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Mongolia Mining Sector
Mongolia has rich mineral resources and exploitation of these has been increasing in the transition period to the market economy. There are over 8,000 deposits of 440 different minerals in Mongolia, of which about 600 deposits and outcrops of resources have been determined. A total of 181 gold deposits, 5 copper molybdenum deposits, a lead deposit, 5 tin, 10 steel, iron, 4 silver, magnesium, mica, 3 gypsum, 3 asbect, 3 graphite, 2 bitumen, 42 coal and brown coal, phosphorus, 42 fluorspar, 12 salt, 10 sodium sulphate, 6 semi-precious stone, 9 crystal, about 30 underground water deposits and 205 construction materials, including stone, sand, gravel, limestone, marble, plaster, cement and mineral pigment's raw materials are found. Exploration works were conducted in about 70 percent of the deposits, and the resources of the deposits were evaluated from an industrial mining point of view.

Over 200 of the aforementioned deposits are being exploited now, of which 24 are non-ferrous metal deposits, 111 are gold, 34 coal, 15 salt and about 50 mineral deposits. The joint Mongolian-Russian Monrostsvetmet Company is exploiting four of the biggest mines, which have the capacity to extract 600,000 tons of fluorite a year, seven exploration parts, and a factory with the capacity to enrich and process 500,000-600,000 tons of fluorite annually. A gold mine with 250 litres capacity in two floating drags, which have a power to wash 1 million tons of sand a year, open mining with the annual capacity to extract 100,000 tons of coal and a geological exploration group are operating in the company.


The companies work with a goal of increasing the mining production's output and attained the proper results. The productions of molybdenum concentrate, cement, lime and production construction, as well as mining of gold and silver were up. Currently, a total of 94,682 hectares of square have been given to companies and enterprises under 527 licences to exploit Mongolia's minerals, of which 28,000 hectares are being exploited for the mining production. An average of 86 million cubic meters of earth moving was conducted each year and 133 million cubic meter of water was exploited. 40 percent of the total consumed water was re-cycled and 35 percent of the earth moving and 70 percent of the water consumption are allotted to Erdenet ore-dressing plant and other coal-mines.

Mining Industry
It is one of the main pillars of the Mongolian economy and produces 30% of the total industrial output and accounts for 65.5% of export revenue. The output of the Mongolia mining sector has increased by about 8 percent a year. Products from this sector account for 9 percent of the Gross Domestic Product. The new Minerals Law of Mongolia, passed in 1997, has greatly improved the legal environment for investors by clearly defining legal rules, simplifying the licensing process and reducing royalty and exploration fees.

The Petroleum Law, adopted in 1991 has also provided a favorable legal environment for investors to operate in this field. During the past four years of geological exploration in Mongolia, platinum has been found in Umnugobi, Bayankhongor, Uvs and Gobi-Altai aimags. Mongolia is becoming an interesting region for mineral exploration due to the discovery of platinum. Thus, the Mongolian mining sector is attracting the attention of foreign investors. A region that may include large amounts of copper was also found, in the areas of Bayankhongor and Gobi-Altai Aimags.

Copper, gold and uranium deposits were discovered in Oyu Tolgoi of Umnugobi Aimag and exploration is underway. Canadian Ivanhoe Mines has now raised $160 million in equity financing since discovering high-grade gold and copper porphyry at Oyu Tolgoi (Turquoise Hill) in July, 2001. Compared to Erdenet Enterprises, the copper substance is higher there. As of now, about 30 thousand meters straight unless the minerals are identified before reaching that level. Over the past four years geological cartographical works made in the western and northern part of Mongolia have resulted in the discovery of 33 kinds of mineral resources.

Because of the reformed mineral resource law of 1997 many foreign and Mongolian companies began new explorations. Before 1997 about 400 licenses were issued but now there are over 2000 licenses issued among the mining companies. About 15-16 percent of Mongolian territory is involved in mining The Mongolian mining sector covers 1 percent of copper, 3.3 percent of spar, 1.3 percent of molybdenum, 0.1 percent of steel and 0.5 percent of gold of the world. Erdenet ore-dressing plant - A Mongolian-Russian joint venture is one of the leading enterprises in this sector. Erdenet Enterprise accounts for around 13,5 per cent of Mongolia's GDP and 7 per cent of the country's tax revenues, 30 percent of industry and 29 percent of export products.

