Mongolia: Little Known Mineral Wealth
By Cope, Louis W
http://www.redorbit.com/news/science/375198/mongolia_little_known_mineral_wealth/index.html?source=r_science
Mongolia is known in western countries as tne location of rich dinosaur
fossil fields. However, the country is even richer in mineral resources. The
Ministry of Industry and Trade reports 6,000 mineral occurrences of 80
metals and minerals.
Mongolia contains an estimated 100 Gt (110 billion st) of coal reserves.
About 5 Mt/a (5.5 million stpy) is produced from 40 mines. Photo shows part
of the 1-Mt/a (1.1-million stpy) Sharyn GoI coal mine.
Mongolia has already attracted much foreign investment in the mining sector.
Mining is the country's largest industry. It is responsible for 17 percent
of the gross domestic product, 65 percent of industrial output and 57
percent of export earnings.
History
By 1206, nomadic tribes living in the rolling grasslands between the Gobi
Desert and the Siberian Boreal Forest were united by Genghis Khan. Once he
had a critical mass of soldiers, he was able to conquer northern China and
sweep across the Siberian Steppes to Central Asia. Genghis Khan is looked on
as a plunderer in western nations, but is greatly revered in Mongolia. On
his death in 1227, the empire was divided between his four sons. It was his
sons and grandsons who conquered southern China and Eastern Europe.
After four centuries, Mongol power waned and China captured the territory in
1638. At the time of the Chinese unrest when the Qing Dynasty fell in 1911,
Mongolia declared her independence. The Chinese started returning in 1919.
In 1924, Mongolia asked the Soviet Union to help drive out the Chinese.
Mongolia became independent and was the second country to have a Communist
government. Since 1990, Mongolia has held four democratic elections among
more than 10 political parties.
Map of Mongolia.
In 1939,'Japan, which controlled neighboring Manchuria, invaded Mongolia. A
joint Mongolian-Soviet Red Army force repelled the Japanese.
Geography
Mongolia is a land-locked country located between China and central Siberia.
It has an area larger than Alaska. It is roughly oval-shaped, 2,250 km
(1,400 miles) east-west and 970 km (600 miles) northsouth. The population is
2.7 million people, with 800,000 living in the capital city of Ulaanbaatar.
Mongolia is generally at an elevation of 1,200 m (3,900 ft).
The east, north and central areas are gently rolling prairie. Some areas in
higher elevation are wooded with birch, alder and conifer forests. Parts of
the northwest, southwest and immediately northeast of Ulaanbaatar are
mountainous. A large swath of the country in the south is the Gobi Desert.
Mongolia is 65 percent grasslands, 23 percent Gobi Desert and 12 percent
mountains. There are some interior drainage rivers. Other rivers drain to
Lake Baikal in Siberia to the north or to China.The country has a
continental climate of hot summers with temperatures to 40 C (104 F) and
winters as cold as -29C (-20 F). Low humidity results in little snow or
rain.
A housing area in Ulaanbaatar, Mongolia's capital. The crane is one of many
serving the city's current building boom.
Flora and fauna
Except for the desert, grasslands are the norm, but with forests at higher
elevations. Horses, cows and yaks are the farm animals of choice in the
center and north. The desert has grasses suitable for camel, sheep and goat
grazing. But the herds have to be kept moving to remain in feed. Mongolia is
a land without fences, as it is open range.
The most commonly seen wild animals in the Gobi are wild asses, which look
somewhat like burros. In addition, there are mountain sheep, ibex and
marmots. In other parts of the country are wolves, lynx, gazelles, fox,
ermine and deer.
Geology
Author's note:The geology section was written by Dr. G. Badarch, deputy
director of the Mongolian Institute of Geology and Mineral Resources, e-mail
gbadarch magicnet.mn.
Mongolia is principally a part of the Central Asian orogenic belt that
extends from the Pacific coast to the Ural Mountains. The geology of
Mongolia is subdivided into 45 terranes: cratonal blocks, passive
continental margins, metamorphic blocks, island arcs, forearc/backarc
basins, accretionary wedges and ophiolites (Fig.1).
