The landlocked country's natural resources are widely seen as its ticket out of poverty, and at a mining conference in the capital Ulan Bator, industry experts and business leaders said coal could be Mongolia's black gold.
"Coal is becoming a very hot topic in Mongolia," lawmaker Sanjasurengiin Oyun told the media on the sidelines of the Discover Mongolia meeting.
"Coal prices are up and energy demand from China is insatiable. Now is the time to diversify and get beyond copper and gold and onto our other natural resources."
Last year, Mongolia sealed a long-awaited multibillion-dollar deal with Canada's Ivanhoe Mines and Anglo-Australian miner Rio Tinto to develop Oyu Tolgoi, one of the world's richest copper deposits and a key gold source.
This year, now that construction of the Oyu Tolgoi mine is under way, all eyes in the mining industry are on Tavan Tolgoi in the south Gobi desert, which has some of the world's largest untapped coal reserves.
The deposit, 270km from the border with China, contains 6.4 billion tonnes of coal — about a quarter of which is high-grade coking coal, a key ingredient for steel production, while the rest is thermal coal.
"There are enormous coal resources here. They are close to the surface, easy to mine and of high quality," World Bank senior mining specialist Graeme Hancock told media.
"At the current rate of production, they could still be mining coal in 10,000 years."
Mongolia has formed Erdenes MGL LLC to manage state-owned mining interests. The firm, which owns 34 per cent of Oyu Tolgoi, has created a subsidiary, Erdenes Tavan Tolgoi (ETT), to handle the coal deposit assets.
ETT is planning to contract out the development of Tavan Tolgoi to a private company or consortium.
Alexander Molyneux, chairman of SouthGobi Energy Resources, a unit of Ivanhoe, told the conference that Mongolia's coal exports had doubled last year, with China the most obvious key market.
"Mongolia is taking its rightful place as the main supplier of China's coal needs," said Molyneux, noting that in 2010, some 39 per cent of China's coal imports were expected to come from Mongolia, up from 11 per cent in 2009.
He predicted that coal exports to China — the world's largest producer and consumer of the fossil fuel, upon which it relies for 70 per cent of its fast-growing energy needs — could total 30 to 50 million tonnes by 2015.
Experts say Mongolia could earn between US$400 million (RM1.2 trillion) and US$600m in much-needed revenue from coal in just a few years — a figure that does not account for new production at Tavan Tolgoi.
source: AFP
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