In 1998, when world market copper prices stood at $1574.0 the enterprise took a loss of 22 billion tugrugs. However in 2002, the copper price fell dramatically to $1559 but the enterprise ran a profit of 23 billion tugrugs and paid taxes worth 13 billion tugrugs. This was due to lower expenditures and an increase in productivity through considerable management and worker effort. In 2003 the miner produced 131,175 tonnes of contained copper, while 133,503 tonnes in previous year. Due to a fall in the world copper price, exports are decreasing and open mining is becoming deeper, down to 300 meters.

Ore levels are decreasing, therefore new technology and creation of refined products will help improve profits. Erdenet Mining is considering building a new plant to produce 25.000 monnes of copper cathode a year. The fleet of heavy trucks "Belaz" and main parts of equipments in the plant are innovative. At present there are 6100 workers and engineering and technical staffs, including 500 specialists from Russia and Commonwealth of the Independent States. In 2001, Erdenet was calculated to have resources for the next 40 years.


Fossil fuel Coal
Over 200 deposits and finds of coal and brown coals, which are the basic source of Mongolia's fuel and energy, were identified in 15 basins. Exploration works were done in 76 of the aforementioned deposits and coal mines were established in 40 coal deposits. Approximately 4,900 tons of coal is extracted in a year from the main coal deposits in Baganuur, Sharin Gol, Shivee Ovoo, Aduun-chuluun and Talbulag. There are 25 oil shale deposits in Mongolia, of which 23 are in Tuv and Dundgobi aimags. Also there is conjecture that the Uvdug Bulag, Khugshingol and Zuunbulag oil shale deposits have large-scale resources.

Mongolia's current coal production is approximately 5 million metric tons, which is mostly consumed by domestic power producers. The country is estimated to have potential reserves of 125 bil-»on metric tons. Many of these reserves have been proven, but remain undeveloped due to a lack of infrastructure. Such reserves include the huge Tavantolgoi deposit in the Gobi, which contains over 5,000 million metric tons of coking and steam coal, but lies more than 400 kilometres from the nearest railway. Several of the country's largest coal mines have been selected for privatisation in the near future. These include the BagaNuur mine, the largest in the country with a design capacity of more than 6 million metric tons per year. These mines are located along the country's main railway line, and supply coal primarily to power plants in the major cities. Several smaller mines are also slated for privatisation.

Mongolia is included in the list of ten world countries, which have great natural wealth and coal resources.
Distribution: Currently, coal deposits are quite consistently distributed in the territory of Mongolia. There are over 200 deposits, and finds of coal and brown coals were identified in 15 basins and four regions, of which about 50 deposits have undergone geological and exploration works. Most of the coal reserves are in Umnugobi aimag and it occupies 65 percent of the total resources. The remaining 35 percent are in Bayankhongor, Selenge, Khentii, Sukhbaatar and Uvs aimags.

The coal is the basic fuel of the energetic production of Mongolia and about 40 enterprises are extracting coal from 21 big and small deposits. Ninety three percent of Mongolia's electric and heat production is produced by coal and seven percent is produced by the liquid fuel. The Mongolia coal industry is opencast chiefly, which is almost 100 percent economical. But it became clear that this method has an adverse effect on the environment. So, a survey on exploiting of natural wealth with the help of advanced technological method is being made in the country in order to protect the environment.


Oil Resources
The oil sector has a high potential for exploration activity and large-scale investment is required. A total of 22 contract fields, covered 538,000 square kilometres area of the total Mongolia's territory were selected. Now American, Australian and Chinese oil companies are running their activities on six contract fields under a Production Sharing Contract concluded with the Government of Mongolia. The foreign contracting parties have been drilling 21 oil exploration and evaluation holes since 1993 and spending about $120 million on this purpose. Mongolia began to export oil in 1997 testing the extraction of the exploration period. The US SOKO International and the Australian Rock Oil Companies are extracting oil in Tamsagbulag of Dornod aimag and Dornogobi aimag.

