Minister D.Zorigt: Tavan Tolgoi is the locomotive of the Mongolian Development
Minister D.Zorigt has more on Tavan Tolgoi and other issues, when Tavan Tolgoi’s faith is under disposal of the State Great Khural.
Q: Many facetted concept of Tavan Tolgoi’s development future creates dilemma in the public. According to you, what is the vital advantage of the project?
Minister D.Zorigt: The project was developed in order to provide same opportunity to every citizen and company of Mongolia. It can be said that the project is the medium version to support the domestic value added production, add positive index in the external factors and strengthen geopolitical conditions. Of course, we received offer from domestic and foreign companies and heard voices from scholars and people.
Q: Since its presentation to the State Great Khural, there was criticism in the society. Some say the project arrangement was against the world standard.
Minister D.Zorigt: There are many good examples in the world to build up the national corporations based on the major mining projects. Therefore, I can’t explain why it was against the normal standard of the world. For example, I would say Brazilian CVRD. CVRD, one of the top three mining companies of the world, stood up on the iron project. It was the state owned company and later it was sold to public.
Q: But Mongolia is different than Brazil, isn’t it?
Minister D.Zorigt: Yes, Brazil has sea port. But, transit transportation is crucial issue for Mongolia. Therefore, when we make decision on Tavan Tolgoi, we always consider the improvement of our transit transport position. Our coal at the national border is several times cheaper than the world market. It is because of real condition. When coal reaches the border, it faces quota of transportation and instable tariff.
Obviously, the share of the license holding company will be distributed to public and remaining will be sold. When we are dealing with foreign companies, we always set forth issue of improving the transit transportation.
Q: What foreign experts and advisers do you have?
Minister D.Zorigt: Deutche Bank, GP Morgan, and McKenzie, especially for the stock market expertise. Mining, financial and legal advisers are working form the World Bank.
Q: Do you think that foreign companies will trade at the Mongolian Stock Exchange?
Minister D.Zorigt: In the first round, the government will give an opportunity to the Mongolian people and companies. Such experience was tested in other countries, for example, Australia sold Telstra Company, the biggest company in telecom sector, to its people and companies. In doing so, it allowed to foreign companies to acquire up to 30% of the stake. But, Mongolia needs to develop its capital market and stock exchange. The Government made request for proposal for the Mongolian Stock Exchange management tender bid. It is all about to bring the management up to the level of the world standard. Of course, the Financial Regulatory Committee will impose its monitoring and control on the arrangement and management.
Q: There are over 300 JSCs at MSE, but few of them submit their report and only dozen of them hold their shareholders’ meeting regularly. What would you say about it?
Minister D.Zorigt: The Financial Regulatory Committee shall take control of this issue. I was informed that the Committee has started cooperating with foreign organizations.
Q: Can MSE changed and reformed to the world level?
Minister D.Zorigt: Yes, it has to. Also it has full capacity to reach that level. There are other cases around the world, which developed the stock market.
Q: So, 10% of Erdenes MGL will be offered to domestic private companies, 30% is to foreign companies and what about the remaining 60%?
Minister D.Zorigt: A subsidiary company of Erdenes MGL, a state owned company, will make IPO and its certain part will be distributed to public. Right at the moment, it is early to say give number and exact calculations on the exercise; however, in order to conduct business operation, the company shall make profit or conduct profitable activities. We will advise with the World Bank also. Regardless all these preliminary steps, I see a bright future that Mongolia can have its world class national company.
Q: Will there be any priority in going IPO, such as Mongol 999 Consortium, which was the first national caller on Tavan Tolgoi?
Minister D.Zorigt: It will be an open IPO for everyone and every company of Mongolia. We see no discrimination in our operation.
Q: Further development of Bortolgoi and section Zuun (East), sections of Tavan Tolgoi deposit, were included in the proposal. Some consider that 6.4 billion tons of reserve is not the cap of the deposit. What do you think on it?
Minister D.Zorigt: As for today, 6.4 billion tons of reserve has prospect of further increasing. We hired international experts on it. It has 7.0 billion tons of reserve according to Canada standard, and 3 billion tons of it is coking coal. The total reserve will be determined after additional exploration on the least explored field. It might take a year to complete.