Cratonal and metamorphic blocks, passive continental margin terranes. Seven
cratonal blocks consist of Archean-Proterozoic metamorphic complexes and
Neoproterozoic meta-sedimentary and volcanic rocks. The oldest is Baydrag
terrane, with a zircon age of tonalitic gneiss of 2.65 billion years, 30
million years and 2.83 billion years, 35 million years.
Four metamorphic terranes are composed of highly deformed and metamorphosed
sedimentary and volcanic rocks and synmetamorphic granodiorite and tonalite
plutons 536 million years, 5.7 million years; 494 million years, 11 million
years and 384 million years, 2 million years, uranium-lead zircon ages. The
two passive continental margin terranes comprise mainly NeoproterozoicLower
Palaeozoic shelf carbonatequartzite and deep-marine sediments that are
similar to post- Archean shale or Phanerozoic cratonic shale.
Island arcs forearc/backarc basins, accretionary wedge sand ophiolitic
terranes. Fourteen island arc terranes are widely distributed in Mongolia.
They consist mainly of Neoproterozoic and Paleozoic ophiolites, tholeiitic
to calc-alkaline volcanic and volcaniclastic rocks intruded by diorite and
granodiorite plutons. The oldest ophiolites are the Dunzhugur, 1.02 billion
years, 700,000 years; lead-lead zircon and 800 million years, 4 million
years, uranium-lead ophiolites. Some other ophiolites have a similar
isotopic ages, 570 million years.
Eight forearc/backarc basin terranes that contain predominantly Lower
Paleozoic thick volcaniclastic successions, minor mixtures and slivers of
ultramafic rocks. The seven accretionary wedge terranes are represented by
narrow linear belts of highly deformed and metamorphosed rocks, thrust
sheets and fragments of ophiolite. The Adaatsag accretionary wedge contains
ophiolite that has a uranium- lead zircon age of 325 million years. Three
ophiolitic terranes contain dominantly Neoproterozoic and Lower Paleozoic
ophiolitic rocks and mlanges. The largest Bayanhongor ophiolite has a strike
length of more than 300 km (186 miles) and a samarium-neodymium age of 569
million years.
The geologic evolution of Mongolia is characterized by an amalgamation of
terranes and the closure of oceanic basins during the Neoproterozoic,
Cambrian-Ordovician and Pennsylvanian-Early Triassic periods that were
constrained by overlap sedimentary basins and volcanicplutonic belts and
stitch plutonic rocks (Fig. 1).
Past mining
Uranium. Major quantities of uranium were produced from the openpit Mardai
Mine near the town of Choibalsan in the east. This property was a joint
venture of the Mongolian and Soviet governments. It shut down in the early
199Os. In 1998, there was consideration given to reopening the mine. But it
was not economic to do so with the then low prevailing price of yellow cake.
Gold. This metal has been mined in almost all parts of Mongolia. Most of the
production has been from alluvial deposits by dredges and wash plants with
water monitors.
Other mining. Most of the additional mining has been coal to fuel power and
steam plants. Fluorspar has been produced and small amounts of other
commodities have been mined.
FIG. 1
Terrane subdivision of Mongolia.
Present mining
There are more than 5,200 exploration and mining licenses in effect. These
cover 40 million hm2 (100 million acres), about 26 percent of Mongolia. The
most notable operations are the Erdenet copper-molybdenum mine, the Boroo
gold mine, the Bor Undur fluorspar mine, and the Sharyn GoI and other coal
mines.
Gold. In 2003,10.7 t (344,000 oz) of gold were produced in Mongolia, almost
all from 136 registered placer mines. The seven largest mines produced 50
percent of the total, while 87 produced less than 10 percent. There are f 2
known areas in Mongolia that have gold mineralization.
