PM to end missing link to Cambodia

U.S. raises serious concerns over OT's environmental, social impact

Wednesday, 13 March 2013 11:47

World number two miner Rio Tinto PLC has suffered another setback at the Oyu Tolgoi copper mine in Mongolia after the United States refused to vote on World Bank funding to expand the massive copper-gold project in Mongolia.

Operator Turquoise Hill Resources, which is controlled by Rio Tinto, has already spent more than USD 6 billion on the mine in the south Gobi Desert, where it hopes to start commercial production by June. The additional USD 4.5 billion debt package being negotiated with the International Finance Corporation (IFC), the World Bank's private sector arm, the European Bank for Reconstruction and Development and several private institutions is needed to develop Oyu Tolgoi to full capacity with an underground mine to compliment the open pit.

The Inter Press Service reported Friday the U.S. decision to abstain from voting would not derail IFC funding of the giant mine, but would add further pressure to make substantial changes to the controversial project.

“[T]he United States' review of the Environment and Social Impact Assessment (ESIA) for the project has raised concerns in a number of areas,” a position paper, dated last February but publicly released this week, states.

“First, the United States believes the ESIA has gaps in critically important information, particularly related to the operations phase of the project and mine closure... Second, the ESIA does not provide a sufficiently detailed analysis of associated facilities and cumulative impacts.

“In particular, the policy statement notes that the impact assessment, which currently focuses almost exclusively on the project's construction rather than its potential operation, covers this planned expansion ‘only lightly.’ The document also draws attention to longstanding complaints from local herder communities, currently pending before a World Bank Group auditor. The U.S. says it is ‘keenly interested in the outcome” of this review.’

MMC 2012 announces weak 2012 results with lower coal sales prices

Wednesday, 13 March 2013 11:46

Mongolian Mining Corp. reported lower-than-expected results for 2012, said Visor Capital. The company increased its coal production by 32 percent year-on-year to 9.4 million tons. 2012 coal sales increased by 17 percent year-on-year to 5.6 million tons. 2012 average realized selling price fell by 26 percent year-on-year to USD 84.8 per ton. 2012 revenue decreased by 13 percent year-on-year to USD 474.5 million, whilst net loss for the period was USD 2.5 million (compared to the previous year's net income of USD 119.1 million). As in 2011, the company will not pay dividends for 2012. In 2013, MMC guides to produce 12 million tons of coking coal and expects to see a recovery in coal's realized prices. The third stage of the coal washing plant is expected to be commissioned in the first quarter of this year, bringing MMC's total annual coal processing capacity to 15 million tons. MMC is targeting to process 12 million tons of coal during 2013. "We believe the main reason for the company's weak 2012 results to be a significant decline in coal sales price, which was 5 percent below our forecast," said Visor Capital. The company said coal sales volume fell 47 percent below its estimates, and its 2013 guidance was 24 percent below its expectations. "We, however, still believe that MMC will successfully reach 20mtpa of raw coal production within the next three years, in line with our expectations."

Mongolia working on new mining law to avoid mistakes from quick passage

Wednesday, 13 March 2013 11:41

Jargalsaikhan Mendee writing in Asia Times Online argues Mongolian lawmakers in the process of finalizing a new bill to regulate the mining industry are hoping to avoid the mistakes of the past.

Parliament has revised the rules governing mining companies and foreign investment in the sector several times since introducing its so-called Gold Program in 1990, but previous laws have not always produced the desired outcomes. The country is still plagued by environmentally damaging artisanal mining, corruption in the awarding of exploration and mining licenses and a lack of local community participation in mining projects, but the new bill—which “avoids the dangers of politicization”—has a better chance of addressing these problems argues Mendee.

That is because Mongolia is relying heavily on its own expertise, the knowledge built up studying other resource-based economies like Australia and Canada, to repeat what happened in 2009:

“Pushed by demands from environmental and local activists, Parliament quickly approved the Law on the Prohibition of Minerals Exploration in Water Basins and Forested Areas in 2009.

“Under the law, the government canceled over 200 mining and exploration licenses that operate within 200 meters from water and forest sources.

“However, this sudden measure caused intense opposition from miners while raising public expectations for stricter enforcement and revisions in the major mining and environmental legislation.”