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1、MONGOLIA MINING 2024MONGOLIAMINING2024Regulation Economy Production and Development ESGTird Neighbor Skill Transfers Planning and Logistics ElectrificationGBR SERIESGlobal Business Reportsis proud to introduce Mongolia Mining 2024 report,our first comprehensive guide for the country.We were drawn to

2、 Mongolia less by what we knew and more by what we did not know.The information gap in a country holding one of the worlds largest copper deposits is strung at its two opposite ends by stories that paint an overly positive and an overly negative picture.GBR set out to fill that gap with an objec-tiv

3、e overview of mining in Mongolia.One story made it through the silence:The Oyu Tolgoi(OT)copper mine,a US$15 billion development by Rio Tinto(with the government of Mongolia as a minority shareholder)puts a pin on the global map for mining on the large territory enclosed between Russia and China.Fol

4、lowing the discovery of the OT Mongolia became Minegolia,and a brief mining boom,that lasted between 2009 and 2013,was followed by a decade of quietude.Today,the country is trying to build a more resilient economy through mining,not by bringing back Minegolia,but by showing that Mongolia is mining a

5、nd more.A new min-ing code,investment law and multiple transactions,all in the pipeline,are already instill-ing more equilibrium.In the first part of the report,we look at Mongolias recent mining history to better understand its present.We remark on the anti-mining sentiment born out of popular resi

6、stance to Minegolia,and how it influenced the policies that are blamed for almost killing the industry in 2013.The second part explores the countrys mining sector of today,where we interview pro-ducers,developers and explorers across three commodity classes.We begin with coal and provide an analysis

7、 of the sectors journey to greater transparency,sustainability and productivity.Copper and gold are the subject of the next article,and together they represent the countrys biggest current opportunities.We then study battery minerals,which we anticipate will write Mongolias mining future.We conclude

8、 with a section on the service and supply chain sector,where the same high international standards as in top-tier jurisdictions prevail,and follow the same patterns of opportunities:Electrification,digitalization and ESG.We would like to thank all of our interviewees in Ulaanbaatar for their contrib

9、utions.We hope that this platform will bring the tight-knit mining community in Mongolia even closer and connect it with the rest of the world.Investors once came to Mongolia for its geology yet stumbled upon its legislative framework.How competitive Mongolia has become today,we will leave our reade

10、rs to judge,hoping that this report provides them with the resources to make an informed assessment.At Oyu Tolgoi,we are revolutionizing the global mining landscape by creating a world-class,safe,and sustainable copper business with our incredible talented workforce and cutting-edge technologies and

11、 working in close partnership with our local communities and stakeholders to create prosperity together.CONTRIBUTING TO THE SUSTAINABLE DEVELOPMENT OF THE WORLD.Alfonso TejerinaDirector and General ManagerGLOBAL BUSINESS REPORTSWELCOME LETTERGBR SERIES|MONGOLIA MINING 20243 Dear Readers,SukhbaatarSa

12、inshandBulganBayankhongorChoibalsanErdenetDarkhanMurunTsetserlegUliastaiDalanzadgadBaruun-UrtUndurkhaanChoirUlaangomUlgiiKhovdAltaiMandalgoviArvaikheerZunnmodRUSSIACHINAMONGOLIAUlaanbaatarLakeBaikalNMongolia MapInternational boundaryAdministrative boundaryNational CapitalAdministrative Center0200400

13、100Km010020050MilesMongoliaA Global Business Reports PublicationFor updated industry news from our on-the-ground teams around the world,please visit our website where you can suscribe to our newsletters,and follow us on X(Gbreports)and Linkedin.MONGOLIA MINING 2024GBR SERIESMongolia Mining 2024Intro

14、duction:The Investment Environment8After a Rush and a Crash11Interview with Government of Mongolia12Interview with The Mineral Resources and PetroleumAuthorityofMongolia13 Interview with Mongolian National Mining Association14 Anti-Mining Sentiment and ESG17 Interview with Qualified Management Consu

15、lting(QMC)18 Interview with BlackRock Partners(BRP)19 Interview with Trigteq20 Regulations22 Interviews with Dunnaran+Partners and MahoneyLiotta 23 Interview with Baatar Consulting25 Interview with Mongolian Stock Exchange(MSE)26 Interview with Erdenes Mongol27 Interview with MIAT(Mongolian Airlines

16、)28 Mongolias Economy29 Interview with Bank of Mongolia31 Interview with Monpolymet Group33 Interview with Asian Development Bank 34 Interviews with Trade and Development Bank(TDB)and Golomt Bank35 Interviews with KPMG Mongolia and PwC MongoliaProduction and Exploration38 Coal41 Interview with Mongo

17、lian Coal Association42 Interview with Erdenes Tavan Tolgoi JSC43 Interview with Aspire Mining Limited44 Copper and Gold46 Interview with Oyu Tolgoi(OT)47 Interview with Xanadu Mines49 Interview with Erdenet Mining Corporation(EMC)50 Interview with Kincora Copper51 Interview with Max Group52 Intervi

18、ew with Steppe Gold54 Lithium,Graphite and Rare Earths58 Interview with Gobi Venture59 Interview with Asian Battery Minerals60 Interviews with Ion Energy and Mongolian National Rare Earths Corp(MNREC)61 Interview with Badrakh EnergyEquipment,Technology and Services66 Equipment and Technology Provide

19、rs70 Interview with MMD Green Mining Solutions(Mauritius)71 Interviews with Metso and ABB Mongolia72 Interview with MSM Group73 Interviews with Sandvik Mongolia and Epiroc Mongolia74 Interview with Green Chemistry 75 Filling the Gap in Supply76 Service Providers78 Interviews with SRK Consulting,RPMG

20、lobal and Redpath Mining79 Interviews with MMS Engineering,RJE Global and Bodi International80 Interviews with Mongolia Talent Network and Pristine Bridge Recruitment Consultancy(PBRC)83 Interview with O2 Mining84 Interview with Orica85 Interview with Titanobel86 Industry Insights:A final word from

21、contributors88 Company Directory90 CreditsEquipment,Technology and Services 6487Production and Exploration 3663Introduction 635GBR SERIES|MONGOLIA MINING 20245 TABLE OF CONTENTSDeirdr LingenfelderCEOOYU TOLGOIThe importance of open and transparent partnerships is too often dismissed as a soft issue,

22、yet it is foundational.Building a business at the scale of Oyu Tolgoi takes many years.I am hoping that future investments in the country will be delivered quicker and swifter.Introduction:The Investment EnvironmentGBR Series MONGOLIA MINING 2024Image courtesy of Xanadu MinesWhat happened to Minegol

23、ia?The discovery of Oyu Tolgoi in 2001 changed Mongolia forever,and in more ways than the geologists at the site,headed by the since-turned-bil-lionaire Robert Friedland,could have imagined when they first came across the large copper and gold deposit in the Gobi Desert.Turquoise Hill,a literal tran

24、slation of“Oyu Tolgoi,”in-spired by the color of the oxide cop-per,gave rise to Minegolia,the nick-name that stuck for the best part of the mining boom years,until 2013.19851990199520002005201020152020-4-2024FDI NET INFLOWS 1981-2022(BALANCE OF PAYMENTS/BOP)Source:The World BankUS$BillionImage court

25、esy of Oyu TolgoiAt the turn of the century,Mongolia had just transitioned into a free-mar-ket economy following the fall of the USSR,and had more horses than cars(or people,for that matter).Most of its income came from nomadic herd-ing across its vast lands.But it was the underbelly of the steppe t

26、hat would drive its future forward.The US$1 billion economy had US$1 trillion in mineral resources.This huge poten-tial was punctuated by the Oyu Tolgoi discovery.Even if at first,the news of the discovery went unnoticed because it was announced on the tragic day of 11th September 2001,over the year

27、s,finding one of the worlds largest cop-per-gold deposits became an explora-tion sensation that would attract many others looking for the same thing.What happened between 2006-2013 in Mongolia has been compared to the Californian Gold Rush in the 19th century or the Australian commod-ity boom in the

28、 1930s.The formerly little-known Soviet satellite country became a magnet for miners and in-vestors,many from Canada and Aus-tralia.The capital,Ulaanbaatar(UB),was abuzz with new people and new money,luxury stores,hotels,cars,and restaurants were springing up around the city.UB grew by 70%,becoming

29、home to almost half of the countrys population.Outside the hustle of the city,about 800 km drive through the steppe,16,000 people were working at the OT site,once one of the least populated regions in the country;they were housed in traditional gers(or tents)equipped with modern facilities.For the p

30、opulation,old and new,hope and caution were mixing in an intoxicating way.Rural people felt the traditional way of life threatened.For others,the opportunity was too good to miss.Friedlands Ivanhoe together with its new partner,Australian mining giant Rio Tinto,had already invested US$3 billion by t

31、he end of 2012,even-tually spending a total of US$10 billion by 2020 to put the underground of the OT into production.Mongolia had become the fastest-growing economy in the world,and the IMF was project-ing continued double-digit growth and the potential for the country to double its GDP within the

32、decade.FDI inflows spiked,reaching a peak in 2011 at US$4.57 billion 43%of the countrys GDP,according to Macrotrends data.Mining already constituted a third of the countrys GDP.Other international players like Centerra Gold and big names like BHP joined the search for minerals,and 3,000 exploration

33、licenses were active by 2012,according to the Economist.Minegolia was born.By 2014,everything changed.Most investors fled,Fried-land included,leaving the OT with Rio Tinto.About half of the 12,000 expats that had been in Mongolia in 2012 were gone by 2015,according to Globe and Mail.FDI fell sharply

34、,hitting a low of(minus)-US$4.16 billion in 2016.The follow-ing year,the economy hit rock bottom,its fiscal,sovereign,and banking sectors collapsed,and public debt ballooned.Mongolia was rescued by an IMF bailout,one of the largest in the organizations portfolio(in rapport to a countrys GDP.)Some bl

35、amed the commodity downcycle that affected the mining industry globally;others blamed the dispute with the OT,which entered a standoff with the govern-ment,sending a chilling effect to other investors.The un-friendly policies that the newly elected government passed to appease strong anti-mining sen

36、timent expressed by the electorate scared investors.Or perhaps the young democ-racy simply fell victim to the resource curse or Dutch dis-ease,when the blessings of resource wealth turn into a curse of spending-beyond-means,out-of-control inflation,and an eventual boom and bust.No one speaks about M

37、inegolia anymore,even though the country derives 90%of its exports and 25%of its GDP from minerals.What Mongolians do talk about is redeem-ing the mistakes made in the past.After a rush and a crash,the industry shrunk considerably and faced multiple hur-dles between 2017 and 2022:A pandemic,a recess

38、ion,and the ripple impacts of sanctions on neighboring Russia.The country has adopted a more sober approach to mining,learning not to take investment for granted,while also un-derstanding that Mongolia is much more than mining,and inherently much more than Minegolia.Therefore,it must not solely depe