Centerra Gold's Boroo Mine has been in production since March 2004. The site
is ffO km (68 miles) northnorthwest of Ulaanbaatar. It is in an enviable
location, being 8 km (5 miles) from a major paved highway and 24 km (15
miles) from the Trans-Mongolian Railway. Reserves are 10.3 Mt (11.3 million
st) of ore at a grade of 3.52 g/ t (0.103 oz/st) gold.
Boroo was discovered in 1910. For the next 90 years there had been
intermittent small amounts of gold production. Centerra purchased a
95-percent equity interest in 2002 and proceeded to develop the property. It
now produces 43 percent of Mongolia's gold. The capital investment of US$74
million was the first major foreign mining investment in Mongolia since
changing to a free market economy.
Borhoo's ore occurs in an intense hydrothermal zone between two low-angle
faults. The ore averages 15 m (50 ft) thick within an area 1,500 χ 2,500 m
(4,900 x 8,200 ft). The ore is mined from an openpit. Mine-life stripping
ratio will be 3.9:1. Blastholes are 115- mm- (4.5-in.-) diam on a staggered
3.5-m (11.5-ft) grid. The blasting agent is ANFO. All the rolling stock at
the mine is Caterpillar equipment.
The 5.5 kt/d (6,050 stpd) mill is a standard carbon-inleach (CIL) plant of
crushing, semiautogenous grinding and ball milling, cyclone classification,
cyanide treatment, carbon adsorption/desorption and electrowinning. The
cyclone underflow goes through Knelson concentrators for gravity
concentration of liberated gold. The \concentrate is leached in an Acacia
strong-cyanide reactor. Tailings are detoxified by an air-sulfur dioxide
system. Operating cash costs are US$5.46/g (US$170/oz) of gold.
Five hundred people are employed, more than 90-percent of whom are
Mongolian. The laborers work 12-hour days for two weeks, then rest for two
weeks while another crew works. The company has strong safety, training,
environmental and sustainability programs.
Tyhee Development planned to begin operations at the Bumbat Mine during
2005. Projections were to produce 700 kg/a (20,500 oz/year) by openpit
mining. The ore occurs in multiple steeply dipping quartz veins. The
property was operated by a joint-venture between Tyhee and Mongolyn Alt in
1997. Tyhee subsequently purchased 100-percent interest in the property. The
deposit was discovered in 1982 by a joint Mongolian-Soviet geological
expedition. It is located 165 km (100 miles) west of Ulaanbaatar.
S. Altenkhuyag is chief engineer at the Sharyn GoI coal mine. He described
the operation to the author.
The Olon Ovoot Mine is located in the Gobi Desert, 100km (62 miles) north of
the provincial capital of Dalandzadgad. It is an openpit operation in a
16-km (10-mile) long shear zone with an average width of 20 m (66 ft). At
the ^present time, 300 t/d (330 stpd) of 16 g/t (0.468 oz/st) ore are being
mined. The ore is treated by a gravity circuit in machinery leased from the
Metso Mineral Systems. Mongol Gazar is the operator.
Copper. Mongolia has a major copper mine in operation and another world
class property currently under development. There is the potential for other
major copper operations in the country.
Centerra Gold's Boroo gold mine uses Caterpillar equipment. The mine has
been in operation since March 2004. It has reserves of 10.3 Mt (11.3 million
st) of ore grading 3.52 g/t (0.103 oz/st). In 2003, Mongolia's gold mines
produced 10.7 t (344,000 oz) of gold.
The Erdenet Mine is located in the north of the country. It is one of the 10
largest copper mines in the world. It also produces molybdenum concentrates.
Openpit ore production is 75 kt/d (82,670 stpd). The mineralized zone covers
an area of 2,400- χ 1,300-m- (8,000-ft- χ 4,300-ft-) by 1,000 m (3,280 ft)
deep. The cutoff grade is 0.25 percent copper.
