D.Gankhuyag, Minister of Mining, Mongolia

1. Ulaanbaatar
2013

2. Current status of coal sector of Mongolia
Coal is the main source of energy, steel
and iron, LPG production and vitally
important asset that drives the economic
development of the country

3. Mongolia’s geological probable reserves of coal
constitute 173,3 billion tons in total with prospects of
further increase. There are over 300 deposits and
occurrences in 15 different basins at which over 21,5
billion tons of coal reserves are determined through
prospecting and detailed exploration work. These
reserves place Mongolia among top 10 countries in
terms of coal resources.
Current state of coal sector of Mongolia

4. In 2012, 4,9bt of coal reserves were newly registered in state registries
Mongolia’s coal resources
(173,3bt in probable reserves)

5. Current state of coal sector of Mongolia
The mining sector’s share as of end of 2012:
Mining
18,6
Other
81,4
Mining
87,7
Other
12,3
Gross domestic product Total exports

6. Current state of coal sector of Mongolia
In 2012, Mongolia produced 31,1 million
tons of coal, of which 20,5 million were
exported bringing in MNT828.5 billion to
the central budget of the government

7. Today, we have around 60 companies, including wholly state-owned
Erdenes TT, partly state-owned Baganuur, Shivee Ovoo, locally
owned Tavantolgoi, Bayanteeg, Mogoin gol joint-stock companies, as
well as national and foreign invested private sector companies such
as Energy Resources LLC, Tavantolgoi JSC, MAK LLC, Qinhua-MAK-
Nariin sukhait LLC, Southgobi Sands LLC, COAL LLC, MoEnco LLC,
Chingisiin har alt LLC, etc., that are engaged actively in the
production and marketing of coal. Presently, there are about 20 coal
exporters exporting unprocessed and processed coals.
Current status of coal sector of Mongolia

8. Presently, approximately 10,000 are employed at coal mining companies, including
170 foreign employees
Current state of coal sector of Mongolia
Total workforce: 9530 persons
Of which: Female 1773 persons
Foreign 164 persons
Health and safety related planned expenditures 31361.93 mln.tug
Total expenses in medical examination 673.68 mln tug
Total number of workplaces 3979
Total number of equipment 1936 pcs

9. About 20 percent of all equipment used in our coal mines are
manufactured in RF, remaining 80 percent in US, Japan, S.
Korea, PRC, including brands such as Caterpillar, Liebrer,
Kawasaki, Hitachi, Hyundai, Hino.
Current level of technologies and equipment used in coal sector

10. Coal production in Mongolia
10607,3
13326,4
25253,1
32994
31139,1
0
5000
10000
15000
20000
25000
30000
35000
2008 он 2009 он 2010он 2011 он 2012 он
Нийт олборлолтTotal extracted

11. Domestic coal consumption
Coal supplies to power stations and households are provided by public and private sector coal producers.
Coal consumption is shown as follows:
Thermal power
stations
79%
Manunstruring
& construction
3%
Transport
&communication
0.8%
Agriculture
0.1%
Utility services,
household
consumption
9.4%
Other
[PERCENTAGE]

12. Mongolia’s coal exports
5123
7550,5
18241,0
22526,0
20500
0
5000
10000
15000
20000
25000
2008 он 2009 он 2010 он 2011 он 2012 он
Ps: Total 2012 exports of 20,5mt represent 91,1% of total exports of the previous
year
Total exported coals /thous.tons/
/2008-2012/

14. Estimated product output requirement for coal industry of Mongolia,
2010-2025 /thous.tons/
Balance 2011 2012 2013 2014 2015 2020 2025
Power stations’ need 5349.5 5910.5 7061.5 . 106360 11717.0 13000.0 15000.0
Industry, construction 299.2 324.0 348.4 373.0 397.6 521.0 630.0
Transport, communications 144.0 147.0 150.0 153.0 156.0 171.0 210.0
Agriculture 16.0 20.0 24.0 28.0 32.0 52.0 60.0
Households, utility services 520.0 525.0 530.0 535.0 540.0 565.0 610.5
Processing industries 500.0 600.0 700.0 800.0 900.0 1400.0 1600.0
Central region 6828.7 7526.5 8813.9 12525.0 13742.6 15709.0 18110.5
Rural demand 806.0 814.0 822.0 830.0 838.0 878.0 900.0
Export demand 25000.0 30000.0 33000.0 40000.0 50000.0 65000.0 75000.0
TOTAL 32634.7 38340.0 42635. 53355.0 64580.0 81587.0 94010.5

15. Capacities of planned coal processing facilities
1. Tsogttsetsii soum, Umnugobi aimag “Ukha Khudag” coal handling and
processing plant – 15mtpa
2. Tsogttsetsii soum, Umnugobi aimag “Erdenes TT” mine based coal
handling and processing plant – 20mtpa
3. Darvi soum, Hovd aimag “MonEnCo” LLC – 300.000mtpa of
metallurgical coke
4. Dalanjargal soum, Umnugovi aimag Eldev mine of “МАК” LLC semi-
coke plant – 75.000mtpa
5. UB city “NAKO” JSC semi-coke plant – 50.000mtpa

16. State policy in coal sector
IN RELATION TO COAL RESERVE MANAGEMENT
 Consultations are underway with mining companies as to optimal
decisions on when and how the reserves are to be exploited depending on
regional and geological specifics as well as coal characteristics, subject to
geographical mapping of coal resources by regions

17. State policy in coal sector
 Opportunities exist in developing coal gasification
facilities producing gas products of natural gas
equivalent quality based on world standard, most
advances technologies.
 Certain part of coal revenues is to be dedicated to
geological studies conducted nationwide and designed to
continuously increase and detail the total reserves.

18. State policy in coal sector
IN RELATION TO INVESTMENTS
 Support domestic and foreign investments into the coal sector providing
the basis for implementation of development objectives
 Adhere to policies of providing equitable legal and regulatory framework
for both national and international investors in the coal sector of Mongolia
Provide support to investments and transfers of technology into
development of coke-chemical, coal-chemical facilities, the production of
value-added coal products sought after internationally
 Provide favorable regulatory, fiscal and business environment for
investors investing in coal and related infrastructure sectors

19. State policy in coal sector
IN RELATION TO COAL EXPORTS
 Efforts shall be made to bring coal processing and trading practices
closer to international standards and benchmarks, as coal and coal
products are the country’s key export products
 Adhere to policies of limiting exports of unprocessed raw coals and
promoting exports of washed coals, semi- and fully-processed finished
products shall be provided

20. State policy in coal sector
IN RELATION TO COAL EXPORTS
 In efforts to sell coals at prices close to international market price levels
implement new transportation and logistics policies such as railway
policies boosting competitiveness of Mongolian coals in import markets
 Within frameworks of single window policies in coal exports, initiate
“Coal Exchange” program and put in place required regulatory framework

21. State policy in coal sector
IN RELATION TO REGULATORY FRAMEWORK
 Principles of equal treatment of coal sector’s national and international
investors from fiscal, tax and tariff perspective shall be strictly enforced
To ensure efficient implementation of set policies, a review of related
laws, rules and regulations, guidelines and standards shall be undertaken
for further enhancement and alignment with adopted policy concepts

22. Coal sector of Mongolia has full potential to lead economic development of
the country and strengthen further this position, as a sector that possesses
most important competitive advantage on international scale.
The Government shall provide strong support to the sector in terms of new
solutions – technological, management and investment related.

23. With best wishes and gratitude
I express my confidence that participants of “Coal Mongolia-
2013” shall deliver many constructive ideas and views for the
future development of coal sector of Mongolia.