39、nd on the industry.In 2023,the stars have started to align again,with the OTs long-anticipated underground development finally complete and prepared for the ramp-up to over 500,000 t/y of copper,which would make it one of the worlds largest mines,as was long promised.Record exports of coal have also

40、 strengthened the countrys balance sheet,and a more pro-mining government elected in 2020 has worked to de-liver a new mining code before the next elections this year.The industry remains imbalanced,between three me-gamoth mines(OT and Erdenet for copper,and Erdenes Tavan Tolgoi for coal)and around

41、20 juniors looking at a basket of commodities,from coal,copper,and gold,to lith-ium,rare earths,and graphite.A large share of producing companies remain in the hands of the state,a trend that has only worsened in recent years.But there are also posi-tive signs of new private players,especially in co

42、pper and gold,signing more transactions over the last two years.The next foreign-led multi-billion investment is also in the pipeline,this time in uranium,with Orano in talks with the Mongolian government for a final investment decision in Zuuvch Ovoo.That would make Mongolia into a diversi-fied,fou

43、r-mega-mines land.In the following articles,we will take a closer look at what Mongolia is doing to get it right this time,by tackling anti-mining sentiment and nationalism,improving regulations,and reducing its dependencies on both its neighbors and mining itself.The following pages should explain

44、in greater detail what happened to Minegolia.After a Rush and a CrashEDITORIALEDITORIAL8 9 GBR SERIES|MONGOLIA MINING 2024GBR SERIES|MONGOLIA MINING 2024What are the main policy reform priorities within the Ministrys agenda?The main reform we are undertak-ing is the re-drafting of the Mineral Resour

45、ces Law to facilitate the in-vestment environment in the min-eral sector and provide clarity.The current law dates from 2006,and has gone through over a hundred amendments,which have created overlaps and confusion,so it is high time this is redone.The redrafting process began in 2020,with the first

46、draft approved in March this year,and a second one released for public review in October.35%of the com-ments received in the first draft were reflected in the new draft.The royalty currently paid has a base of 5%,and depending on the commodity prices,the percentage can increase dramatically.In the(d

47、rafted)law,the percentage will conform to in-ternational best practices.Within this framework,we are also addressing the issuance of mineral exploration licenses.In the last year,Mongolia started granting exploration licenses at a stable rate.We seek to stabilize the issuing of permits further and i

48、m-prove as well as digitalize-the ten-der process for mineral permits.The redrafted Mineral Resources Law is in its final stages of completion.We plan to submit the document to the Government of Mongolia in No-vember and pass it on to the Parlia-ment in December 2023.Effective this June,the law on t

49、he Mining Commodity exchange has also been enacted,with the scope to over-come corruption,bribery,theft,but also bureaucracy by selling products through the exchange by mandat-ing the participation of the state and state-owned enterprises.Private com-panies can participate on a voluntary basis.Minin

50、g companies in coal and copper have started trading on the exchange since the beginning of this year,and we are looking to extend this to fluorspar and iron in the future.Since implementing the Exchange,the selling price of coal has gone up.The goal is to have 30%of Mongolias com-modities traded on

51、the Exchange as a starting point.How do you seek to maintain the momentum in exports not only in coal but also copper?Our main export item is coal.Mon-golia had exported 35 million t/y of coking coal at best,but,this year,we are almost doubling this volume to 60 million t/y.While demand for thermal

52、coal is inevitably phased down as the world rejects this form of fossil fuels in line with the energy transition,demand for coking coal is poised to stay strong.Meanwhile,in copper,Oyu Tolgois(OT)underground mining will boost Mongolias copper concentrate ex-ports in the long run.We are export-ing ap

53、proximately 1.4 million t/y of copper concentrate with the poten-tial to ramp up to 2-2.5 million t/y in the future.Besides the OT,other projects are moving towards mining.Zijin,one of the largest Chinese inves-tors,financed the development of the Kharmagtai copper and gold project,operated by Xanad

54、u Mines,while op-erations at the Tsagaan Suvarga mine are progressing according to plan,taking us closer to the goal of becom-ing the third largest copper producer in the world.How do you tackle the negative per-ception of mining by parts of the Mongolian population?In my view,the fact that money co

55、l-lected from mining is put into a na-tional budget,disseminating that rev-enue as social care,rather than going back to the host communities,is part of the problem.We are proposing that 10 to 20%of royalty contributions go into local community development,but the law is yet to go through Parlia-men

56、t.One other point we have been working on is dispute resolution with communities by establishing an agen-cy in seven regions in the country to act as a bridge.How are you working to accelerate exploration,especially in critical metals like rare earths?We are currently doing baseline stud-ies,having

57、signed a trilateral agree-ment with South Korea and the US to establish a Rare Metals Cooperation Center.Since many of the known tar-gets were defined before the 1990s,there is ample scope for new surveys to reconfirm the mineral occurrences and be able to discover more critical battery metals.Do yo

58、u have a final message for in-ternational readers and potential investors?I would like to reassure investors that Mongolia will have a stable state pol-icy and the older patterns of sudden changes will be a thing of the past.Ganbaatar Jambal Minister of Mining and Heavy IndustryGOVERNMENT OF MONGOLI

59、ADEMOGRAPHIC DATAPEOPLE LIVING IN ULAANBAATAR1.7 millionLITERACY RATE99%PEOPLE WORKING IN MINING60,000CAPITALUlaanbaatarTERRITORIAL ORGANIZATION21 provinces(aimags)POLITICAL SYSTEMSemi Presidential Multi-Party DemocracyNEXT ELECTIONS2024(Presidential)CURRENT PRESIDENTUkhnaagiin KhrelskhCURRENT PRIME

60、 MINISTEROyun-Erdene LuvsannamsraiTRANSITION TO DEMOCRACY1990Source:IMF,data for 2023MEDIAN AGE26.7 yearsUNEMPLOYMENT5.9%POPULATION3.35MILLIONMONGOLIA AT A GLANCECURRENT ACCOUNT BALANCESource:IMF,2023Billions of U.S.dollars-6-5-4-3-2-101-2.46ECONOMYSource:IMF,2023Real GDP growth(Annual percent chang

61、e)-10-5051015204.5GDP PER CAPITA,CURRENT PRICESSource:IMF,202319801988200420122020199619841992200820162000U.S.dollars per capita2024est.0100020003000400050006000$5,490Source:World Bank,UN,World Mining Congresss;World Population Review198019882000200820201996198419922004201219962024est.19801988200020

62、0820201996198419922004201219962024est.The main reform we are undertaking is the re-drafting of the Mineral Resources Law to facilitate the investment environment in the mineral sector and provide clarity.INTERVIEW11 GBR SERIES|MONGOLIA MINING 2024EDITORIALGBR SERIES|MONGOLIA MINING 2024Please introd

63、uce the functions of MRPAM?MRPAM is an implementing agency of Mongolian Government and it is been 27 years since its establishment.Our main objective is to support in framing development policies of geo-logical,mining,and the oil sector and provide quick and fair services to in-vestors and customers

64、.Also,we are responsible for imple-menting laws and regulations related with the licenses.We are in the pro-cess of renewing the system to transit from the Russian system to the West-ern system,and to digitalize it.Could you share the recent changes and achievements of MRPAM?In the“Vision 2050”polic

65、y document,it is stated that“Citizen-centered pub-lic services will be created based on electronic technology.”In this context,the MRPAM is now in the process of transmitting e-governance in order to increase the mineral resources sectors efficiency,benefit,and productivity,and to make the services

66、open,unbureau-cratic,transparent,and accountable.We have been receiving complaints related to the selection of explora-tion licenses quite often.The process of receiving exploration and mining reports and plans was notoriously bureaucratic.This issue has resolved,and in accordance with Recommenda-ti

67、on No.03 of the National Security Council of Mongolia,dated November 25,2022,the mineral special licenses issuing process through a selection process has been developed into the electronic system www.tender.gov.mn in cooperation with the State Procurement Department.The en-tire selection process has

68、 been digit-ilized,and the licensing area became Bayarmandal.L,ChairmanTHE MINERAL RESOURCES ANDPETROLEUM AUTHORITY OF MONGOLIA(MRPAM)Could you give us a sense of the coun-trys untapped mineral potential?In our country,the mining industry is relatively young compared to other mining countries,with a

69、 history of just over 100 years.However,if we consid-er the last 30 years,we can observe a significant influx of investments from third countries,leading to the inten-sive development of the mining indus-try.Advanced technologies and lead-ing international practices have been introduced into our min

70、ing industry through these investments,and the industry personnel have been trained at a high level.Furthermore,respon-sible mining practices and social li-cense considerations have rapidly progressed from mere declarations to actionable measures in our industry.Also,we have learned from our mis-tak

71、es in the past and are working on relevant legal reforms to reduce fu-ture risks.The mining sector of our country is relatively young and has a lot of potential for mining exploration and extraction,so it is expected to be-come a major sector attracting foreign investment in the future.What has prev

72、ented the further de-velopment of Mongolias resources?One of the major challenges confront-ing the mining industry in our country is the disparity in stakeholder under-standing and the insufficient acces-sibility and transparency of informa-tion about the mining industry.As our association believes

73、that the solution to these problems is responsible min-ing,we focused on localizing and pro-moting responsible mining within the industry.To achieve this objective,we have examined the experiences of associations in highly developed Erdenetuya GanboldExecutive DirectorMONGOLIAN NATIONAL MINING ASSOC

74、IATIONMongolias mining sector is relatively young and has a lot of potential for exploration and extraction,so it is expected to become a major sector attracting foreign investment in the future.publicly announced from November 23,2022.Being able to monitor the decision-making process of govern-ment

75、 institutions is a big advantage of providing information transparency.Furthermore,foreign investors do not necessarily need to come to Mongo-lia.They can access the information,participate and apply in the selection process online by paying the fee.Thus,we are working to intensify the rare earth el

76、ements exploration and geological research,and increase mineral resources that will ensure economic growth in the medium and long term.What are the main changes of the Minerals law?Which direction did you pay more attention to?The Minerals Law is a big law.In order to strengthen transparent,open and

77、 responsible governance,the Ministry of Mining and Heavy Industry has devel-oped policies for the sector in five main areas:Exploration,extraction,process-ing,sales and distribution.In this frame,we are working to submit the prelimi-nary draft laws to the Parliament.As there is a real need to change

78、 the law with the times,we prepared a draft of the revised Minerals law.Even though the current law is clear about exploration and exploitation,it is not clear about processing and mine clo-sure.The revision included an open system at every stage from the pros-pecting to closure.In other words,we ai

79、med to include comprehensively processing,mine closure,guarantee funds,labor safety,and local coordina-tion in this revised draft.How do you describe the develop-ment of the mineral and geology exploration sector in the Vision 2050 long-term policy document?What is MRPAM doing concerning its impleme