Ore from the Erdenet Mine is treated in a flotation mill, which produces
separate copper and molybdenum concentrates. Product is taken by a 140-km
(105-mile) rail spur to the Trans-Mongolian Railway. Concentrates formerly
went to go to the Soviet Union. Now they go to Russia and China.
Erdenet commenced operations in 1978 as a joint venture between the
Mongolian and Soviet governments. The ore body is a stockworks of copper and
molybdenum within a large porphyry system. Proven minable reserves are
1.54Gt (1.7 billion st)ofore, with a mine-life grade of 0.52 percent copper
plus molybdenum credits. A 3-kt/a (3,300-stpy) copper solvent extraction
plant was recently commissioned. Plans are to enlarge this facility. Another
facility was commissioned in September 2005 to produce a higher value
molybdenum oxide product.
The mine and city of Erdenet are 365 km (226 miles) northwest of Ulaanbaatar
and 125 km (77 miles) from the Siberian border. Besides the rail connection,
access is also by a paved highway. There are 6,000 employees at the
industrial complex, which includes explosives manufacturing, a casting plant
and other units. The city has a population of nearly 65,000 people.
Gold placer
Alluvial gold deposits occur in many locations in Mongolia. There are five
bucket-line dredges in operation in the Zaamar Valley. So most of the
production comes from this area. The valley is located about 100 km (62
miles) northwest of Ulaanbaatar.
Other notable placer production comes from the Bayangol and Tolgoit valleys.
The bucket-line dredges have 250-L (9-cu ft) buckets. Each dredge mines and
treats 250 mVh (340 cu yd/ hour). The dredges are capable of digging 7 m (23
ft) below the water line. Scrubbing and screening are in a trommel and gold
recovery is in sluices
The smaller plants are at a fixed location, like so many in Russia. Gravel
is dug by an excavator and is hauled to a stockpile. A monitor washes the
feed over a grizzly with 50-mm (2-in.) openings. The minus fraction flows
over sluices for gold recovery.
Coal. Mongolia is well endowed with coal resources. There are an estimated
100 Gt (110 billion st) of known reserves. Nearly 5 Mt (5.5 million st) are
mined annually from 40 mines. Much of the coal is a high Btu, low ash and
low sulfur product. Some is of coking quality.
The Sharyn GoI Mine is located 130 km (81 miles) of paved road plus 40 km
(25 miles) of unimproved road north of Ulaanbaatar. It is an opencast coal
mine with a production rate of 1 Mt/a (1.1 million stpy) of high quality
coal. The seam is 40 m (131 ft) thick. The coal is at a low angle of dip, so
that greater amounts of overburden have to be stripped as mining progresses.
The Erdenet copper mine is a 75-kt/a (82,670-stpd) operation located in the
northern part of Mongolia. It is one of the 10 largest copper mines in the
world. The Erdenet Mine began operations in 1978 as a joint venture between
the Mongolian government and the former Soviet Union.
The Sharyn GoI Mine's coal supplies two power plants, one at Erdenet and the
other near Ulaanbaatar. The coal is hauled by rail. Mining started in 1965
with Russian machinery. Only the original drills are still in use. Loading
and hauling equipment have been replaced by Caterpillar 40-t (44-st) trucks
and 10-m3 (13-cu yd) Terex shovels.
The Baga Nuur strip coal mine is located 110 km (68 miles) east of the
capital city. A spur rail line hauls the coal to a power plant in
Ulaanbaatar. The deposit has a rock sequence of 500 m (1,640 ft) that
contains 24 coal seams. Reserves are estimated to be 600 Mt (660 million st).
The mine has been operated continuously since 1978.
A Mongolian-Chinese joint venture operates the Nariin Sukhait coal mine 160
km (100 miles) southwest of Dalanzadgad and 40 km (25 miles) from the
Chinese border. It is in a small license area surrounded by Ivanhoe
exploration licenses. The column is as much as 150 m (400 ft) thick
containing between 30 and 90 m (100 and 300 ft) of coal seams. The company
is mining coking coal that is exported to a steel mill in China.