Excavation officials say Tamsag may have 1.5 billion barrels of oil, and one area of Dornod aimag may contain as much as 50 million barrels of oil. The SOKO International Company, which is developing the 19-22nd contract field of the Tamsag basin under the aforementioned agreement, made a $7.4 million investment, drilled four bore-holes and extracts 300 barrels of raw oil a day. The joint group of the Australian Rock Oil and Chinese Dongsheng companies drilled two exploration holes in 2002 and the first hole was drilled to a depth of 2844 meters. This was the deepest hole in the Dornogobi basin.

The second hole was bored to 1,100 meters and slanting drilling, a first in Mongolia, is being used in the hole. In 2003, the company drilled one well, performed experimental service works on four wells, and by the end of the year had extracted 32,400 barrels of oil from five wells and exported 15,100 barrels of oil. At the end of 2003, Parliament endorsed the amendments, which said that if contractors wish to extend the term of their prospecting activities, the government would allow the term to be extended by up to five years, taking into consideration adherence to contract terms and the necessity to continue prospecting activities at the contracted site. Oil extraction of the country increased 3.3 times in 2003 over 2002. Oil exports also rose by a factor of 3.8. In 2003, 470,000 barrels of oil were extracted and 441,000 were exported.

Gold Resources
A total of 18 gold ore zones such as Khentii, Bayankhongor, Kharkhiraa, and Khangai mountain range have been determined in Mongolia. There are 152.6 tons of explored gold reserve in the country, of which 90.6 tons are in the Tuul, Bayangol, Arnaiman, Ult and Toson placers and 62 tons are included in the Boroo, Sujigtei and Tavt basic deposits. As a result of the Mongol Gazar and Gachuurt companies' exploration and research activities, large scale gold reserves of the Kharguit, Shiirt and Zuun Sadat deposits in Tsenkher and Bat-Uul soums of Arkhangai and Uvurkhangai aimags were discovered and registered in the state reserve book.

The gold extraction of Mongolia increased by 14.7 times in the last 10 years. Also copper ore extraction and concentrate production increased by 30.4 per cent, and fluorspar concentrate production increased by 14.6 percent. This sector is leading other fields by its output production and investment amount. The Mongolian government is paying more attention to implementation of the gold program along with intensively controlling the gold extraction process of enterprises and organisations. The gold program is also aiming to improve techniques and technology, and decrease waste. The gold extraction and export of the country have been increasing year by year. The Canadian Boroo Gold Company, engaged in gold and mining exploration, was named Top Company of 2003 and as the leading company in the mining sector.

It has been estimated that the impact of Boroo will represent 5 to 7% improvement to the GDP of Mongolia. The capital cost of development and construction of the project was $75 million equivalent to 88 billion tugrigs. The Boroo hard rock deposit was discovered in the early 1900's however it was only explored extensively in the 1980's by a Mongolian — East German joint venture. The property has been held by several parties since but acquired by Altai Holding Company in 1997. The start-up of the Boroo Gold Mine represents the first hard rock gold deposit to be developed and brought into operation in Mongolia and the largest foreign investment of its kind. The project has undergone development and construction during 2002/03, and culminated in the first gold bar being poured in December 2003 and achievement of commercial production on March 1, 2004.


Silver Resources
Four independent silver deposits were determined in Mongolia, and exploration works were carried out in the deposits. The main source of silver, reflected in the state reserves statistics, is silver-bearing, non-ferrous metal deposits. Most part of the silver reserve in the state reserve registration is allotted to the Asgat sil-ver-sulfate, the Tuv and Mungun-Undur silver-mixed metal deposits. The silver reserve will be increased during exploration works of soil and mixed-metal deposits.

Copper Resources
Most of Mongolia's copper reserve is allotted to the Erdenet mining and the Tsagaan Suvarga copper-porphyry deposits. There is considerable high content copper-nickel and sandstone deposits and finds in the country's territory. But a detailed survey has not yet been made. As a result of copper exploration, many finds with two percent copper contents were determined. The Erdenet mining extracts 22.23 million tons of copper ore a year and produces 126.7 thousand tons of copper and 1953.7 tons of molybdenum. Also the mining is operating the Erdmin industry, which has a capacity of producing 3.600 tons of cathode pure copper from the unsuitable ore for processing in the technological cycle. As a result of mining research carried out by Ivanhoe Mines Mongolia Inc. Company in Oyu Tolgoi deposit, more than 10 million tons of copper and 500 tons of gold deposits were discovered. However, with more detailed studies going on, the resources may increase.