80、ntation?In line with Vision 2050,the New Re-vival Policy approved by the Govern-ment of Mongolia includes three goals and 11 measures to restore industrial-ization,and 13 projects and programs are being implemented in this context.For example,mineral license digi-talization,intensification of geolog

81、i-cal exploration in prospected areas of state protection and located near in border areas,Tavantolgoi coal concentration plant,construction of an industrial technology park based on Erdenet State owned company,production of cathode copper from oxidized ore,copper concentrate processing based on the

82、 Oyu Tolgoi deposit,and a ferrous metallurgical complex plant and oil refinery are all being implementing.Do you have a final message?Mongolia is a developing country.About 30 years have passed since the transition to a market economy.We have a lot of things that were improved and a lot of things we

83、 need to fix.We are cooperating with the pri-vate sector and the public to develop responsible and green mining in line with global development.Since 2023,MRPAM has started branching out to more provinces so that we can coor-dinate more locally-driven activities and nurture mutual understanding.Our

84、aim is to establish a branch in ev-ery province.We would also like to express that we are open for our foreign and do-mestic investors to cooperate within the framework of the law in the direc-tion of discovering Mongolias vast mineral resources.mining countries like Australia and Canada.Since 2018,

85、we have devel-oped the Responsible Mining Codex and introduced it to approximately 40 organizations within the mining sec-tor.Additionally,we have established a memorandum of cooperation for joint implementation.Responsible mining is viewed as the outcome of the accountable collabo-ration of all sta

86、keholders involved in the mining industry,rather than being solely attributed to a single company.In line with this approach,the MNMA aims to enhance the knowledge and information of these stakeholders.To further this goal,the MNMA collabo-rates with civil society organizations and local administrat

87、ive organiza-tions to organize Responsible Mining Events across all regions of Mongolia.What have been the most recent de-velopments on the regulatory front?One of the foremost concerns for in-vestors in the mining industry is the stability of the legal environment.To attract investors,The Governmen

88、t of Mongolia is actively working on revis-ing the Law on Investment and the Law on Minerals.Similarly,our association is diligently working on submitting pro-posals related to these law reforms.Additionally,the MNMA actively participates in approximately 18 national committees,councils,and working

89、groups appointed by the government on behalf of mining sec-tor companies.Through these work-ing groups,the MNMA effectively conveys the voices,suggestions,and recommendations of the private sec-tor towards shaping government policies.Moreover,the association provides consulting services to com-panie

90、s in terms of legal requirements by compiling information on industry-specific laws and regulations.What are the main agenda points at the Association for 2024-2025?For the years 2024-2025,the MNMA has set its focus on several key priori-ties.These include improving foreign cooperation,supporting an

91、d attract-ing foreign and domestic investors,and adhering to the highest interna-tional practices within the industry.Do you have a final message for our international audience?People are the wealth of our country,not just our industry.Over the past 30 years,our mining industry has trained many inte

92、rnationally competitive per-sonnel.In the future,we will continue to work proactively in training and developing skilled personnel.Also,compared to 30 years ago,there have been many positive social changes such as improved education and atti-tude of our citizens,increased public knowledge about the

93、mining industry,and our country shares a border with the worlds largest mining importing country,China.It is believed that the trade cooperation between the two countries has improved more and more in recent years,creating favor-able conditions for the investment en-vironment of our industry.The Mon

94、golian National Mining Association(MNMA)would like to extend a warm invitation for coop-eration and support to all investors interested in the mining sector of our country.We are here to offer guid-ance and support to investors,ensur-ing understand and navigate the legal framework in Mongolia We are

95、 open for our foreign and domestic investors to cooperate within the framework of the law in the direction of discovering Mongolias vast mineral resources.INTERVIEWINTERVIEW12 13 GBR SERIES|MONGOLIA MINING 2024GBR SERIES|MONGOLIA MINING 2024From hero to villain and backMost mining executives agree t

96、hat Robert Friedland was one of the best promoters of Mongolia.Huge crowds would gather to hear his talks at PDAC.“Friedland put a banner on Mongolia,”said Bayar Baatar,principal consul-tant at Baatar Consulting,based out of Toronto.And yet,the talented speaker made a costly blunder when,addressing

97、an investor audience,he failed to see he had another auditor,the Mongolian population:Dur-ing a pitch in the US,Friedland made comments about the Mongolian mine being a cash machine,with 95%margins.He continued:People near your mining project are a real nightmare()The nice thing about this,theres no

98、 people around,theres no NGOs.”These comments,though pleasing to investors,reached the ears and stung the hearts of Mongolians.The speech became famous;Friedland turned into“toxic Bob,”a nick-name already circulating in the media after an incident outside of Mongolia,and many locals can still recite

99、 the most incendiary parts of the speech.This article is not about Friedland,because is the industry itself that briefly turned into the villain.Friedland proclaimed at the Mongolian Mining Week 2023 that the country had wasted a decade:The OT could have been built 10 years ear-lier had it not been

100、for all the time spent on discussions an allusion made to the disagreements between the project de-velopers and the government.But the root of the delay goes deeper than the altercation itself,to the anti-mining feeling that was brewing in the country and which eventually esca-lated from sentiment t

101、o policy,with radical implications.Descendants of one of the largest empires that ever was,Mongolians are a proud people and it is easy to see why Friedlands speech offended them;they are also well-ed-ucated,with one of the highest literacy rates in the world(99%),and many have worked or studied abr

102、oad.At the same time,Mongolians have a unique relationship with land and nature,as one of the last large nomadic popula-tions remaining.Although the numbers are dropping,27%of households still earn a living from livestock herding,ac-cording to the International Herders Organization.Mining contradict

103、s the traditional way of life,where the freedom of roaming without any fence and the respect for nature is most valued.The population in the Gobi worried about the impact of mining on the scarce water supply.People were already uneasy about the price to be paid for“Minegolia,”and Friedlands words ad

104、ded wood to the fire,making Mongolians feel as if they were robbed of their resources.Anti-mining feeling became a fever,with protests and disputes between local communities and mining compa-nies erupting around the country.Its people were calling for Mongolia to gain more control of the OT mine.Thi

105、s was picked up by politicians,taking a nationalistic turn.In the 2012 elections,25%of seats were won by politicians rallying against foreign mine ownership,and a resource nationalist was put in power as the minister of mining.A new law pro-hibiting mining and exploration close to waters led to the

106、re-vocation of many mining licenses,including a key portion at the OT.Eventually,the government was asking for a bigger share of the OT,which sparked a huge dispute.In 2013,Rio Tinto reached a standoff with the government over the pay-ment of royalties,which delayed the project by two years.Today,ba

107、cklash from the locals has eased,partly due to the industry itself carving a better name for itself,but also due to shifts in the Mongolian population,which is very young,with a median age of 27 years old,and more urban.If previous generations moved to Ulaanbaatar(UB)out of ne-cessity but held very

108、close ties to their native aimags(prov-inces),the new generation is born in UB,learns English,and sees opportunity in mining.In rural areas,local disputes are not uncommon,and voters tend to be more susceptible to populist anti-mining rhetoric.“More than half of Mongolias voters come from rural area

109、s where a lack of adequate infor-mation and misleading discourses have made mining vastly unpopular.To appease the electorate,some leaders take a negative stance towards mining.In simple words,if they say,mining is bad,it is likely they will get more votes,”com-mented Tsolmon Gonchig,CEO and co-foun

110、der of Trigteq,a consultancy and technology distributor in Ulaanbaatar.Politically,the establishment seems aligned in its ambi-tion to develop the industry.A clear sign of that was the participation of all relevant leaders at the Mongolia Mining Week in 2023.Ironically,after many years of not coming

111、 to Mongolia,in 2023 Friedland was awarded the Order of the Polar Star,the highest honor for a foreign citizen.Friedland finally received his credit and his hero status is restituted.How to do betterAt the core of the negative perception of the industry is that many people,especially those living in

112、 the countryside,did not directly see the benefits of mining.In a new draft of the mineral law,the government is looking to ensure that royal-ties go directly to the community level,rather than into the national budget.Minister of Mining and Heavy Industry Gan-baatar Jambal said the new mineral law

113、proposes 10 to 20%of royalty contributions going into local community develop-ment.“Our view is that local communities in the vicinity of mining,at the province and soum(county)level,should ben-efit more compared to the rest of the population,”he said.A good level of communication to manage expectat

114、ions is also necessary.When they think of mining,peoples expec-tations are often influenced by the Erdenet copper mine and the city it gave rise to.Built during the Soviet times,Erdenet,the city,became the third largest in the country.But not all mining assets will have the same impact,or at least,n

115、ot such a bluntly visible impact.For instance,Badrakh Energy,the local JV between French uranium company Orano and the Mongolian state-owned company Mon-Atom LLC,uses a chemical extraction technology to pump out the uranium.“Since we dont dig holes or handle any ore,our technology can hardly be cate

116、gorized as mining,leaving the landscape untouched from beginning to end.The drawback,if I may call it such,is that it is not visible like a standard open-pit operation may be,so the work we do cannot be noted from the outside.This is why we need to explain and re-explain what we do,with the help of

117、the Mongolian authorities,”said Marc Meleard,the executive director of Badrakh.By contrast,host communities tend to see the negative impacts of mining,especially on the environment.The oc-currence of dzuds,a climate disaster characterized by sum-mer droughts and freezing winters,leaves animals witho

118、ut enough pasture,killing millions of them every year.Accord-ing to the UN,dzuds are happening more frequently in parts of Mongolia now.“Mongolia is more vulnerable com-pared to other countries to the impacts of climate change because of increased desertification,water scarcity,and ex-treme weather

119、conditions,all of which can be worsened by climate change,”Edward Faber,senior country economist at the Asian Development Bank,told GBR.70%of the Mongolian territory suffers from desertifica-tion,with multiple rivers and lakes drying up,according to the UN.Artisanal miners,known as“ninja”miners be-c

120、ause of the green bowls they carry on their backs making them resemble the comic book characters Mutant Ninja Turtles,use cyanide and mercury,poisoning rivers.Com-munities also worry that the use of large amounts of water by formal mining companies will further deplete the coun-trys available water.