Fluorspar
Mongolia is the fourth largest producer of fluorite in the world. Only
China, Mexico and South Africa exceed Mongolia's production. Reserves are
more than double those of China, but Mongolia produces only 6 percent as
much.
Mongolrostsvetmet operates the Bor-Undur Mine. This is a joint venture of
Mongolian and Russian interests. It holds extensive reserves 380 km (236
miles) southeast of Ulaanbaatar. For the past 15 years, production has been
110 kt/a (121,000 stpy) of chemical grade and 80 kt/a (88,000 stpy) of
metallurgical grade concentrates.
Part of the openpit at the Erdenet copper mine. Proven minable reserves are
1.54 Gt (1.7 billion st) of ore, with a mine-life grade of 0.52 percent
copper. Ore is treated in a flotation mill that separates copper and
molybdenum. In addition, a 3-kt/a (3,300-stpy) copper solvent extraction
plant was recently commissioned.
The Bor-Undur Mine is the largest fluorspar producing property in Mongolia.
Ore grades from the openpit vary between 28 percent and 44 percent CaF2. The
mill has a rated capacity of 1.2 kt/d (1,320 stpd). Hand sorting and
flotation are the recovery methods. Reserves are 12.2 Mt (13.4 million st).
The Urgan fluorspar ore field is adjacent to the Trans-Mongolian Railway
near the Chinese border. It is an area of 12 km2 (4.6 sq miles) with much
faulting. The strongest vein has a strike length of 520 m (1,700 ft). It is
20 to 100 m (66 to 328 ft) wide with a known depth of 30 to 170 m (100 to
560 ft). The total resource of the ore field is estimated to contain 9 Mt
(10 million st) of 45-percent fluorite.
Lead and zinc
Base metal deposits of lead and zinc, some with copper, gold and silver
credits, occur in various locations in the country. There had been little
interest in them until the recent run-up of metal prices.
Tsairt Minerals commenced production at the Tumertiin Ovoo Mine in 2005.
This is a Mongolian-Chinese joint venture, with the Chinese holding 51
percent. The capital cost of the installation was US$38 million. The
property is projected to produce 69 kt/a (76,000 stpy) of >50-percent zinc
concentrate. Mining of the scarn deposit is by openpit. Concentration is by
flotation. The project is in southeastern Mongolia.
Development projects
Oyu Tolgoi. An exciting development is taking place in Omnogovi Aimag (South
Gobi Province) of Mongolia. Ivanhoe Mines is moving ahead with its world
class Oyu Tolgoi (Turquoise Hill) copper-gold property. It is projected to
be a 70-kt/d (77,000-stpd) complex. The location is in the Gobi Desert 560
km (350 miles) south of Ulaanbaatar and 80 km (50 miles) from the Chinese
border. The deposit is a mid-Paleozoic porphyry system.
Logging drill core in the core shack at Ivanhoe Mines' Oyu Tolgoi
copper-gold project, located south of Ulaanbaatar. The project currently has
nine drill rigs operating.
It is believed Bronze Age people extracted and smelted some of the surface
copper oxides. It was not until the 1980s that modern geological studies
were made.
In the 1990s, Magma Copper and BHP held the license to Oyu Tolgoi. Ivanhoe
acquired earn-in rights in 2000, gaining 100- percent ownership of the
project in 2002.
By mid-2005,550,000 m ( 1.8 million ft) of core drilling had been completed,
along with 19,000 m (62,000 ft) of reverse-circulation drilling. This
program has delineated 1.15 Gt (1.26 billion st) of measured plus indicated
ore. The grade is 1.3 percent copper and 0.47 g/t (0.014 oz/st) of gold, at
a cutoff grade of 0.3 percent copper for openpit ore.
Underground ore will have a cutoff of 0.6 percent copper. Reserves continue
to be increased asdrilling follows the northward trend of the ore body.
Phase one operations at Oyu Tolgoi will be a 70-kt/d (77,000- stpd) complex.
