which Mongolia’s economy is
indelibly linked – is of particularly
concern.
“Mongolia’s macroeconomic
performance continues to be tightly
linked to that of China with the
mainland economy accounting for
approximately 90% of the demand
[for] Mongolia’s exports,” BMI
Research wrote in a recent research
note.
3
“We believe that the structural
slowdown in the Chinese economy
remains in place and will continue to
weigh on Mongolia’s commodity
exports over the coming months […]
Indeed for the whole of 2015,
Mongolia’s exports fell by 19.1% and
this was majorly due to a collapse in
commodity exports.”
That point was echoed by Stephen
Duck, Senior Consultant – Steel Raw
Materials at CRU: “Given the
downturn in prices, most Mongolian
coal miners are burdened with debt
and have reported losses since 2013,”
Duck told
World Coal
. “Production has
been falling with CRU estimating coal
exports to fall to 10.8 million t in 2015.
Production is also unlikely to recover
lost ground in 2016, given the weak
outlook for demand in China.” CRU
forecasts exports to fall to 7.1 million t
in 2016 with recovery back to
10.8 million t only by 2020.
In early February, Mongolian coal
mining company, Mongolian Mining
Corp. (MMC), said it was seeking to
restructure debt of US$600 million,
appointing J.P. Morgan Securities (Asia
Pacific) and SC Lowy Financial (HK)
Ltd. In a statement, MMC blamed
“changes to economic policy
implemented within the group’s
principal target market, China, [that
have] resulted in reduced crude steel
production and consequently lower
coking [metallurgical] coal
consumption and declining import
volumes,” on its precarious financial
state.
Tavan Tolgoi: still no deal
“Mongolia relaunching key mining
talks later this month” ran the headline
in the
Wall Street Journal
.
4
The story
focused on Tavan Tolgoi – Mongolia’s
vast metallurgical coal reserve – and
quoted a Mongolian official “familiar
with the situation” as saying the goal
was to award the contracts before the
Mongolian parliamentary elections in
June. The story appeared in October
2011.
Fast forward four years and not too
much has changed. A
government-approved US$4 billion
deal had been lined up last year with a
consortium comprising Japan’s
Sumitomo Corp., China’s Shenhua
Energy and MMC. But then came the
politics. The speaker of the parliament
said that deal might violate Mongolian
Table 1. Mongolia – select coal projects (Source: BMI Research)
Primary company
Mine
Notes
Xanadu Mines (100%)
Khar Tarvaga
Coal resource in excess of 327 million t; scoping study by Nexant Inc. (Nexant)
confirmed that coal is suited to liquids or gasification.
Xanadu Mines (100%)
Galshar
Thermal coal resource of 170 million t of inferred and indicated JORC compliant
resource.
Xanadu Mines (80%)
Wild Horse
Project under exploration.
Mongolia Energy Corp. Ltd (100%) Khushuut coal mine 44.5 million t of measured resources; commerical production started in 2012 but got
halted in 2013.
Mongolia Energy Corp. Ltd (100%)
Gants Mod
MEC will explore resources for further resources development potential.
Mongolia Energy Corp. Ltd (100%)
Olon Bulag
Mongolia Energy Corp. Ltd (100%)
Govi-Altai
MEC will explore resources for further resource development potential.
Mongolia Energy Corp. Ltd (100%)
Bayan-Ulg ii
Mongolyn Alt Group (100%)
Aduunchuluun
400 million t of brown coal resources are identified.
Prophecy Coal Corp. (100%)
Chandgana coal
project
Measured resources: 633.7 million t; initial coal delivery date anticipated to be during
2H16, annual estimated production: 3.5 million tpy.
Prophecy Coal Corp. (100%)
Ulaan Ovoo
Measured coal resources: 174.5 million t; started pre-commercial operations from
December 2010; however, production has been temporarily suspended.
Aspire Mining (100%)
Ovoot
Production to commence in 2016; reserve: 176 million t.
Aspire Mining (100%)
Nuramt
Ongoing exploration.
Aspire Mining (100%)
Jilchigbulag
Ongoing exploration; company said that the interest in the project has been or will be
relinquished.
SouthGobi Resources (100%)
Soumber
Measured coal resources: 57.9 million t; under exploration stage.
SouthGobi Resources (100%)
Zag Suuj desposit
Indicated coal resources: 17 million t; under exploration stage.
SouthGobi Resources (100%)
Tsagaan Tolgoi deposit Measured coal resource: 23.4 million t; under exploration stage.
Guildford Coal Ltd (70%)
Middle Gobi
Under exploration stage.
Erdenes Tavan Tolgoi (100%)
Tavan Tolgoi
Tavan Tolgoi is Mongolia's largest metallurgical coal deposit. Macmahon has been
operating at Tavan Tolgoi since 2012 and its contract is due to expire in 2017. It won
a bid in August 2011 to work as a contract miner at the east pit at Tavan Tolgoi. Coal
production to peak at 15 million tpy when all mine and transport infrastructure is
established.
16
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World Coal
|
March 2016