121、Regulations to mitigate the impact of mining on water are in place(the Water Law,the Environ-mental Impact Assessment Law(EIA),and the Water Pol-Anti-Mining Sentiment and ESGEDITORIALEDITORIAL14 15 GBR SERIES|MONGOLIA MINING 2024GBR SERIES|MONGOLIA MINING 2024Image courtesy of Oyu Tolgoilution Fee L

122、aw),yet the coordination between the different regulatory bod-ies is sometimes missing,according to research by the German Develop-ment Institute,which noted,among others,insufficient quality control for EIAs,lack of transparency,rent-seek-ing behaviors hindering enforcement,and lack of financing co

123、nstraining the effectiveness of inspections by lower-level public authorities.Besides water,an equally pressing challenge is power.Positioned as the climate bank for Asia,the ADB has en-gaged in multiple projects to help Mon-golia navigate the challenges emerging from climate change,but Faber thinks

124、 more is required on the government end to entice investment in the energy sector so that the country can meet its ambitions to reduce GHG emissions by 27.2%by 2030:“The government would like to see greater private participation in the energy sector,but to attract in-vestors it would need to guarant

125、ee suf-ficient returns;that would entail that demand is high enough,which is chal-lenging in a small market,but also re-quire a stable regulatory environment and adequate tariffs.Right now,energy is subsidized so the sector would need to undergo some sort of reform and liberalization to draw in priv

126、ate inves-tors.The ADB has financed a private solar project and there are many more opportunities for both solar and wind projects,”said Faber.Indeed,much more can be done.Euro Khan invested in the largest wind farm in the country,the Sainshand Wind Park,with a capacity of 55 MW,yet it has not been

127、paid US$170 million owed by the government for the past five years of supplying green energy to the grid,an off-putting record for other companies looking to invest in the energy scene.Oliver Schnorr,Euro Khans CEO,said the government did everything right from a legislative per-spective,but it did n

128、ot respect its con-tract.“The good news is that OT is tak-ing a stronger stance on net zero and investigating the possibility of building a 250 300 MW combined wind and so-lar plant,and they are looking now for a JV partner.The fact that the elephant in the room is looking at this issue is a good si

129、gn already,”said Schnorr.Unsurprisingly,the biggest expec-tations falls on OT,which seeks to set an example.OT has over 400 social in-vestment projects,spanning from ed-ucation,healthcare and infrastructure to various other initiatives.In Khan-bogd,the soum(district)close to the mine,these are run t

130、hrough an MoU between Oyu Tolgoi,the Ministry of Construction and Urban Development as an NGO fund(the Oyu Tolgoi Cata-lyst Fund for Khanbogd Development).“We appreciate that our community members and civil society organiza-tions keep us on our toes.As one of the biggest businesses in the country,we

131、 are working to bring the biggest positive impact.We will be neighbors with our host communities for the next 100 years,which means we need solid foundations,”said Deirdr Lin-genfelder,the CEO of Oyu Tolgoi.Throughout the years,OT has dealt with multiple community disputes.In 2013,a group of local h

132、erders filed a complaint concerning a river diversion that could impact their traditional live-lihood,as well as the pasturelands and the water available.This resulted in a tripartite agreement between the government,the host community,and representatives from the company.“It takes time to build tru

133、st,yet it is very easy to lose it,so we make sure to proactively engage with the commu-nity on what is going well,and on what is not going well and needs improve-ment,”said Lingenfelder,explain-ing the role of the tripartite council,where representatives meet regularly to have conversations on topic

134、s that matter.“Sometimes these discussions are difficult,but we believe that open and transparent dialogue is key to reaching alignment,”she emphasized.To mediate these difficult conversa-tions,a neutral actor that sits in the middle of government,industry,and people,is required,according to Dag-va

135、Myagmarsuren,the CEO of QMC,a consultancy specialized in ESG mat-ters and involved with 40%of the min-ing sector today.Most recently,QMC was part of the team that assessed the impact of the OT underground devel-opment on the local community.“Of-ten,local people do not know whom to trust;they want to

136、 trust the miners,but conflicts of interest that have led them to lose that trust.They also want to trust politicians,but contradictions in the political messages leave them confused,leading to more mistrust.Needing to trust someone,they tend to trust QMC,which opens a door for dialogue between all

137、stakeholders,”Myagmarsuren said.Once the OT mine reaches peak production in the next five years,the countrys gross domestic product per capita will double to US$10,000,said Prime Minister Luvsannamsrain Oyun-Erdene,as reported by AFR.Because Mongolia is a small country,with only 3.3 million,developm

138、ents like the OT have a widespread impact.With more developments of that scale,Mongolia could realize its early 2000s aspira-tions of turning into a Qatar-type of economy,with the risks that such tra-jectory entails.For that,it would need solid and inviting regulations,which we will discuss in the n

139、ext article.Could you introduce QMC to our readers?The early signs of the first-ever min-ing boom in the country became vis-ible in the early 2000s,when I was lecturing at the Mongolian Univer-sity of Science and Technology,doing part research,and part independent consulting with the main mining pla

140、y-ers.The industry was quickly chang-ing,with more and more newcom-ers making their way to Mongolia.I sensed there was a need for more consultancy services to assist Aus-tralian and Canadian investors,so in 2011,my team and I established QMC offering a hybrid of technical and management knowledge.Ho

141、w have QMCs services grown since?To start with,we focused more on the technical side,offering PFS and FS studies.As a lecturer and consul-tant,we assisted both government organizations and regulators in de-veloping the guidelines for techni-cal studies in line with international norms,while also hel

142、ping the indus-try to comply with these,so we had a very critical bridging role that helped us grow as a business.However,by 2015,the landscape shifted as local communities grew skeptical of the mining sector.This skepticism hin-Dagva Myagmarsuren Founder and General DirectorQUALIFIED MANAGEMENT CON

143、SULTING(QMC)QMC has been instrumental in shaping new legislation,bridging the divide between authorities and private investors by offering expertise in aligning projects with broader societal and environmental benefits.dered political support for mining ventures.Recognizing this critical gap,QMC exp

144、anded its services be-yond the technical realm.We recog-nized the absence of a crucial dimen-sion:the societal and environmental impact of mining projects.This led us to pioneer the development of mine closure plans,addressing the concerns of future generations and emphasizing the necessity of re-me

145、diation and rehabilitation in our policy paper for mine closure provi-sions.Consequently,QMC has been instrumental in shaping new legis-lation,bridging the divide between authorities and private investors by offering expertise in aligning proj-ects with broader societal and envi-ronmental benefits.H

146、ow is mining currently perceived by the population?Anti-mining sentiment peaked around 2013,resulting in a halt in exploration licenses,followed by a wave of divestments.10 years on,and these problems still exist.In-vestment has not come back,and negotiations with host communities remain difficult.A

147、t the core of it,our politicians are quite slow at making changes.For instance,the mine clo-sure regulations we proposed are still not part of the official legislation,after failing to become law two times;now these provisions are in the draft of the new Minerals Law.The alloca-tion of royalty contr

148、ibutions to local communities was put into law some time ago,but implementation lagged as politicians required more control of the budget distribution.As the head of the Critical Miner-als Association,could you share with us what are your main agenda items for the new organization?Within the current

149、 mining sector,one big chunk is metallurgical coal,and the other big chunk is copper,with the remaining 10-15%of it being a mix of other metals,including gold.The energy transition risks putting about half of our industry at peril in the next few decades.Contradicto-rily,the countrys Vision 2050 for

150、sees the mining industry expanding up to four times its current value.So how are we to grow the industry from a base that is supposed to be phased out?The future lies in those critical minerals that we know exist in Mon-golia,yet we have little visibility of their extent.In the last two years,we hav

151、e seen a lot of international inter-est in collaborations for critical min-erals.Our government says“yes”to these partnerships,but then,it stops there.Other countries have already developed their critical mineral poli-cies,strategies,and lists.Mongolia does not have these.No one else can do these ta

152、sks other than Mongo-lians themselves,because,although the world believes in our geological potential,they do not believe in the role that Mongolia could play in the critical minerals supply chain con-sidering its geographical and geo-political position.We must take the first steps.The Critical Mine

153、rals As-sociation looked at what other coun-tries are doing and drafted a critical mineral framework and list,submit-ting these to the government.Like I said earlier,however,things move slowly.Yet,for critical minerals,the world is changing really fast.So the question remains:Are we going to be too

154、late?We are ready to push our government to accelerate the legal framework before this opportunity passes us.INTERVIEW17 GBR SERIES|MONGOLIA MINING 2024EDITORIAL16 GBR SERIES|MONGOLIA MINING 2024Image by Oleh Slobodeniuk at iStockCould you introduce BlackRock Partners to our international audi-ence?

155、BRP was incorporated in 2014 in Ulaanbaatar and became a diversi-fied consultancy firm with focus on sustainable practices in agriculture,banking,energy,environment sectors and international development area,yet mining remains as our key area of expertise to date.Is there a mandatory framework for G

156、HG reporting for the mining in-dustry in the country?Mongolia has signed up to the Paris Agreement,committing to reduce its GHG emissions by 22.7%by 2030.However,at the industry level,there is no specific framework dictating emis-sion reduction.The mining sector as a huge energy consumer,in some cas

157、e energy producer,is amenable to some requirements included in the Nation-ally Determined Contribution(NDC)ac-tion plan.This integration in the energy sector should force the mining sector to reduce energy consumption or tran-sition to alternative energy sources,whereas the government must look at l

158、ow-emission pathways for the mining industry to streamline the develop-ment towards specific targets.Could you tell us more about the in-vestment regime in the mining sec-tor in Mongolia?Mongolia has an estimated 6,000 de-posits of some 80 different minerals,Surakhbayar GalsanManaging DirectorBLACKR

159、OCK PARTNERS(BRP)Bridging essential expertise and specialties,BRP is expanding our network through international collaboration to bring knowledge,skills,and investment into the country.including coal,copper,gold,iron ore,tungsten,molybdenum,phosphate,uranium,and oil.Recent discover-ies and developme

160、nt of some of the great deposits of coal,gold,uranium,copper and REE,demonstrate that FDI interest in Mongolia is attractive.By 2023,there are about 2,900 active exploration and mining licenses and more than 20 countries are major players in Mongolian mining sector,namely China,Canada,Singapore,etc.