At year seven, the plan is to double production. If all goes as planned, the
mine will produce 17.5 Mt ( 19.25 million st) of copper and 342 t ( 11
million oz) of gold during the first 35 years of operation. The estimated
capital cost to bring the initial openpit mine and mill into production is
US$ 1.15 billion. An additional $232 million will be required to bring the
underground mine into initial production
Projections at Oyu Tolgoi are to mine ore from openpits for seven years. By
that time, the block-caving ore of the underground Hugo Dummett orebody will
be phased in. Redpath is currently sinking a 6.7-m- (22-ft-) diam shaft. The
first stage will bottom at 1,200 m (3,940 ft). Processing will be by
conventional crushing, grinding and flotation. Three water aquifers have
been identified within 60 km (37 miles) of the mine site. Including
contractors, there are presently 700 people working on site. Ivanhoe Mines
holds or controls 111,000 km2 (42,300 sq miles) of mineral licenses in
Mongolia. And it is exploring several prospects. Under study are two items.
One is a railroad connection to the mine. The other is a coal mine-mouth
power plant in the South Gobi region.
Oyu Tolgoi sustainability program. Ivanhoe Mines' Oyu Tolgoi project has
already started sustainability programs within the province of South Gobi
and the nearby town of Khanbogd. Otgon Munkjargal is the coordinator. He is
based at Oyu Tolgoi.
The first program involved making wooden core boxes. With nine core drills
working, many boxes are needed. This work will be expanded into making
furniture. A related program is to produce cinder blocks. They will be sold
to the company and to the local market.
In addition, a water well was drilled and an area fenced to grow fresh
vegetables, a rare commodity in the Gobi Desert. The products will be for
the camp kitchens and for the local people. Some consideration is being
given to developing a hydroponics garden so fresh vegetables will be
available in the winter. Another food item will be a hog farm. It will use
discarded food from the camp kitchen as feed.
The women of Khanbogd are cutting and sewing borders on cotton pants, food
service jackets and hats, bed sheets and pillow cases.
An improved road is also being graded the 45 km (28 miles) between OyuTolgoi
and Khanbogd. Refurbishing the village school kindergarten building has been
completed. And work is progressing on refurbishing the local hospital.
Ivanhoe Mines is also supporting the rebuilding of a prominent Buddist
monastery between the camp and the town. It was destroyed during the
communist era.
Ivanhoe Mines is also giving preference to hiring and training local people
of the South Gobi and Khanbogd for jobs at the mine. This prosperity is
already showing in the pride people are taking in their town. Houses are
whitewashed and there is little litter in the streets. The mine is more than
two years from production, but the sustainability program is already
producing results.
Boroo Mine. Thirty-five km (22 miles) east-southeast of its Boroo Mine,
Centerra Gold has been exploring its 100-percent owned Gatsuurt gold project
site. Drill reserves there now stand at 11.3 Mt (12.4 million st) of ore
with 3.17 g/t (0.093 oz/st) of gold. The company is preparing a feasibility
study. Plans are to bring the property into production in the short term.
The ore is vertically oriented in a mineralized granite shear zone.
Exploration drilling continues.
Exploration projects
Exploration projects in Mongolia are too numerous to provide a complete
list. Here are a few, to show the scope of exploration in Mongolia. These
are among the projects that have had enough exploration to show a known
resource.
Construction of the collar of a 6.7-m- (22-ft-) diam shaft at the Oyu Tolgoi
project. Ivanhoe Mines plans to phase in underground block caving operations
within seven years of startup of the openpit.
QGX is a Canadian junior company. It is exploring the Golden Hills gold
deposit in western Mongolia. QGX is in the process of earning-in to an
80-percent equity position. The near surface ore assays 0.2 to 0.4 g/t
(0.005 to 0.016 oz/st) gold, while in depth the grade is in the 2- to 4-g/t
(0.058to 0.116-oz/st) range. Exploration is ongoing. QGX holds 100
exploration licenses in Mongolia covering 5 million hm^sup 2^ (12.4 million
acres). The company was the first western firm to obtain an exploration
license under Mongolia's Mineral Law of 1994.
