The wild wild east

Miners are always searching for that latest underdeveloped province, but as the world grows smaller there are fewer and fewer places that are yet to be fully explored.

The open barren plains of Mongolia are one place that is drawing the mining industry in droves.

The importance of Mongolia as a destination for mining companies is being recognised more and companies are scrambling to ensure they are a part of the booming industry.

Australia is one of the countries that is getting in at the ground floor.

Building relations

The current Mongolian Prime Minister, Sukhbaatar Batbold has realised the relationship between his country and Australia, becoming the first Mongolian Head of State to visit Australia in February.

The Mongolia Australia Business Forum brought mining industries together, those already involved in mining projects in the country and others who are considering tapping into the rich market.

At the forum, the audience heard of the Mongolian nationals who complete their training in Australia and enjoy their time and training so much, they refer to themselves as ‘Maussies’.

Batbold praised our mining industry and says Australia and Mongolia have many things in common.
"There are a lot of common things between the two countries," he said

"Like Australia, we are blessed with an abundance of mining minerals, so we are blessed in that sense.

"They are key for the Mongolian economy.

"He said the similarities between Mongolia and Australia can be harnessed by the two nations working together on mining developments, training and innovation.

Speaking to the Mongolian Consulate for Australia, Peter Sloane, he told Australian Mining that "Australia is seen as a friendly country with the same issue of a large country with a small population."

"Our two countries can compliment each other," Batbold told the forum.

Batbold has previously used the phrase a ‘third partner in Mongolia’ to describe Australia’s position, Sloane added.

"There’s less than 20 years of modern mining, but the discovery of minerals has put us on a global stage," Batbold told the forum.

"We’re not building mines, we’re building a mining country, like Australia and Chile.

But he said the placement of Mongolia amongst some of the world’s most prosperous mining nations will not be an easy or quick task.

"We’re mindful that we need to undergo years and decades of mining exploration to establish ourselves like Canada and Australia.

Fall of communism: Rise of Mongolia

The country took a major step forward n following the fall of communism in 1991, after which it soon amended mining laws to make the country friendly for exploration and to encourage overseas miners.

However, an Australian coal mining company Xanadu Mines chief executive Brian Thornton told Australian Mining there was a void in the mining space from 1991 after the Russians left.

But in the last few years miners have seen the opportunity in the country as "there is serious exploration potential as Mongolia is not very mature, mining wise," he said.

However "Mongolia is still highly vulnerable in economic terms," Batbold said.

Sloane explained that "the development will provide problems for the Mongolian Government, as with all this money flooding into the country it will be difficult to prevent rising inflation."

The Prime Minister went on to say that he was "impressed by the environmentally sound operation" when he visited the Hunter Valley during his visit.

The importance of Australia’s presence in Mongolia was outlined by the Prime Minister, who detailed the economic improvements it has brought for the nation.

"As a result of foreign investment, the mining sector has grown and now contributes 60 per cent of investment into Mongolia.

Black gold

"There is now coking coal to be mined," Batbold stated at the mining forum

Brian Thornton told Australian Mining that there are massive coal fields within the country, adding that there has been a massive increase in awareness in the mining potential of Mongolia.

"We’ve been in the country for six year and I’ve never seen so many miners in this country before," Thornton said.

Peter Sloane said that Mongolia currently has one of the world’s largest under developed coal projects, the Tavan Tolgoi mine, which could hold around six billion tonnes of coking coal.

"It’s so large that there is actually a debate on how to mine it, but it looks like there will be three to four companies mining it, likely larger companies such as Mitsui, Xstrata, Peabody or Mitsubishi," he said.

Supporting the nation

Some of the mining developments in Mongolia will be amongst some of the most technologically advanced in the world with Rio Tinto’s Oyu Tolgoi copper gold mine set to use a revolutionary mining development, the block cave mining method.

"This method requires construction of significant underground infrastructure prior to ore production," according to Rio Tinto.

"In anticipation of this need, Rio Tinto Technology & Innovation has been engaged in a long running development programme to significantly improve both the safety and speed of constructing underground infrastructure such as shafts and tunnels."

David Stewart, chief executive of Leighton Holdings detailed the involvement the company has in Mongolia, and its commitment to contribute to the local communities.

"The Mongolian people demonstrate a tremendous desire to understand what we’re doing in Australia," he said.

"The bulk of the mine workers are local people.

"We employ 680 local people and we have a long term view at the mine site."

He said the facilities in the country are conducive to successful mining operations and the company strives to understand and partake in the cultural customs.

"When I’ve been there, I’ve been very impressed with the airport, phone service, and the camp site was extraordinary.

"There are 35 ethnic groups and 45 religions, and they work in every province in the country.
Stewart said the weather conditions in Mongolia often presented a challenge.

"The environment is harsh, in June it’s pleasant and temperatures can go down minus 30," he said.

"Temperatures range from minus 40 to plus 40."

Culuundorj Khanchuun , committee chairman of national development and innovation said one of the benefits of Mongolian mining are the type of people who are available to work there.

"Mongolia has a very young population," he said.

"Mongolia has a unique chance to become number two in the world for unique metals.

Every job in mining created additional demand of $11.84 in other sectors.

He said with the movement of the new growth areas, the nation is in need of infrastructure and investment in school, hospitals and other necessary services.

Infrastructure development

Mongolian Consulate Peter Sloane told Australian Mining that at mining conference last year, a World Bank economist said the Mongolian Government will need to invest around $4 billion into infrastructure over the next decade, which is set to cause headaches as the budget of the Government is around the same size as the city of Brisbane.

According to Khanchuun, 800 kilometres of rail is planned for 2011, and 3000 kilometres over the next four years.

600 kilometres of specialised highways and truck auto roads for mining is also in the planning, as well as copper smelting, gold refining, coal processing and oil processing plants and facilities.

At Tavan Tolgoi, there is a plan to build an 11 000 kilometre railway to Russia, despite it being only 300 kilometres from China, so as not to be beholden to the Chinese.

Sloane explained that the "Mongolians are wary of both the Russians and the Chinese, but are hedging their bets, and would actually like to turn some of its thermal coal into electricity after which it could export the power generated."

The industry is also looking towards renewable energy and looks to use windpower, which Khanchuun says could provide 100 per cent of the energy for some areas.

Looking forward

George Lhagvaa, managing director of Hunnu Coal perfectly demonstrated the enormity of the mining boom in Mongolia at the forum, when he told of a conversation he has with his mother.

"The other day my 70 year old mother wanted to discuss how mining affects Mongolia, [so that] shows the impact on the country’s economy," he said.

"Growth in Mongolia can be compared to growth in the Western Australian mining regions."

Rod Commerford, Austrade’s Senior Export Advisor, Export and Invest Services-Opportunities for Australian Business in Mongolia told the forum that the opportunities in Mongolia are huge.

"Mongolia is rich in mineral resources and has some of the world’s major deposits," he said.

"Less than 15 per cent of the country has been geographically surveyed."

The Oyu Tolgoi agreement signals an important milestone in Mongolia’s mining history and future.

He said with additional nine projects in the pipeline, Mongolia is at the beginning of its mining boom, and the business opportunities for Australian’s are huge, because we are generally viewed more favourably than Canadians and Americans for our direct approach to doing business.

Brian Thornton added that in the junior miner space, it’s predominantly Australian miners dominating the sector.

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