukhaa Khudag and state-owned Erdenes MGL works the Tsanh, Bor Teeg, Shar Teeg and Bortolgoi deposits. Around 40-50 million tons of coal can be extracted from these.

While the MPRP now wants to settle the Tavan Tolgoi issue before an investment agreement on Oyu Tolgoi is signed, the Head of the DP group in Parliament, Mr. Ch.Saikhanbileg, says the two should be discussed together. A DP MP, Mr. L.Gundalai, attributes the MPRP’s sudden interest in Tavan Tolgoi to Russian pressure to start work on a railway to the mines and to obtain rights to the deposits.

Mr. Kh.Badamsuren has estimated Mongolia will earn USD1 billion a year when all the deposits are in use. The reserves will not be exhausted in possibly 100 years of mining. He is pressing for five independent open pit mines, each with, if necessary, a different partner. Even when the open pits are severally owned, the processing, concentration and power transmission will be under unified control. He agrees that choosing partners is a tough act as the interested companies are world leaders and will offer up-to-date technology and the countries backing them are long time donors and, in some cases, neighbors.

Read More at Business Council of Mongolia Website

Source: Ardiin Erkh, Undesnii Shuudan