In the Gobi Desert, 164 km (100 miles) southwest of the Trans- Mongolian
Railway, is an area with seven porphyry showings. Limited exploration
drilling to date at Surven-Sukhait has delineated a resource of 220 Mt (242
million st) of 0.54 percent copper and 0.019 percent molybdenum plus minor
amounts of gold and silver. The deposit can be traced on surface for 10 km
(6 miles).
The 180,000 hm^sup 2^ (444,000 acres) Shivee Tolgoi license of Entre Gold
surrounds Ivanhoe's Oyu Tolgoi concession. The ore body of Oyu Tolgoi's Hugo
Dummett deposit continues onto Entre ground. Under an agreement between the
two companies, Ivanhoe will mine the entire deposit. There are several other
promising showings of gold and copper on the Entre property. The company is
exploring several of these.
Five licenses covering 1.1 million hm^sup 2^ (2.7 million acres) are held by
International Uranium. They are located 320 km (200 miles) southeast of the
capital city and along the Trans-Mongolian Railway. This known uranium
mineralized area is a horst and graben zone. Sediment fill in the downtrust
areas contains roll-front uranium deposits. The resource is estimated to be
22 Mt (24.2 million st) of 0.052 percent U^sub 3^O^sub 8^. The company is
studying the possibility of in-situ mining.
The Ondor Tsagaan tungsten deposit is located 200 km (124 miles) east of
Ulaanbaatar. Wolframite stringers occur as stockwork in synclinal folds. The
deposit is elliptical, 150 x 600 m (490 x 1970 ft). It has been drilled to a
depth of 550 m (1,800 ft). The resource at Ondor Tsagaan currently includes
141 Mt (155 million st) of 0.124 percent tungsten, 0.019 percent molybdenum
and 0.03 percent beryllium.
Northwest of Choibalsan and near the Mardai uranium mine is the Ulaan
lead-zinc deposit. It has an estimated 68 Mt (75 million st) of 2 percent
zinc, 1.2 percent lead, 53 g/t (1.5 oz/st) silver and 0.21 g/t (0.006 oz/st)
gold.
In far southwest Mongolia, near the town of Khovd, is the Halzan Buregtei
rare earth deposit. It is in granite with abundant fluorite. The content of
rare earth minerals is 3.2 percent.
Laws
The following is a summary of the laws related to mining in Mongolia. It is
incomplete but does describe some of the salient features of the laws. It is
recommended that anyone interested in the details should obtain the full
text and consult an attorney.
Mining. The mineral law offers equal rights regardless of nationality.
Exploration and mining licenses can be held 100- percent by foreign persons
or companies. Full repatriation of profits is allowed. All minerals, except
oil, gas and water, can be mined with a mining license. Stateowned or joint
ventures with the government enterprises receive no special privileges. The
law has been written so that Mongolia can compete with other nations for
investment capital.
To obtain a mining license, no approved business plan is necessary. The
applicant must submit operations and closure plans. There are no work or
expenditure requirements.
Land tenure. Exploration and mining licenses are granted by the Department
of Geology and Mining Cadastre (DGMC), a branch of the Mineral Resources and
Petroleum Authority of Mongolia (MRPAM). This is a "one stop" procedure, as
the DGMC is the lead agency. Once granted, licenses can be transferred and
used as collateral. But such changes must be registered with the DGMC.
Exploration licenses are granted for three years, with rights of renewal
twice for two years each. Mining licenses are valid for 60 years, with a
one-time right of renewal for 40 additional years. Annual fees for licenses
are shown in Table 1. The maximum size of a single exploration license is
400,000 hm^sup 2^ (988,400 acres). But there is no limit on the number of
licenses that an individual or company may hold. Exploration and mining
license holders have the right of access across adjacent land.
