OyuTolgoi: one step in a long journey

Russel Taylor
Much has been written about the Mongolian government and Rio Tintos recent agreement over the OyuTolgoi
copper deposit. But while the OyuTolgoi agreement is positive and welcoming news for the country and its 3
million people, I feel that its significance has been greatly exaggerated. In itself, it is not a silver bullet for the
Mongolian economy, foreign direct investment or the mining industry. But it is a much needed first step: one
step in a long journey.

Mongolias economic rollercoaster ride

To grasp just how significant the fall of Mongolias economy has been you only need to look back over the last 5
yr. In 2010, it burst onto the world economic stage as mining started to have a much needed positive impact.
Then in 2011, Mongolia stunned the world of economics by having the worlds fastest growing economy and the
worlds most improving currency. The mining boom was in full swing and everyone wanted to invest and be part
of it. Foreign direct investment soared, unemployment was low and Mongolia looked to be the mining and
investment capital of the world. But it was short lived. As fast as Mongolia burst onto the global economic stage,
it faded away. A wave of anti-foreigner hysteria backed by political interference in the investment law, has seen
Mongolias dream run come crashing down.

Coal is a significant opportunity for Mongolia

Mongolia has some of the largest mineral deposits in the world of coal, copper, gold, molybdenum, fluorspar,
uranium, tin and tungsten deposits, among others. If Mongolia is to reach its full mineral resource potential, it
cannot rely on OyuTolgoi alone. It should be noted that OyuTolgoi will not be in full production for at least
another 6 yr. Therefore Mongolia must also fully develop all of its resources and most importantly its vast coal
deposits. OyuTolgoi has overshadowed another major development in Mongolias mining industry: the
completion of the TavanTolgoi coal tender. The TavanTolgoi coal deposit is located south, in the Gobi Desert. It
is 540 km from the capital city of Ulaanbaatar and 240 km from the Chinese border. It contains in excess of 7
billion t of high-quality metallurgical and thermal coal reserves. It has been described as one of the largest
untapped coal reserves in the world.
In December 2014, a Tri-Consortium of Chinas Shenhua Energy, Japans Sumitomo and Mongolias Energy
Resources won the tender to develop the TavanTolgoi deposit in Mongolia. Several months on and this US$4
billion project is stalled in negotiations. The main sticking points are the outstanding loan to the Aluminium
Corp. of China and the Build-Own-Operate-Transfer railway agreement. This could be a mirror image of the
protracted OyuTolgoi agreement and stall the economy further. TavanTolgoi is a major mining project for
Mongolia and it could provide approximately 30 50% of Mongolias GDP. However it is much more
important, as it is the litmus test for all of the other mining projects that are yet to commence. Failure to
successfully develop TavanTolgoi in the short term will further erode the confidence that international investors
have in Mongolia and may result in a continued restriction of foreign direct investment. Mongolia does not have
the wealth to develop its mining industry; it needs foreign direct investment. It also needs the expertise and
experience of foreign individuals and companies, to ensure that the industry develops efficiently and sustainably.
International mining can and will assist strengthening Mongolias economy, provide much needed jobs and the
development of local businesses.

Conclusion
The announcement of the agreement with Rio Tinto with regards to the OyuTolgoi copper project is very
positive news for Mongolia. However, it does not signal an immediate return to a very strong Mongolian
economy or an immediate go ahead for the development of Mongolias mining industry. It is one step in a long
journey and the Mongolian Government has much work ahead to rebuild Mongolias economy and international
reputation.

The mass exit of foreign investors and their funds will not be solved overnight. It may take years for foreign
investors to regain confidence in Mongolia and return. To ensure a return of foreign direct investment and a
prosperous and sustainable economy, the Mongolian government has three main tasks:

Formalise the OyuTolgoi agreement so that it has no more debate and delays.

Formalise the TavanToligoi agreement and ensure that it commences in the near future.

Secure the return of foreign direct investment and Mongolias reputation as a fair and stable business
environment.

If these three objectives can be completed, Mongolia will have a great platform to build a robust economy and a
bright future for its growing population.
Edited by Jonathan Rowland. This article first appeared in the August issue of World Coal.
About the Author: Russel Taylor has over 20 yr of experience in the coal mining industry as a mining
engineer, project director and mining executive. Most recently, he was Executive Vice President and
Project Director at Reliance Coal Resources in India.

Oyu Tolgoi appoints general manager for

underground development
Ulaanbaatar, Mongolia,
17 8- 2015

Oyu Tolgoi has appointed Greg Field as General Manager - Underground, one of the key roles in the
execution of the Oyu Tolgoi underground development, and, the first of a number of key roles being
filled as Oyu Tolgoi progresses towards development of the underground project.
In this new position, Greg Field will play a major role in preparations for underground mining at Oyu
Tolgoi.
Andrew Woodley President and CEO, Oyu Tolgoi, said: The development of the underground mine
is a vital part of our long-term future as a business, and we are pleased to announce Greg Fields
appointment to this important role. Gregs breadth of experience spanning various roles at Oyu
Tolgoi, and senior positions in block caving projects and mine construction around the world will be
a great asset to the project.
Greg Field previously held a variety of roles in Oyu Tolgoi, most recently as General Manager,
Infrastructure and Services. He has more than 20 years of mining experience across Asia, Africa and
Australia, with extensive senior experience in block caving, which will be used at Oyu Tolgoi
underground mine.
Prior to joining Oyu Tolgoi, Greg Field was General Manager, Operational Readiness at Argyle
Diamond Mine in Australia. He has a degree in mining engineering from the University of
Johannesburg.
About Oyu Tolgoi LLC (www.ot.mn)
Oyu Tolgoi LLC, Mongolia's largest copper and gold mining company, is a strategic partnership
between the Government of Mongolia, Turquoise Hill Resources and Rio Tinto. Located in the South
Gobi, Oyu Tolgoi commenced shipment of product to customers in July 2013. Oyu Tolgoi is managed
by Rio Tinto, which is investing global expertise and cutting-edge technology to help develop

Mongolias mining industry and ensure Oyu Tolgoi is one of the worlds most advanced mines. For
Oyu Tolgoi, nothing matters more than safety. The business operates under the principle that if a job
cannot be done safely, it will not be done at all.
For more information, connect with us on Facebook and Twitter.

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