Molybdenum Resources
Most of the molybdenum reserve is in the Erdenet Ovoo and Tsagaan Suvarga deposits. The remaining parts are in the Arin Nuur molybdenum-copper, Undur Tsagaan and Eguzer Tungsten deposits. The Tsagaan Chuluut, Zost Uul and Ikh Uul molybdenum finds are located in the central and northern parts of Mongolia.

Iron Resources
Exploration works were made in the Bayangol, Tumurtei and Tumur Tolgoi iron deposits and the deposits' reserves were determined. These deposits are sufficient to provide the country's iron manufacture with raw materials. But the issue of discovering new iron deposits with high quality and large-scale reserves has still not been solved.

Uranium Resources
Mongolia's uranium geological survey was conducted effectively. Currently, the uranium reserves are found in Gurvanbulag, Nemer and Mardai deposits of Dornod aimag. The uranium reserve in the deposit is 49.000 tons. It is observed that the uranium reserve of Gobi region will approximately reach 1.5 million tons. Among the sectors, which exploit resources, mineral and raw materials of the Gobi region fuel, energy, ore mines and construction material production are being better developed. 98 percent of Mongolian energy production is produced by coal and ore mine's production occupies about 60 percent of the country's total export output.  

Canadian investment in Mongolia
Mineral Exploration Roundup 2010, assembly will organize in Vancouver, Canada on 18-21th of January, 2010. The assembly is welcomed some kind of organizations, especially related to mining industry. Everyone who wants to expand their goldmine actions, someone who has a license of mining prospecting and the company, that is interested in importing modern technology are available in this assembly.

Betrayal of Energy resource from national interests
Energy resource is announced to put the railway from Ukhaa Hudag of Tavan tolgoi to Gashuun suhait by investment of Germany while they discussed and supported by Safety standing committee of parliament. But before Safety standing committee drew a conclusion, which putting the railway is opposite to Mongolian economical interests. It’s so controversial issue, but recently Minister of Transport of China, Luau Zigjune announced, when he is starting to put narrow ring railway along the Mongolian eight border ports. One of them passes by Gashuun Suhait. Then Government is planning to do some important indusrt, such as to build heavy complex industry in Sainshand and put the railway from Dalanzadgad to Sainshand along the Tavantolgoi, in the future it will used for export industry to China, Europe, East Asia. If Energy resource put the railway there, Mongolia will supply coals only in China, from neighbor. Ukhaa hudag has 411 tonn sources.


Mining wealth to be shared by all Mongolians
At its plenary meeting on November 13, 2009 Parliament approved a law aimed at fulfilling the Mongolian People Revolutionary Party and Democratic Party election manifesto promise to allocate mineral deposit exploitation profits to all the country’s citizens. During the Parliamentary Elections, the MPRP promised to distribute 1.5million tog to each citizen while DP promised 1million tog. This year, the Government drew up a Bill for the “Favor of Motherland” and these have been submitted to Parliament. In the process of discussing these Bills at Parliament, it was considered necessary to combine the two Bills and the two parties therefore each set up a relevant working group for negotiations. At last, a new Bill, namely, “Human Development Fund”, as a combination of the two Bills was approved by parliament.
This new law stipulates distributing 1,5million togs to every citizen as a state and favor from mining profits and, from the year after distribution, the fund’s money is to be deposited into domestic and international financial market savings faculties so as to gain profits and annually distribute dividends from these earnings. Law, not just about giving money to citizens, but about creating a legal environment to distribute shares from mineral resource profits. The Human Development Fund will be financed by State owned share dividends from strategically important mineral resources; income from share sales; advance payments and a portion of companies’ royalties paid into the state budget. The Fund’s asset income will increase considerably between 2016 and 2017. The Law stipulates that a company specially licensed for nationwide operations will co-own the state’s shares in entities legally exploiting strategically important deposits and every Mongolian is to be privileged shareholders in that company.

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