Steering Development for 90 years: Problems Faced by the mining Industry

The year 2012 marks the 90th anniversary of Mongolia’s mining sector, and it was celebrated, as we have reported previously, with the Mining Mongolia 90th International Open conference, held on May 9th and 10th at the Central Palace of Culture of the Mongolian Trade Union. The Mineral Resources Authority and Ministry of Mineral Resources and Energy organized it. 

The aim of the conference was to introduce and present current mining companies and organizations to the public, and support their cooperation with each other. The mining companies, in addition to Mongolian administrative bodies, will discuss the difficulties they face and talk about ways to overcome them. Another important objective of the open forum is to connect investors with mining projects while also assisting growing businesses with new investors. The latest mining technology, equipment and innovations will also be discussed between the representatives of the mining industry. 

D. Zorigt, Minister of Mineral Resources and Energy, led the opening ceremony. His speech generally focused on the high impact of Mongolia’s mining sector within both society and the economy and its inevitable growth in the future.

Zorigt noted that the mining sector carried a significant weight of the Mongolian economy since its establishment with the Nalaikh coal mine in 1922.

“The past three years can be considered as a new era for our mining sector. Our mining sector today makes up over 20% of our GDP and around 90% of our export products. This statistical number may simply be a number and may not represent much but this allowed Mongolia to become one of the fastest growing economies in the world. By doing this, Mongolia has set its path to become a highly developed nation in the next four to eight years.”

He noted that the mining sector of Mongolia is the largest sector in terms of Mongolian employees.

“There are over 50,000 Mongolians working for and getting paid from the mining sector. I think it is right for me to congratulate all the men and women who gathered here today, who are the representatives of the mining sector of Mongolia. It is also correct to state that 30% of Mongolia’s state budget consists of mineral resource profits, and majority of the rest of the budget are made up from the profits from mining-related service and provision companies.”

Afterward, he congratulated the delegates on the 90th anniversary of the mining sector. Minister D. Zorigt said, “Of course, aside from mentioning the great accomplishments of our mining sector through the past 90 years, we will discuss the future and current problems of the sector.” He said that mining operations, legislature or even any small matter concerning mining or mining related works is involved with politics and he emphasized on the need to improve the legislation surrounding the Mongolian mining sector.

In the end, he said that any problems faced by the mining sector are caused by us ourselves; citing the abandonment of mines and irresponsible treatment of nature. He said that the mining sector should not be looked upon as bad because of a few individuals taking things into their own hands.

He also mentioned a number of things about the new Securities Law. “Foreign Investment laws were proposed two years ago, and now are being discussed. Both the new Securities and the Foreign Investment laws are not about limiting and fending off foreigners. It is a way to know who is investing in us, and with what intentions.”

The individual conferences included various discussions regarding the mining sector, from human resources, environment safety and infrastructure. 

Afterwards, two representatives read out messages of greetings from both the President and the Speaker of the Parliament. 

The world trend is that due to increased construction all over the world, the demand for copper will increase evermore, for example in 2020 the demand for copper both in China and India will increase by 50% compared to today. 

In addition to copper demands, copper supply is seen as a problem in the near future. As of today, Peru and Chili are leading copper exporters, and it is estimated that by 2020 Mongolia will lead the world’s copper exports. 

With inflation, increased mineral production, and the 20-30% increase in MNT value will increase the cost of producing minerals. This means that, according to a representative from the Ministry of Finance, substantial action must be taken to reduce costs of extracting, processing and transporting mineral resources. 

The initial actions that should be taken right now are to build railways, roads and electric lines or power plants near mining sites.