161、The peak period of FDI in the sector was between 2005-2013.Mongolias major exporting commodities are copper,gold,iron,coal and fluorspar,and the mining sector is the main driver of the economy.Mongolia is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Award

162、s.Our country has close to 30 double taxation and investment protection agreements with its counterparts.Mongolias juris-diction is competitive at regional and international levels,and accepts,sup-ports,and protects investment.What do you make of the govern-ments plans to pass a new Mineral Law?The

163、regulatory amendments shaped the mining industry in three stages since the Constitution in 1992 the first passed in 1994,the second in 1997,and the last(effective to this day)in 2006,along with other laws.The gov-ernment is working on modernizing the laws in accordance with interna-tional standards

164、and Constitutional amendments.Some people may have lost faith in Mongolias ability to garner investment,lamenting that the explo-ration sector is almost neglected and only a few major players are left.All countries have issues,whether these are community,political,economic,or even security related.T

165、hese are chal-lenging paths to development,and BRP has no doubt that we will over-come those and raise Mongolias pro-file as a competitive and sustainable investment destination.BRP is opti-mistic that Mongolia,with its immense geological potential,geographical loca-tion and legislative environment

166、will be one of the best mining jurisdictions in the world,however beyond 2030.As Mongolia is still the one of important players in the critical minerals era to-wards energy transition,the modern-ization will take crucial steps for better benefits for all the Mongolians,and the investors as well.Visi

167、on 2050,Mongo-lias long-term development policy,and a new draft of Law on Investment and other related modernizations of the investment regime will also bring actions,steps and outputs for the min-ing sector,and its future development of sustainable mining practices.What are your priorities for 2024

168、 and beyond?Impact investment deployment and sustainable mining practice are two of our top priorities with a dual focus on addressing challenges and creat-ing positive change.Bridging essential expertise and specialties,BRP is ex-panding our network through inter-national collaboration to bring kno

169、wl-edge,skills,and investment into the country.BRP will be supporting the organization of the Mongolia Mine Closure Forum in July 2024,inviting local and foreign parties to discuss mine closure from legal,technical,and ESG perspectives.We also will be supporting the critical minerals development by

170、collaborating with the Mongolian Critical Minerals Asso-ciation and other key stakeholders in the sector.BRP sees itself as a leading firm domestically for driving the ESG and GHG Emission understanding and compliance in the country,and as a key catalyst for collaboration between multiple stakeholde

171、rs.Could you introduce Trigteq?We started Trigteq in 2013 in the US.While completing our studies in Colorado,four fellow Mongolian col-leagues and I came up with the idea of bringing our skills together and open-ing a consultancy once we returned to Mongolia.Today we have a team of almost 50 people,

172、and we are legally incorporated in the US,Mongolia,Ka-zakhstan and China.Could you elaborate on the role that Trigteq plays?Nowadays,the real need is to imple-ment technologies in daily workflows to make the work more efficient,both timewise and cost-wise,but also to allow for greater professional d

173、evel-opment instead of being tied to te-dious manual tasks,people can grow their capabilities by making smart use of technology.This is what Trigteq is trying to do:besides traditional con-sulting,we introduce cutting-edge technologies to help our customers reach better results.By using ad-vanced ge

174、ological tools and software,professionals get the space in their mind and in their job to be more stra-tegic and scientific.Trigteq represents brands like Se-equent for integrated subsurface soft-ware,Krux Analytics for drilling data collection and analysis,STRAYOS for AI and advanced image processi

175、ng so-lutions,or Four Point for AI based use Tsolmon Gonchig CEO and Co-FounderTRIGTEQBy using advanced geological tools and software,professionals get the space in their mind and in their job to be more strategic and scientific.of satellite imagery solutions,among others.This year,we also signed an

176、 MoU with the German engineering and consulting group DMT to intro-duce their geotechnical risk manage-ment capabilities into Mongolia.What is the general reception of the technologies brought in by Trigteq into the country?Oyu Tolgoi(OT)has accelerated tech-nology adoption in Mongolia,with many peo

177、ple carrying the knowledge and experience of best-in-class tech.The OT has helped create an invalu-able workforce in Mongolia,for the benefit the entire mining sector.What demand trends do you ob-serve today in Mongolia?Exploration has unfortunately been declining since 2009,when Mongolia stopped is

178、suing exploration licenses.In 2017-18,the government granted about 1,000 more licenses,but these were not enough to allow the indus-try to grow.This gap in exploration is reflected in mining since all existent mines are the result of the previous exploration cycle(prior to 2009).Last year,some inves

179、tments were made in critical minerals.As some countries seek to reduce their resource depen-dency on other countries,Mongolia will likely emerge as a strong contend-er for direct investment in minerals related to the energy transition.What holds back the issuance of more exploration licenses?More th

180、an half of Mongolias vot-ers come from rural areas,where a lack of adequate information and misleading discourses have made mining vastly unpopular.To ap-pease the electorate,some leaders take a negative stance towards min-ing.Like other developing countries,Mongolia also struggles to allocate suffi

181、cient budgets to local develop-ment to reach everyone,so locals in deprived regions have a misguided impression of the industry,not see-ing the direct benefits.The solution is to inform communities about mining to increase acceptance.What are your main priorities in the coming years?Our main priorit

182、y is innovation.Inno-vation comes with free speech,free competition,access to plenty of in-formation,and,crucially importantly,openness to innovation.Western in-novation is world-leading because English-speaking countries literally speak with one another,collaborate,exchange results,and therefore re

183、ach the best solutions.We are engaging players from different anglophone na-tions,from the US to South Africa and beyond,to identify the best innova-tions and bring them into the mining sector in Mongolia.The other aspect is integration across multiple prod-ucts and technologies.Companies are becomi

184、ng bigger and are adopt-ing more solutions,but they require further integration to make mines truly smarter.Trigteq does not aim to duplicate the things that work but fo-cuses on the real gaps,where there is truly no solution in place.Do you see scope for growth out-side of Mongolia?Yes,we have grea

185、t potential to grow in Central Asia,where the mining in-dustry also faces a technological gap.Trigteq has been working in China since 2021,introducing geological modeling and other software to two Chinese companies;also,in Kazakh-stan,we just started working with a company in geological modeling,and

186、 we aim to add more technology in geotechnical,hydrology,and re-source reporting.INTERVIEWINTERVIEW18 19 GBR SERIES|MONGOLIA MINING 2024GBR SERIES|MONGOLIA MINING 2024Why to catch flies with honey,not vinegarMORE EFFICIENTWebsite: Phone:+976 77376002Email: Trigteq constantly seeks innovation in both

187、 business and technically,aiming to refresh and revitalize routine manual tasks.We partner with leading innovators around the World to bring theirpractical knowledge and technology into the Central Asian market.Our business is centered on empowering teams to transcend routine tasks and focus on honi

188、ng their skills through the strategic and intelligent use of enhancing technology.Image courtesy of Mongolia Talent NetworkMongolia is preparing to submit to Parliament a newly drafted Mineral Law.For such an important milestone,the industry remains conspicuously nonchalant at the mention of these u

189、pcoming changes,probably because they feel they are a long way from being passed into law and an even longer way from becoming fully implemented.The coun-trys regulatory environment could be described as simulta-neously too slow and too fast.Much-needed changes fail to materialize quickly enough,whi

190、le abrupt changes come so often that they are not taken seriously enough.Some think of the proposed new Mineral Law cynically,likely to be rushed in before election time this year,and then scrapped if a less mining-friendly government takes over.The current mining regulations date to the 2006 Minera

191、l Law,which suffered multiple,sometimes confusing and overlapping,amendments(over a hundred in number),according to Ganbaatar Jambal,Minister of Mining and Heavy Industry.The main points of the new draft address the most pressing concerns the industry faces:Improving the issuing of exploration licen

192、ses;a royalty system aligned with international practices;clearer community develop-ment allocations;and more transparency mechanisms.If passed,the law would mark a significant reform.Mongolias first pieces of legislation in the mining sector opened the door to foreign investment.“The 1993 Foreign I

193、nvestment Law and the 1997 Minerals Law were attractive to investors and Centerra Gold was the first taste of big foreign investment in the minerals sector other than what the Russians had done with the likes of Erdenet Copper Mine under the old Soviet planned economy model,”said James Liotta,partne

194、r at MahoneyLiotta Law Firm,a legal practice established in Ulaanbaatar in the late 1990s.What followed next,however,undid the previous regula-tions:“As investments and discoveries in the minerals sec-tor continued to grow,so did populism.This led to the en-actment of the 2006 Minerals Law and Windf

195、all Profits Tax Law,which were far less attractive to investors,and in 2012 the Strategic Entities Foreign Investment Law was enacted.Resource nationalism and creeping expropriation grew,along with international and local arbitration and litigation.The combined effect,along with other policy,adminis

196、tra-tive,and legislative missteps,triggered an about-face of the investment community.Since this time,and even with the enactment of the current Investment Law,we have seen a growing trend of state-owned participation,or dominance,in the minerals sector and little attention toward the free-market pr

197、ivate sector-driven investment economy that led to Mongolias economic boom,”continued Liotta.Two of the laws Liotta mentions were particularly far-reaching.First,the Strategic Entities Foreign Investment Law(SEFIL),now repealed,allowed the government to take over an asset deemed of strategic importa

198、nce for the coun-New Investment Law(Draft)New Minerals Law(Draft)try,and it pertained to the states par-ticipation in the mining sector.SEFIL controversially required companies to seek government or parliament ap-proval over proposed transactions in strategic sectors,like mining.The nationalistic im

199、petus at the time was most obviously expressed when the government wanted to re-negotiate the royalties paid and cost overruns with operator Rio Tinto just as Oyu Tolgoi was preparing to sell its first concentrate from the open pit.Rather than a negotiation,some of our interviewees called it“taking

200、Rio Tinto hostage.”Under the previ-ous agreement,established in 2009,the government was to provide its 34%share of construction costs up-front,but would only get dividends once those costs were recouped,which meant that the country would effectively pay its share of construc-tion costs by forgoing e

201、arly dividend flows from the mine.Needless to say,the standoff spooked investors.“For good or bad,OT continues to symbol-ize the countrys investment environ-ment to the international community,so when the OT shut down operations in 2012,massive ripple effects spread across the industry,”commented Br

202、ad Clarke,managing director at Sandvik,a global engineering company.This event turned the country into what Shaukat Tapia,country manager at PwC Mongolia,calls a“hot big po-tato”for international investors.Rio Tinto finally resolved its disputes with the government in 2022;the under-ground mine,whic

203、h was supposed to start a few years ago,was inaugurated in 2023 and,all going well,will provide copper and gold for at least another 50 years.For the resolution,Rio Tinto was the one who relented first,waving the US$2.4 billion debt owned by the government for the construction(34%of the US$6.93 bill

204、ion expansion).SEFIL came in conjunction with anoth-er law,popularly known as the“law with the long name”or LLP,and by its official name,The Law On Prohibiting Mineral Exploration And Extraction Near Water Sources,Protected Areas And Forests.As its name suggests,it prohibited min-ing close to riverb

205、eds.Shaukat Tapia,country manager at PwC Mongolia,said:“The problem with this regula-tion was that it came with no warning,so many operators lost their licenses overnight.This move was perceived as anti-business not only by international players but also Mongolians.”Also,these two laws were at times

206、 used to cancel each other.According to the LLP,Mongolias first large,pub-licly listed miner,Centerra Gold,could not develop the Gatsuurt gold mine,close to the Gatsuurt River,in the north of Ulaanbaatar.As a solution,the government declared it an asset of strategic importance,which meant it could h

207、ave a 34%right to it,and SEFIL would no longer apply;as a national security asset,it was no longer behold-en to environmental protection laws,according to an explanation by Forbes.These two pieces of regulation shaped the countrys mining indus-try to this day,leaving room for more state intervention

208、 in mining assets and leading to a dearth of exploration by revoking licenses.Sam Spring,the CEO of Kincora Copper,a copper developer in the South Gobi,said that over 40%of Mongolias landmass was covered 23RegulationsEDITORIALEDITORIAL20 21 GBR SERIES|MONGOLIA MINING 2024GBR SERIES|MONGOLIA MINING 2