Q: Many sub-contractors will be hired, but Mongolian companies will not have chance to take part in the project. What do you think about it?
Minister D.Zorigt: Especially in marketing and sales field we have to cooperate with foreign companies. But we set requirement for the foreign companies to join or establish joint venture with the Mongolian companies in order to take part in the project. This policy is to give advantage for the Mongolian companies. But the Mongolian companies are gaining experience and becoming mature than they were before. Only thing is to give them chance from the Government. Major companies can bid for the tender alone.
Q: Some NGOs and its activists said that the Government gives away Tavan Tolgoi in order to reach its election promises, especially cash of ₮1.5 million.
Minister D.Zorigt: I believe that it is even better solution for Mongolia and Tavan Tolgoi. On one hand, election promise is a deed to develop the nation and improve its people’s living. In order to achieve it, it is obvious to utilize all resources. Previous Governments privatized livestock and apartments. They were correct step in developing the market economy. Based on these achievements, the Government initiates Tavan Tolgoi project, the fourth wave of developing market economy in Mongolia.
Tavan Tolgoi is closely connected with many programs and projects such as “Smokeless Ulaanbaatar”, Railway Development and Building, 100 thousand households, reform in the health sector. Also developing capital market is another challenge. Under this ideology, we developed the Tavan Tolgoi project. In another word, locomotive and pilot of the development is Tavan Tolgoi.
Q: Tavan Tolgoi is remained 100% to the state ownership and this ownership project was adopted. What foreigners think about it?
Minister D.Zorigt: As far I strive, we are working to reserve an opportunity to create capital for our citizens, develop capital market, connecting them with the major creation and projects and establishing national companies. Only if “Erdenes MGL” remains national and leads in the region and world, we will develop. Let’s take example from Hyundai, Mitsui. They are all state owned companies, but they can distribute their wealth to its people through shares. Now they have recognized in the world. Erdenet represent Mongolia at the world capital market. Likewise, “Erdenes MGL”, even bigger scale, can represent Mongolia to the World.
Q: Can you proudly say that Tavan Tolgoi project draft is fully developed reflecting all interest of Mongolia?
Minister D.Zorigt: There is no perfection in our life. I can say that this project draft can servce equally to the Mongolian companies and legal entities, reflecting comments from every aspect of our life.
Q: Many facetted concept of Tavan Tolgoi’s development future creates dilemma in the public. According to you, what is the vital advantage of the project?
Minister D.Zorigt: The project was developed in order to provide same opportunity to every citizen and company of Mongolia. It can be said that the project is the medium version to support the domestic value added production, add positive index in the external factors and strengthen geopolitical conditions. Of course, we received offer from domestic and foreign companies and heard voices from scholars and people.
Q: Since its presentation to the State Great Khural, there was criticism in the society. Some say the project arrangement was against the world standard.
Minister D.Zorigt: There are many good examples in the world to build up the national corporations based on the major mining projects. Therefore, I can’t explain why it was against the normal standard of the world. For example, I would say Brazilian CVRD. CVRD, one of the top three mining companies of the world, stood up on the iron project. It was the state owned company and later it was sold to public.
Q: But Mongolia is different than Brazil, isn’t it?
Minister D.Zorigt: Yes, Brazil has sea port. But, transit transportation is crucial issue for Mongolia. Therefore, when we make decision on Tavan Tolgoi, we always consider the improvement of our transit transport position. Our coal at the national border is several times cheaper than the world market. It is because of real condition. When coal reaches the border, it faces quota of transportation and instable tariff.
Obviously, the share of the license holding company will be distributed to public and remaining will be sold. When we are dealing with foreign companies, we always set forth issue of improving the transit transportation.
Q: What foreign experts and advisers do you have?
Minister D.Zorigt: Deutche Bank, GP Morgan, and McKenzie, especially for the stock market expertise. Mining, financial and legal advisers are working form the World Bank.
Q: Do you think that foreign companies will trade at the Mongolian Stock Exchange?
Minister D.Zorigt: In the first round, the government will give an opportunity to the Mongolian people and companies. Such experience was tested in other countries, for example, Australia sold Telstra Company, the biggest company in telecom sector, to its people and companies. In doing so, it allowed to foreign companies to acquire up to 30% of the stake. But, Mongolia needs to develop its capital market and stock exchange. The Government made request for proposal for the Mongolian Stock Exchange management tender bid. It is all about to bring the management up to the level of the world standard. Of course, the Financial Regulatory Committee will impose its monitoring and control on the arrangement and management.
