Ten years have passed since the freezing day in November 2008 when Boloroo– as our founder-editor Bolormaa Luntan was affectionately called -- carried copies of the first issue of The Mongolian Mining Journal to distribute them at various sales points. To our lasting regret, she is not with us as we publish the 120th issue of the first bilingual journal specializing in the Mongolian mining sector but we all know how proud she would have been that her brainchild has not skipped an issue in these 10 years and that it now occupies a place of honour on the Mongolian media scene.
The decade that has seen us come of age has overlapped with Mongolia’s development years. It has been witness to our now 96-year-old mineral sector reach a record high, only to sink to the bottom. The growth and expansion of the national economy, and then its sharp downturn have all been directly linked to the fortunes of the mining industry. Take 2008. It was the year MMJ was born, and also the year when a new period in the development of the mining sector started with the beginning of negotiations on the investment agreement for the Oyu Tolgoi deposit. It was a sensitive time with a worldwide financial crisis, but in Mongolia the Government was taking the first steps to put a strategic deposit into economic circulation. The negotiations went on for about a year, while the external environment continued to be unfavorable and inside the country there were protests and resistance. The parties to the talks finally agreed on the general principles and moved the project forward. The rest is history.
Since then there have been huge developments in our mining sector. Modern mines now mark the once desolate vast steppes. Production has soared, exports have risen at an exponential rate and the economy has grown rapidly.
These 10 years have also seen Mongolia’s export composition change. Coal export surpassed that of copper in 2010,for the first time in the three decades since Erdenet Mining Corporation was established. This diversification was a fundamental factor in the economic growth. Almost no coal was exported a decade ago, but today it accounts for 40% of the total exports. Crude oil and iron ore have also become important items of export.
With a new resource-rich country full of energy and opportunity opening up, the world’s leading mining companies made a beeline for Mongolia, though they were quick to exit, too. As the mineral sector expanded, all kinds of supply systems and services entered Mongolia, introducing international standards. At the same time, the exposure and competition led domestic entrepreneurs to adopt global practices.
As the horizon expanded Mongolian mining went in search of new spaces and began studying the prospects of peat, coal seam methane, coal liquefaction and such non-traditional fields.
But it was not all moving forward. These 10 years have also seen many things that were delayed, or got stuck, or was frozen. An excess of optimism made us dream of becoming a coking coal giant in no time, producing uranium, manufacturing steel and having a copper smelter.Most of these hopes have remained on paper, and a huge amount of money has been wasted on the artwork.
Some of these were rightly dreams but there were projects that could have certainly become reality by now. Unfortunately, some had their wings clipped just when ready to take off, and some have at long last started to crawl only recently. Among the missed or delayed opportunities are: transformingTavan Tolgoi into a large project, optimal development of Oyu Tolgoi, constructing a railroad to carry coal to the border, building a power plant in South Gobi, and moving forward the Tsagaansuvarga and Gatsuurt projects.
In the past 10 years Mongolia has twice had to seek help from the International Monetary Fund -- in 2009 and again in 2017. The economy grew an astounding 17% in 2011, only to have a similarly astounding fall just over a year later. The policy setting out the principles of use of deposits in collaboration with foreign investors was announced in 2008 and the Investment Agreement of Oyu Tolgoi was signed in 2009; then came a backlash and the law enshrining the policy was annulled in 2013. One step forward was followed by two steps backward.
This decade also saw eight Governments, some in power for just a brief period indeed.Political instability affects the economy, and leaves the “pillar” sector,mining,in uncertainty. The ups and downs that the mining sector has gone through possibly had more to do with domestic political decisions than global market conditions. There can always be honest mistakes, and these can be corrected, but uncertainty of policy brought about by partisan instability is a bigger hurdle to development of the mining sector. How can there belong-term vision and strategic planning if there is no policy continuity?
The biggest progress was made in capacity building and strengthening of the human resources. Domestic companies in the mineral sector appear to have drawn significant lessons from their past mistakes and are better prepared to meet the challenges that are sure to come up in the next ten years.
Production at Oyu Tolgoi, Mongolia’s showpiece to the world, will peak in the next decade. The underground mine contains 80% of Oyu Tolgoi’s resources and production there is scheduled to begin in late 2020 and reach full capacity in 2027. The railway should certainly be ready in the next 10 years. That will make Mongolian coal more competitive and all the companies working at Tavan Tolgoi would benefit.
Our wish list for the the mining sector in the coming years includes an overhaul of regulatory practices; creating a more systematic and comprehensive legal environment; putting Tsagaansuvarga and Gatsuurt projects into economic circulation as modern mines; and successful exploration companies like Erdene Resource, Aspire Mining and Xanadu Mining beginning production.
This is our 10th anniversary issue, and its contents have been plannedas a report card on the mining sector’s performance in the last 10 years. Looking back helps us look forward with more confidence. This is true of both mining and ourselves. MMJ would not be in its present happy position without the support of readers and advertisers. A big “Thank you” to you all as we step into our second decade.