209、024by exploration tenure when they took over the Bronze Fox project in 2011.Today,the land available for exploration dropped by 10 times,covering just 4%of the countrys ter-ritory.During the boom,about 3,000 mining licenses were issued,according to the Economist.Many of these were scrapped during th

210、e period of clampdown on the industry.The government granted 1,000 more licenses in 2017-2018,according to Trigteq,and now the total number is reaching back to the boom levels,at 2,900,according to another lo-cal consultancy,BlackRock Partners(BRP).These are still not enough;the country holds 6,000

211、deposits of some 80 differ-ent minerals,said BRP.Mongolia now wants investors to look again at its licens-es,both by making the issuance process more transpar-ent and digitalized and by issuing more licenses.Since last year,Mongolia started granting exploration licenses“at a stable rate,”said Minist

212、er Ganbaatar.According to Sam-buudorj Erdenebat,the CEO of Glogex Consulting,based out of Ulaanbaatar,the government is planning to release another 400 exploration licenses soon.Mongolias open bidding system,created at the end of 2022,allows inves-tors to check the licenses available in a much more

213、trans-parent way.Bayarmandal L.,the chairman of the agency in charge of issuing licenses(the Mineral Resources and Petroleum Au-thority of Mongolia or MRPAM),admitted that the agency received complaints about the selection of exploration li-censes quite often,because the previous process was slow an

214、d notoriously bureaucratic,but believes that the new sys-tem is much smoother:“Since 2022,mineral special licenses issuing process through a selection process has been devel-oped into the electronic system www.tender.gov.mn in co-operation with the State Procurement Department.All the selection proc

215、ess has been completely digitalized,and the licensing area became publicly announced on November 23,2022,”he said.The same progress cannot be said of the states inter-vention in mining.Amongst one megamine(Oyu Tolgoi),a handful of listed developers(like Australian-listed Xanadu Mines and Aspire Mini

216、ng,or Canadian-listed Erdene Re-source Development),and developers and early produc-ers(like Steppe Gold and MoEnCo),sit an unusually high number of state-owned enterprises or SOEs,including Erdenes Tavan Tolgoi(ETT)and Erdenet Mining Corpora-tion(EMC),the operators of the countrys top-three larg-es

217、t mines.Erdenes Mongol,the governments umbrella company that holds the stakes in 23 different legal enti-ties across the mining value chain,accounts for 14%of the countrys coal reserves,65%of copper,15%of fluorspar,and 55%of iron.In total,it contributes almost a third of the countrys earnings,and tw

218、o-thirds of the royalties paid back into the country,according to Erdenes Mongols CEO,Narantsogt Sanjaa.12 of the natural resource companies of Mongolia are SOEs,according to the National Bureau of National Research.Bayar Baatar,principal consultant at Baatar Consulting,noted that it is unhealthy fo

219、r the taxpayer to coincide with the tax receiver in a normally functionating free market economy.“I would say there is more state participation Could you elaborate on Dunnaran+Partners areas of expertise?Our foundational expertise lies in minerals law,which distinguishes us from local law firms.Howe

220、ver,the cy-clical nature of the mining industry led us to diversify our legal practice.Since 2014,we have been advising clients on their employment and industrial relations matters,which has become one of our key practice areas today.In addition,our expertise also en-compasses investment and corpora

221、te law.We also assisted oil and gas play-ers in the market successfully raising funds on LSE and ASX.Another area that differentiates us from other for-eign investment law firms in Mongolia is that we do litigations.This would indicate that our firm provides clients with full legal services,except f

222、or tax and felony criminal matters.How has the change in the employ-ment law in 2022 impacted the min-erals sector?The change affected,among oth-ers,roster agreements,mandating two weeks on and two weeks off ar-rangements for mining companies.This shift has caused significant fi-nancial burdens and

223、management-related regulatory challenges.Given Dunnaran BaasankhuuManaging PartnerDUNNARAN+PARTNERSCould you introduce MahoneyLi-otta to our international audience?MahoneyLiotta was established in Ulaanbaatar in 1997 as one of the first law firms comprised of Mongolian and international lawyers.What

224、 do you make of the govern-ments efforts to attract investors?Unfortunately,the two main political parties in Mongolia tend to engage in big PR exercises without enough underpinning action.I think the key for any prospective investor is to talk with the private sector companies do-ing business in Mo

225、ngolia,and not rely heavily on government PR.The government should also define what it means by investment.When asked,there never seems to be an an-swer as to whether this means foreign investors incorporating and doing business in Mongolia,as was the case in the past,or more restricted to for-eigne

226、rs lending into Mongolia.As noted above,the key to attract investors once again will be a legisla-tive ecosystem that incentivizes and James LiottaPartnerMAHONEY LIOTTA LAW FIRMMongolias workforce deficiency,the country heavily relies on foreign workers for mining.Previously,com-panies commonly appl

227、ied a 28-day on-site and 14-day off arrangement.The new 14-14 has forced companies to introduce additional shifts and em-ploy more people.Bringing expats from around the world only to let them return after two weeks is,natu-rally,disruptive.What are the areas of improvement in the legislative framew

228、ork of the mining industry?Mongolia has all necessary legislation on paper,but the challenge is their application and enforceability,mainly due to inconsistent interpretation and application of laws by govern-ment officials.Do you have a final message?Mongolia has significant untapped potential for

229、minerals and is situat-ed in a strategic location next to the worlds largest buyer market in terms of minerals.Mongolia faces its share of challenges like any other country,but those are not deal-breaker mat-ters.These issues can be navigated and resolved in the hands of the right professional advis

230、ors.protects investment into the private sector,as well as a demonstrated pe-riod of successful implementation of,and adherence to,the laws conducive for investment.Overall,I am optimis-tic and encouraged by the govern-ments pivot toward attracting inves-tors once again.The investment and business c

231、ommunity will do our best to help them to achieve that goal.Do you have a final message to share with our readers?As with any jurisdiction,investors need to do their due diligence before making decisions.I have seen too many people skipping this part be-cause they were in a hurry to come here and ge

232、t that contract,or because they think they know somebody who is connected and can get things done,or because they had a good meeting with a government official during a promotional conference.Mongolia is workable,the people are welcoming especially to Western businesses,and there is no doubt about t

233、he countrys minerals potential.21 Mongolia has several state-owned enterprises in the min-ing sector.Has state participation increased in recent years?There is more state participation today than it was 10 years ago but whether we should attribute this to the overall growth of the industry or increa

234、sed nationalism,is a separate question.From a historical perspective during the centralized economy,on one hand,we had only state-owned mines(often in joint venture with a country from the Soviet Bloc)and the social wel-fare for the mines(such as schools for employee children and hospitals)were prov

235、ided by the state in a form of municipalities built around a mine,such as Erdenet,Baganuur and Bor-Undur.In parallel,we also had uranium mines operated entirely by the former USSR in secrecy with no visible benefit to the locals.So,the population has a healthy demand for greater transparency and leg

236、acy desire for increased social benefits to locals from mining.Unfortunately,this legacy still keeps a sizable popula-tion warm to the idea of increased state participation in mining.Why do you think the renewables sector hasnt devel-oped more?While Mongolia is blessed with 260 days of sun and 1.1TW

237、 wind potential,renewables does not provide a stable basel-oad at grid level.Investments in renewables are usually done with direct government subsidies and favorable Power Pur-chase Agreements at inflated rates compared to whats avail-able on the market to make a business case.This is in direct con

238、tradiction with free market principles.However,there is ever increasing use of both solar and wind power by house-holds in the countryside.Do you have a final message?I always ask,if you knew how big Sudbury would become,would you have invested in Sudbury?The same is true for Khanbogd,which has grow

239、n significantly,but it has much more room to grow.I see the entire area surrounding OT developing like Sud-bury or Timmins in Canada,becoming a service and supply hub for the mining industry,with mining schools,OEMs,and suppliers congregating.The fact that the OT is one of the larg-est block-caving

240、operations in Eurasia drives a natural evolu-tion for the Khanbogd to become a hub,with the OT at its epi-center,for the supply of technologies and services applicable to this world-scale mine.Bayar BaatarPrincipal ConsultantBAATAR CONSULTINGINTERVIEW23 GBR SERIES|MONGOLIA MINING 2024INTERVIEW22 GBR

241、 SERIES|MONGOLIA MINING 2024happens,especially before an election.Equally,on the regulatory side,approv-als and permits tend to stall around these times.The different laws must communicate with each other well to create a well-thought-out and attrac-tive legislative ecosystem.An attrac-tive minerals

242、 law is insufficient without transparent dispute and tax resolu-tion frameworks.“Many investors also worry about the lengthy,complex yet unorganized procedure of tax audits and tax disputes,said Sang Yong Cho,Partner at KPMG Mongolia.“The same ease of opening a business does not apply when closing a

243、 business or un-dergoing tax litigations.Foreign inves-tors usually comment that the onerous bureaucratic and judicial process takes no less than 18-24 months,he added.The problem,Yong Cho said,is a mismatch between the legislators preference for keeping domestic tax law simple and foreign investors

244、 need for more complex transactions.“When investors try to clarify uncer-tainties from tax offices or depart-ments under the relevant ministry,it often takes months to hear back.Sometimes,they never get a reply.Yong Cho,like others,sees Mongo-lia as a young democracy.Many of its laws,including its t

245、ax system,are only 30 years old and require further guid-ance before they can align with inter-national practices,but progress has been made recently,including the 2017 Amendment to the Minerals Law that sought to increase transparency and improve the business environment,or the recent decision that

246、 Mongolia should follow the OECD transfer-pric-ing guidelines there,however,regula-tions were again delayed so everyone is again in wait-and-watch mode.The will to make the changes is there.The steps noted in this article,including a redrafting of the mineral law and a tender system aligned with int

247、ernational standards,point to that.Besides the Mineral Law,Mongolia has also redrafted its Investment Law,which stipulates more legal guaran-tees to investors.This law was devel-oped within the countrys long-term Vision 2050 master plan.That same plan also outlines ambitions to di-versify the econom

248、y beyond mining and beyond its two neighbors.So lets delve into that in the next article.Could you introduce the MSE?The MSE was initially set up to cata-lyze the privatization of government-owned assets under the former com-munist regime.To realize this transfer,all citizens were granted vouchers t

249、hat could be converted into shares.475 such entities were brought into the exchange.Since 2011,the MSE has been in a strategic partnership with the London Stock Exchange,which has been a reference in terms of the rules and regulations that we adhere to,and that also shares the same trad-ing(now elec

250、tronic)platform.Today,185 companies and 2 in-vestment funds are listed on the MSE;their total market capitaliza-tion was 10.3 trillion MNT(20%of the countrys GDP).Out of these,the finance and real estate sectors hold the highest market capitalization(6.7 trillion MNT),whereas the average market capi