Q: There are over 300 JSCs at MSE, but few of them submit their report and only dozen of them hold their shareholders’ meeting regularly. What would you say about it?
Minister D.Zorigt: The Financial Regulatory Committee shall take control of this issue. I was informed that the Committee has started cooperating with foreign organizations.
Q: Can MSE changed and reformed to the world level?
Minister D.Zorigt: Yes, it has to. Also it has full capacity to reach that level. There are other cases around the world, which developed the stock market.
Q: So, 10% of Erdenes MGL will be offered to domestic private companies, 30% is to foreign companies and what about the remaining 60%?
Minister D.Zorigt: A subsidiary company of Erdenes MGL, a state owned company, will make IPO and its certain part will be distributed to public. Right at the moment, it is early to say give number and exact calculations on the exercise; however, in order to conduct business operation, the company shall make profit or conduct profitable activities. We will advise with the World Bank also. Regardless all these preliminary steps, I see a bright future that Mongolia can have its world class national company.
Q: Will there be any priority in going IPO, such as Mongol 999 Consortium, which was the first national caller on Tavan Tolgoi?
Minister D.Zorigt: It will be an open IPO for everyone and every company of Mongolia. We see no discrimination in our operation.
Q: Further development of Bortolgoi and section Zuun (East), sections of Tavan Tolgoi deposit, were included in the proposal. Some consider that 6.4 billion tons of reserve is not the cap of the deposit. What do you think on it?
Minister D.Zorigt: As for today, 6.4 billion tons of reserve has prospect of further increasing. We hired international experts on it. It has 7.0 billion tons of reserve according to Canada standard, and 3 billion tons of it is coking coal. The total reserve will be determined after additional exploration on the least explored field. It might take a year to complete.
Q: Many sub-contractors will be hired, but Mongolian companies will not have chance to take part in the project. What do you think about it?
Minister D.Zorigt: Especially in marketing and sales field we have to cooperate with foreign companies. But we set requirement for the foreign companies to join or establish joint venture with the Mongolian companies in order to take part in the project. This policy is to give advantage for the Mongolian companies. But the Mongolian companies are gaining experience and becoming mature than they were before. Only thing is to give them chance from the Government. Major companies can bid for the tender alone.
Q: Some NGOs and its activists said that the Government gives away Tavan Tolgoi in order to reach its election promises, especially cash of ₮1.5 million.
Minister D.Zorigt: I believe that it is even better solution for Mongolia and Tavan Tolgoi. On one hand, election promise is a deed to develop the nation and improve its people’s living. In order to achieve it, it is obvious to utilize all resources. Previous Governments privatized livestock and apartments. They were correct step in developing the market economy. Based on these achievements, the Government initiates Tavan Tolgoi project, the fourth wave of developing market economy in Mongolia.
Tavan Tolgoi is closely connected with many programs and projects such as “Smokeless Ulaanbaatar”, Railway Development and Building, 100 thousand households, reform in the health sector. Also developing capital market is another challenge. Under this ideology, we developed the Tavan Tolgoi project. In another word, locomotive and pilot of the development is Tavan Tolgoi.
Q: Tavan Tolgoi is remained 100% to the state ownership and this ownership project was adopted. What foreigners think about it?
Minister D.Zorigt: As far I strive, we are working to reserve an opportunity to create capital for our citizens, develop capital market, connecting them with the major creation and projects and establishing national companies. Only if “Erdenes MGL” remains national and leads in the region and world, we will develop. Let’s take example from Hyundai, Mitsui. They are all state owned companies, but they can distribute their wealth to its people through shares. Now they have recognized in the world. Erdenet represent Mongolia at the world capital market. Likewise, “Erdenes MGL”, even bigger scale, can represent Mongolia to the World.
Q: Can you proudly say that Tavan Tolgoi project draft is fully developed reflecting all interest of Mongolia?
Minister D.Zorigt: There is no perfection in our life. I can say that this project draft can servce equally to the Mongolian companies and legal entities, reflecting comments from every aspect of our life.
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