Taxes. Corporate taxes on profits are on a sliding scale between 15 and 30
percent. Depreciation and amortization are to be calculated on a
straight-line basis. For equipment, it is five years. 15 years for buildings
and five years from the start of production for exploration and site
preparation. The cost of property acquisition can be amortized throughout
the life of the license. There is a tax holiday for three years, followed by
three years of 50 percent of the normal tax rate. Losses can be carried
forward for three years.
Table 1
Land license fees.
A 2.5-percent royalty is due to the government on mineral production. It is
7.5-percent for alluvial gold. There is a 15- percent value added tax on
imports plus 5 percent custom's duties. Heavy equipment, though, is exempt
from both. Exports are not taxed.
There is a provision in the tax law that allows a company to petition for a
tax stability agreement. This freezes the tax rate for 15 years. Most
operating companies apply for this status when they have met the
requirements.
Labor. Obligations and restrictions of the laborer and employer are spelled
out in detail in the labor code. Any hours worked beyond 40 hours a week or
eight hours a day are considered overtime, payable at 1.5 times the
straighttime pay. Pay for holidays worked is double the normal rate. There
are nine paid holidays a year in Mongolia. Paid vacations of 15 working days
are accrued a year. There are additional vacation days for yearsof service.
It ranges from three days for six to 10 years of service to 14 days for 32
years and more of employment. Employees pay 10 percent of their wages into a
retirement trust fund. The employer's portion is 20 percent.
As part of its sustainability program, Ivanhoe Mines is supporting the
rebuilding of a Buddist monastery that was destroyed during Mongolia's
communist era. The company has several programs in place to improve the
lives of the local population. And the mine is giving preference to hiring
and training local people from the South Gobi and Khanbogd areas.
Environment. Environmental matters fall under the Ministry of Nature and
Environment. The rules and regulations are not too dissimilar to those of
Nevada, Ontario and World Bank recommendations.
Regulators. The government has formed an independent department for the
inspection and enforcement of the various laws. The State Professional
Supervision Agency reports directly to the prime minister. The subdivision
that inspects the mining industry is the Geological and Mining Inspection
Agency. It has 12 offices that work closely with the provincial mine
inspectors.
Mongolia's mining future
Much is going to be heard in the coming years about mineral development in
Mongolia. It is a mineral-rich country, being on the Tian Shan highly
mineralized belt that extends from the Ural Mountains to the Pacific Ocean.
The government is mining-friendly and the laws have been crafted to be
reasonable. The proximity of China with its insatiable need for metals and
minerals is a nearby market. Most of the exploration and mining developments
to date have been carried out in the eastern one-third of the country. This
is the area with roads, railroads and power. The geology of the more
mountainous west is even more encouraging than the east.
More information
The Mongolian National Mining Association has a Web site (www.miningmongolia.mn)
to help those interested in mining in Mongolia. The site has links to all
aspects of the industry and is in English. Trade or commercial attaches at
Mongolian embassies can also be helpful. In Ulaanbaatar, the Government
Information Center of the Mineral Resources and Petroleum Authority of
Mongolia has a library and reading room. There are 5,300 exploration reports
plus maps on file. They can be read in the reading room, or copies
purchased. Most are in Mongolian or Russian, but are being translated into
English. (References are available from the author.)
Acknowledgments
The author is grateful to Ivanhoe Mines for its hospitality during a fourday
stay at Oyu Tolgoi. He appreciates the assistance of Boroo Gold and Wagner
Equipment Co., the Caterpillar dealer, for visits, transportation and
openness with information. He thanks the general manager of the Erdenet
operation and the chief engineer of the Sharyn GoI coal mine. The National
Mining Association and the World Bank were also helpful.
Louis W. Cope, member SME, is a metallurgical and mining consultant, 715 S.
Alton Way. No. 3C, Denver, CO 80247-18H, e-mail processman@ aol.com.
Copyright Society for Mining, Metallurgy, and Exploration, Inc. Jan 2006
Source: Mining Engineering
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