251、talization across the nine sectors we represent is around 1.1 trillion MNT.The MSE registered strong growth between 2022 and 2023.What are your expectations for the next few years?2022 and 2023 marked a remarkable turnover period,with our market capitalization increasing threefold.Any companys initi

252、al public offering is only the starting point.As the mar-kets liquidity grows,companies and enterprises will increase the quantity of shares.Altai Khangai CEOMONGOLIAN STOCK EXCHANGE(MSE)Looking ahead,there is a possibility that major mining projects may consider listing their shares on the Mongolia

253、n Stock Exchange.How did the IPO market perform this year?We had sizeable IPOs from the fi-nance and agriculture sector,with a total of 335.9 billion MNT raised be-tween six companies that went public this year.Notably,Khan Bank raised 183.4 billion MNT from 29,345 inves-tors,marking the largest IPO

254、 in the history of the exchange.How could the MSE become a more attractive platform for internation-al investors?What Mongolia currently lacks is inter-national,as well as local,institutional capital.To attract institutional inves-tors,a pension reform is essential.Secondly,we must put forward an at

255、tractive pipeline of products to bring in international investors.The MSE will be doing a roadshow at the main financial centers around the world,including Shanghai,Hong Kong,and London.If in 2011,80%of our inves-tors were international,today,its ma-jority Mongolian.Last year,the MSE was classified

256、as a Frontier market by the FTSE global equity indices,which will also bring more international attention.In the future,we will continue to implement more steps to upgrade our status within the FTSE classification.The mining sector plays a crucial role in Mongolias economy,serving as the primary sou

257、rce of our coun-trys exports.Mongolia is currently engaged in significant large-scale min-ing projects,which are operated by both joint-stock companies and state-owned companies.Notably,joint-stock companies have obtained capi-tal from foreign stock exchanges and have subsequently established opera-

258、tions in Mongolia.It is important to note that these companies have not issued shares on the Mongolian Stock Exchange.Looking ahead,there is a possibility that major mining projects may consider listing their shares on the Mongolian Stock Exchange.What is the key challenge that Mon-golias economy mu

259、st overcome?It is anticipated that the economy will experience a surge in growth,surpass-ing 6%by 2024-2025,due to the rise in mining production.However,it is imperative to implement reforms that encourage economic diversification to maintain this growth and establish resilience against domestic,ext

260、ernal,and climate-related disturbances.Also,I believe there is a case for the government to privatize more assets.Could you explain to our audience the significance of the Mineral com-modities exchange in Mongolia?The Mongolian Stock Exchange has established a legal framework for trad-ing in the min

261、ing product sector with the approval of the Mining Product Exchange Law.The trading of mining products on the stock exchange has fa-cilitated the establishment of appropri-ate conditions for the accurate calcula-tion of tax fees.This,in turn,will lead to an increase in revenue for the state budget,e

262、nsure the fulfillment of con-tractual obligations related to the sup-ply of mining products,and mitigate risks for the parties involved in the trade.Consequently,a solid ground-work has been laid for a conducive in-vestment environment.Furthermore,the settlements for exchange trading are conducted v

263、ia Mongolian bank-ing and financial institutions,resulting in an increase in foreign currency in-come,strength of exchange rates,and the creation of favorable conditions.Since January this year,9.4 million tons of coal and 272,2 thousand tons of iron ore concentrate traded on the Mongolian Stock Exc

264、hange with a total value of 4.3 trillion MNT.Munkhbat Batmunkh,CEOMONGOLROSTSVETMET One areathat requires further improvement in Mongolia is lawsuits and the judicial courts.The legal framework presents multiple challenges for foreign investors,as we learned from our own transition from Mongolian-Ru

265、ssian ownership to a state-owned entity.Mongolias foreign investment reputation has been stained by stories of failed partnerships,but I believe that the past is beginning to be wiped up.The younger generation has a different mindset that is more influenced by Western ideas of transparency and ethic

266、s.Baatar UuganbayarCEOMURRAY MINING SERVICEStoday than10 years ago.Whether we can attribute this to the overall growth of the industry or to nationalism is a separate question,”he said.An article published by the Mongo-lian National News Agency confirms that the number of state-owned enter-prises(SO

267、Es)has increased in the last five years by 2.8 times.This is across the board,not just in mining.Of the 98 companies owned by the state in different sectors,more than half op-erate unprofitably,notes the source.But the most profitable are the two mining giants,Erdenes Tavan Tolgoi(ETT)Coal Mine and

268、the Erdenet Cop-per Mine.To nationalize Erdenet was a tumultuous journey.Erdenet,which means treasure in Mongolian,was a JV between Mongolia and Russia,but it was acquired in 2016 by a pri-vate company called Mongolia Mining Corp,backed by the largest commer-cial bank in the country(Trade and Develo

269、pment Bank or TDB).Just two years later,the government decreed by parliamentary resolution that the shares should belong to Mongolian nationals,and nationalized it,illegally,as a local court found.It remains to this day a national asset.The gap between paper and practiceFor more private players to i

270、nvest in the country,Mongolia will have to provide a much clearer investment framework.For instance,Orano,which plans to in-vest US$1.6 billion in the Zuuvch Ovoo project,required tax stability over the projects lifetime,expected to stretch over three decades.It would also need irregularities in the

271、 current laws to be sorted out since uranium mining is subject to both the Mineral Law and the Nuclear Energy Law.According to Marc Meleard,executive director at Badrakh Energy,the local JV between Orano and the government,Mongolia wants higher royalties from the project,which would entail a lower s

272、harehold-ing,currently set at 34%.The Mineral Law would have to be amended to clar-ify that uranium mining should only be governed by the Mineral Law.Going back to the start of this article,a lot hinges on the new Mineral Law,and on the country following up on it.Mongolia has struggled in the past w

273、ith implementation,as well as sudden changes and periods where nothing INTERVIEW25 GBR SERIES|MONGOLIA MINING 2024EDITORIAL24 GBR SERIES|MONGOLIA MINING 2024Could you introduce Erdenes Mongol?Erdenes Mongol LLC was established in 2007 as Mongolias principal state-owned enterprise responsible for rep

274、re-senting the governments ownership in matters involving strategically significant mineral deposits.Our company serves as the holding company for 30 different legal entities,which are grouped into Copper&Metals,Fuel&Energy,and Infrastructure&Logistics groups.Our group is the largest player in the m

275、ining industry,engaged in exploration,min-ing,beneficiation,and refining of gold,silver,copper,coal,and other minerals,and together we account for a substan-tial share of Mongolias resource sector,holding 14%of the nations recognized coal reserves,65%of copper reserves,15%of fluorspar reserves,55%of

276、 iron reserves,and contributing around 30%of the countrys total export earnings.How has Erdenes Mongol per-formed in 2023 and what is your outlook for 2024?In 2023,Erdenes Mongol LLC success-fully implemented significant struc-tural changes aimed at fortifying the governance structure of its subsidi

277、ar-ies and affiliates;these measures have already resulted in notable improve-ments in their economic efficiency.Consequently,major subsidiary com-panies of our group achieved historical results in terms of product processing volume and sales revenue in 2023.For instance,Erdenet Mining Corpo-ration

278、SOE anticipates a notable 10%increase in processed ore volume and a 6.8%growth in sales for the year 2023 compared to the previous year.In addition,we are striving to at-tract foreign investors and fostering mutually beneficial collaboration for upcoming projects and programs at Narantsogt SanjaaCEO

279、ERDENES MONGOLOur group is the largest player in the mining industry,engaged in exploration,mining,beneficiation,and refining of gold,silver,copper,coal,and other minerals.the group level within the framework of our new strategic plan.Looking ahead to 2024,Erdenes Mongol Group intends to develop in-

280、dustrial parks to create an industrial production chain by providing private sector companies that are engaged in activities of producing final goods from mineral resources to ensure the implementation of the governments New Revival Policy.Much of Mongolias territory re-mains under-explored.What is

281、the exploration strategy undertaken by Erdenes Mongol?Currently,our company holds 67 min-ing licenses and 17 exploration licens-es.We also have a number of licenses for which the response is still pend-ing.Erdenes Mongol Group does not have the resources to investigate all mineral reserve fields.As

282、a result,we have begun the process of identifying essential minerals and we are pursuing a program of expanding investment and boosting exploration and research in the sector of critical minerals.With regards to exploration activities,we are focusing on increasing the reserves of existing exploratio

283、n and exploitation fields through commissioning addi-tional detailed exploratory studies in accordance with internationally accept-ed standards such as JORC standard.Foreign investors are always open to investing in and collaborating on these exploration and exploitation projects.What should our int

284、ernational readers know about Mongolia?Mongolia has abundant mineral re-sources,ranking among the top 10 in the world,and is home to over 80 different types of minerals.We aim to reduce the export of unprocessed raw minerals and further develop the mineral-processing industry.I would like readers an

285、d for-eign investors to know that our country has numerous advantages in terms of abundant mineral resources with a geo-graphical location close to major export markets,a skilled workforce,and a state policy to safeguard and assist potential investors.Numerous international in-vestors have shown int

286、erest in Mongo-lia,however,we recognize that there are certain hurdles such as an unstable legal environment and inconsistent policies with regards to supporting investors.As a result,the Mongolian government is focusing heavily on making reforms to the investment law and enhancing its business clim

287、ate.What are some upcoming develop-ments?In our medium-term strategic plan,Erdenes Mongol Group intends to es-tablish industrial plants to produce ba-sic raw materials such as cathode cop-per,steel billets,lime,and coke,which are essential for the manufacturing of final products based on the resourc

288、es of the groups large mining entities.Hence,the group will be able to gener-ate opportunities for the private sector to create value by investing in the es-tablishment of industrial parks and the provision of primary raw materials and infrastructure to their processing plants engaged in production

289、of end-products.In this way,instead of conducting a sin-gle project,it will be feasible to construct a cluster in which the public and private sectors collaborate to completely utilize natural resources and generate final goods.Furthermore,Mongolias min-eral processing industry will be brought to th

290、e next level,and by increasing the value of our minerals,we will be able to give full benefits to our investors.Could you introduce MIAT to our in-ternational audience?MIAT is a 100%state-owned entity that operates out of the Chinggis Khaan International Airport.Estab-lished in 1956,the airline bega

291、n its international operations in 1992,and currently offers services to several key destinations across the globe,including Frankfurt,Istanbul,Seoul,Busan,Tokyo,Osaka,Beijing,Hong Kong,Guangzhou,Phuket,and Bang-kok.Before the conflict between Rus-sia and Ukraine,MIAT also operated flights to Moscow.

292、The pandemic hit the aviation in-dustry hard.How did MIAT recover?Getting back on our feet after the pandemic years of 2020-2022 was challenging.However,we managed to operate 3,200 flights in 2023,which is comparable to the pre-pandemic lev-els.Nonetheless,with a population of only 3.3 million peopl

293、e,Mongolias market is small,which makes it chal-lenging to achieve the required load for all flights.Could you elaborate on MIATs growth strategy and international expansion?Our strategy for growth involves ex-panding our network by forming part-nerships with different airlines.For example,we do not

294、 have direct flights to London,but we offer this connec-tion through our partner airlines with a stopover.In August of 2023,the governments of Mongolia and the United States signed an“open skies”agreement,something we have been working on for the past two decades.Last year,we also welcomed our first

295、 Munkhtamir Batbayar President&CEOMIAT(MONGOLIAN AIRLINES)We aim to collaborate more with various industries in Mongolia,including mining,and customize our flights to meet their needs.Boeing 787 Dreamliner aircraft and are expecting a second one in the first quarter of this year.This will bring us c

296、loser to opening up flights to the US starting from 2024.Our goal for 2025 is to open up new destinations and offer direct flights to Vietnam,Singa-pore,and Australia.Over the past few years,we have been focusing on developing the sixth freedom rights,which allows passen-gers to be transported betwe

297、en two nations by an airline of a third coun-try,but via its home base,effectively turning Mongolia into a preferred transit hub.As a result of our efforts,we have tripled the number of our transit passengers since 2019.Ad-ditionally,foreign investment in the countrys mining,renewable energy,and oth

298、er sectors has increased inter-national travel into Mongolia.MIAT offers direct flights to the Oyu Tolgoi(OT)site.How important is the mining sector to the airline?As part of our strategy,we aim to col-laborate more with various industries in Mongolia,including mining,and customize our flights to me

299、et their needs.Our collaboration with the OT mining site serves as a great example.Since 2015,we have provided around 30 flights per week to the OT site.During the pandemic,when we faced a severe cash flow crunch due to low demand,we negotiated an agree-ment with the CEO of OT for long-term discount

300、ed trips paid upfront.This helped us inject much-needed cash to pay for our employees and keep the business afloat.I previously worked for OT for six and a half years before joining MIAT,and I am confi-dent that the mining sector can offer many opportunities to MIAT and the country itself.As the avi

301、ation industry is becom-ing more regulated,how is MIAT ap-proaching sustainability?Our main strategy is to increase our fuel efficiency by acquiring less fuel-intensive aircraft and upgrading our existing fleet with software that can reduce fuel consumption.Additional-ly,we have introduced the paper

302、less cockpit concept,which we are now ex-panding to our back office operations.Mongolia initiated the Welcome to Mongolia three-year campaign,which started in 2023.In your opin-ion,how could Mongolia attract more visitors to the country?Logistics plays a vital role in enabling more people to visit M

303、ongolia.To in-crease Mongolias global presence,we need to make it convenient for people to come here,and that is where MIAT comes into play.Though we are not as big as Turkish Airlines or Emirates and cannot fly to everywhere,we can expand our network of partner-ships to connect with every city in t

304、he world,making it easier for people to travel to Mongolia with just one to two stops.Mongolia is a unique coun-try with a rich culture,beautiful na-ture,and business opportunities that the world needs to explore.By ensur-ing efficient logistics at an affordable price,we can attract more attention t

305、o our country.From 2023 to 2025,the Mongolian government launched the Welcome to Mongolia campaign to make tourism one of the main pil-lars of the economy.INTERVIEWINTERVIEW26 27 GBR SERIES|MONGOLIA MINING 2024GBR SERIES|MONGOLIA MINING 2024Diversification goes back in circlesA small economy with a

306、small population,tucked between Siberia and the Gobi Desert,with a harsh climate that swings from-40 to+40 Celsius,has few options for eco-nomic growth.Agriculture is mostly limited to livestock and at the mercy of the weather;manufacturing and trad-ing are limited by the remote location and the lac

307、k of exit ports;and the service sector is constricted by the lack of a substantial domestic market.Mining remains Mongolias best shot,but relying too much on commodities holds per-ils too.On a good year,like 2023,mineral-export pushed GDP growth close to 6%.The opposite becomes true when commodity p

308、rices drop.Mongolia is well aware of the risks of depending on mining alone.“It is anticipated that the economy will ex-perience a surge in growth,surpassing 6%by 2024-2025,due to the rise in mining production.However,it is im-perative to implement reforms that encourage economic diversification to

309、maintain this growth and establish resil-ience against domestic,external,and climate-related dis-turbances,”saidAltai Khangai,the CEO of the Mongolian Stock Exchange(MSE).The main options for economic diversification are agri-culture,value-added manufacturing,power,and tourism.Before the development

310、 of mining,Mongolia was mostly an agrarian economy,and the general economic advice was to diversify away from agriculture and into other sec-tors like mining.Now,the tables have turned,with the dif-ference being that Mongolia is advised to develop a more technologically driven,sustainable,and integr

311、ated agri sec-tor.For instance,instead of selling cashmere,it could pro-cess the raw material into yarn,deriving more value.The same principle would apply in the minerals sector.Compa-nies like Oyu Tolgoi are talking about eventually produc-ing cathodes,rather than simply copper concentrates in the

312、future.Erdenes Mongol,the main state-owned enter-prise that holds a stake in 30 different mineral companies(exploration,mining,logistics),also said it wants to build more processing plants.Mongolias main opportunity outside of mining could be renewable power.The Asian Development Bank esti-mates tha

313、t Mongolia could generate 5.45 terawatt-hours of clean wind and solar energy,which is about 62%of Chinas electricity generation in 2022,reported the Lowy Institute.“Mongolias renewable resources are incredible.Mongolia is one of the sunniest locations;this,and the alti-tude,makes it ideal for photov

314、oltaics,”said Oliver Schnorr,the CEO of Euro Khan,a company that eventually chose wind to generate green power in Mongolia at its Sainshand Wind Park.The constraints of developing large-scale renewables are political,suggested the authors at the Lowy Institute article:If Mongolia were to export its

315、green energy to China,the most obvious candidate for the purchase,it would tap into a gap that currently Russia fills,as an exporter of energy to both China and Mongolia.The disruption could upset the relationship between Mongolias only neighbors.China is building a US$12 billion solar project on it

316、s side of the Gobi.“China could build massive renewable plants in Mon-golia,but Mongolia wants to guard its energy sovereignty as much as it can outside of Chinas influence.Even Oyu Tolgoi is currently powered by a company in Inner Mongolia(Inner Mongolia Power Corporation),”said Schnorr.The develop

317、ment of hydropower plants would also bump into a geopolitical obstacle,according to Schnorr:“Hydropower projects are a bit more problematic because the important Orkhon River is feeding into the Selenge,and the Selenge flows into Russia,draining into Lake Bai-kal.Russia would be alert if Baikal Lake

318、 levels dropped as a consequence.”Image courtesy of SRK Consulting MongoliaCould you provide an overview of Mongolias monetary policy strat-egy and objectives?As outlined in the Central Bank Law,our primary objective is to ensure the stabil-ity of the national currency,the togrog.However,this statem

319、ent is subject to two interpretations:either focusing on inflation or the exchange rate.The Bank of Mongolia explicitly states its objective as safeguarding the purchasing power of the togrog,demonstrating a com-mitment to price stability measured by the Consumer Price Index.On the other hand,some s

320、takeholders tend to lean towards emphasizing exchange rate stability.In our country,characterized by a small,open economy heavily de-pendent on commodity exports,main-taining a flexible exchange rate is cru-cial.It serves as a vital shock absorber in the economy.Consequently,the Bank of Mongolias ma

321、ndate is to stabilize inflation at 6%with a band of+/-2 per-cent over the medium term,as outlined in the Monetary Policy Guidelines for 2024,approved by the Parliament.Could you comment on the efforts to tame inflation and the outlook on inflation/interest rates for 2024?The year 2022 presented subs

322、tan-tial challenges for numerous central banks,with a notable surge in inflation attributed to rising oil and food prices and supply chain disruptions stemming from geopolitical tensions in the after-math of the pandemic.In response to these circumstances,the Bank of Mongolia implemented a series of

323、 five Lkhagvasuren Byadran GovernorBANK OF MONGOLIA 30The Bank of Mongolia expects that the recent banking sector reforms will bolster banks capital,improve governance,and enhance the performance of the domestic stock market.policy rate hikes throughout 2022.This resulted in a cumulative increase of

324、 7 percentage points,elevating the rate from 6%to its current level of 13%.Over the past few quarters,infla-tion has exhibited a moderate decline,reaching 7.9%in December 2023a substantial reduction from the 16.%recorded in June 2022.This decline can be attributed primarily to the decrease in import

325、 prices,facilitated by the eas-ing of supply chain disruptions and the stabilization of the exchange rate,sup-ported by an upswing in coal exports.Furthermore,the impact of a tighter monetary policy stance has become ev-ident in the sluggish growth of imports and business loans throughout 2023.How c

326、an Mongolia reduce/face macro risks as a commodity-driven economy?Mongolia,being a resource-rich and landlocked country,faces potential spillovers from developments in its two neighboring nations,China and Russia.Furthermore,with the mining sector serving as the primary driver of our economy,coupled

327、 with limited buffers,our economic landscape be-comes susceptible to external shocks.In light of these economic character-istics,it becomes imperative to man-age our economy countercyclically.The establishment of buffers within economic sectors and among various agents plays a pivotal role in fortif

328、ying economic resilience against adverse conditions.Additionally,fostering economic diversification emerges as a crucial strategy to further enhance our economic resilience.In this context,the Bank of Mongo-lia has successfully collaborated with commercial banks to strengthen prior-ity sectors by in

329、creasing loan supplies.Notably,commercial banks,in col-laboration with international financial organizations,are actively supporting the non-mining export sectors,par-ticularly the wool and cashmere sec-tors.Additionally,the banking sector,spearheaded by the central bank,has played an active role in

330、 supporting the“Food Supply and Safety”national campaign,an initiative led by the Pres-ident of Mongolia.Our engagement in green financing exemplifies a proac-tive approach toward addressing the challenges of climate change,show-casing our commitment to building a more resilient and sustainable futu

331、re.What is the expected outcome of recent reforms in the banking sec-tor,including the compulsory pub-lic listing of the countrys top five commercial banks?The Mongolian banking system is at a crucial crossroads.Policy reforms have been crafted to tackle the bar-riers obstructing the effective ad-va

332、ncement of the banking sector.The“Banking Sector Reform Program 2020-2023”covered the entire Mon-golian banking sector,with the goal of fortifying banking institutions in the short to medium term.As part of this ambitious reform program,the Bank of Mongolia has focused its efforts on reducing owner-

333、ship concentration and improving the corporate governance of banks.This aims to foster a transparent and so-cially responsible banking system.The transition of banks into joint-stock companies and the IPOs of systemically important banks(SIBs)have led to a rise in investment opportunities,expanded market participation,and the availability of highly liquid financial products.The Bank of Mongolia ex