23.05.2012 understanding the crucial role of coal sector in mongolia's growth story, a....
TRANSCRIPT
A.Erdenepurev, Director General, Fuel Policy Department,
Ministry of Mineral Resources and Energy,
Ulaanbaatar city, Mongolia
23-24 May 2012
COAL EXPORT 2006 - 2011
2700 32453965
7550
18200
24574
0
5000
10000
15000
20000
25000
30000
2006 2007 2008 2009 2010 2011
2006 2007 2008 2009 2010 2011
Coal export 2700 3245 3965 7550 18200 24574
23 MAY 2012
2010 2011 2012 2013 2014 2015 2020 2025
Total production 25,344 32,634 38,340 42,635 53,355 64,580 81,587 94,010
Export 16,635 25,000 30,000 33,000 40,000 50,000 65,000 75,000
Internal consumption 7,344 7,634 8,340 9,635 13,355 14,580 16,587 19,010
010,00020,00030,00040,00050,00060,00070,00080,00090,000
100,000
COAL PRODUCTION AND EXPORT
PROJECTION
23 MAY 2012
TOTAL: 24.5
mln tons in
2011
COAL EXPORT:
Name of exportersThousand
tons
1 TAVAN TOLGOI JSC 6239.8
2 ENERGY RESOURCES 6154.4
3 ERDENES TAVAN TOLGOI 708.6
4 MAK 5282.2
5 QINHUA MAK 1776.1
6 SOUTH GOBI SANDS 3870.5
7 Others 542.7
TOTAL 24574.3
23 MAY 2012
COAL – where does this fit within Mongolia’s developing mining
sector?
Production 2007 2008 2009 2010 2011
1Flotation concentrate,
thou.tn109.9 115.7 115.3 140 116.4
2Copper in concentrate,
thou.tn130.2 126.8 129.8 127.31 121.59
3Molybdenum in
concentrate, tn1978.3 1783.6 2408.7 2198.19 1956.65
4 Coal, thou.tn 9237.6 9691.6 13163.9 25246.4 30940.1
5 Gold, kg 18087 15184 9803 6037.1 5702.6
6 Cathode copper, tn 3006.5 2586.6 2470.1 2746.2 2388.7
7 Iron ore, thou.tn 265.1 1387.4 1379.0 3203.2 5678.3
8 Zinc concentrate, thou.tn 154.7 143.6 156.5 112.6 104.7
Major mining products:
23 MAY 2012
COAL – where does this fit within Mongolia’s developing mining
sector? Minerals sector in the economy:
63.456.4
60.966.7 69.6
0
10
20
30
40
50
60
70
80
2007 2008 2009 2010 2011
Industrial output
78.480.7
84.6
87.889.2
70
75
80
85
90
95
2007 2008 2009 2010 2011
In export
47.1
20.2
9.1
5.3
3.0
2.4
2.01.2
9.7Coal
Copper concentrate
Iron ore
Crude oil
Zinc concentrate
Gold
Flour spar
Cashmere
Others
23 MAY 2012
Poor infrastructure: transportation, electricity, water,
Lack of financial resources: high interests, short term
Lack of experiences in distributing natural resources to social
benefits, differentiated points of understanding
Lack of qualified personnel and equipment
Inappropriate coal pricing and trading
Insufficient border station capacity
Inefficient cooperation with coal consumers
Legal environment: stable or …
PROBLEMS FACED:
23 MAY 2012
COAL TAXATION:
Taxes, fees Percentage
1 Income tax
10% up to 3 bln MNT (approx. 2.3
mln USD),
25% over 3 bln MNT
2 Royalty 5% and plus …..
3 Social insurance 11-13%
4 VAT 10%
5 Tax on real state 2%
6 Tax on vehicles, machineries Depends on cc power
7 Customs clearance fee MNT1500 per ton
8 Export tax 5% / 20%
9 Fee on air pollution MNT 1000 per ton
10 Water fee 30-100 per ton
11 Land fee Depends on land usage
Average
PricesPercent
Average
PricesPercent
Washed Raw coal
0-100 0% 0-25 0%
100-130 1% 25-50 1%
130-160 1.5% 50-75 2%
160-190 2% 75-100 3%
190-210 2.5% 100-125 4%
210 over 3% 125 over 5%
OVERALL:
35-40%
+
5% / 20% =
23 MAY 2012
GOVERNMENT POLICY ON COAL SECTOR - GENERAL:
Improve legal environment:
◦ Amendment into Minerals Law
◦ Regulations: environmental issues, licensing, taxation
Increase of exploration budget and intensify geological survey
Increase of production and export:
◦ Target Markets: China, Japan, Korea, Taiwan
Introduction of value added production:
◦ Preparation, Washing plants
◦ Lignite upgrading: semi-coke
◦ Gasification and Liquefaction
Responsible mining principles
23 MAY 2012
MARKETING APPROACH TO GOVERNMENT POLICY ON COAL
SECTOR: QUICK SWOT ANALYSIS:
STRENGTHES:
• ABONDANT RESOURCES OF HIGH
QUALITY COAL
• MINING CONDITIONS ARE
FAVORABLE
• COMPETITIVE GEOGRAPHICAL
LOCATION
WEAKNESSES:
• INFRASTUCTURE
• FINANCIAL RESOURCES
• LACK OF EXPERIENCES IN
INTERNATIONAL TRADING
• LACK OF QUALIFIED PERSONNEL
• LACK OF MARKET RESEARCHES
OPPORTUNITIES:
• RAPID INCREASE TENDENCY OF
COAL USAGE
• INCREASED INTERESTS OF
WORLDWIDE CORPORATIONS
• INCREASED COMPETITITIONS
THREATS:
• UNSTABLE LEGAL AND
POLITICAL ENVIRONMENT
• UNEXPECTED INFLUENCES
FROM PARTNER COUNTRIES
• …
23 MAY 2012
GOVERNMENT POLICY ON COAL SECTOR – ACCURATE
(DRAFT)
Resources management
Environmental protection, reclamation and responsible mining principles
Efficient and effective investment coordination
Development of market principles in the sector
Stable and reliable supply for power production
Export oriented missions
Introduction of value added production
SMEs
Personnel and institutional structure
Specific development programs
Legal environment
23 MAY 2012
Purpose: coal trade facilitation through joint efforts of stakeholders in the sector to
resolve such issues as transportation, prices, payments, coal quality etc
Separate gates for coal transportation at border stations
Determination of export volumes per quarter, half year and year
Coal quality: calorific value from 5500 and up, side expertise
Coal price: price orientation is determined.
Trans-loading facilities to be prepared
Payment facilitations methods, international methods to be used
Transportation costs to be minimized
Responsible / Focal points to be determined: Mongolian Coal association vs Chinese
local Coal associations
MISSION: NEW GATE FOR COAL EXPORT - COHESIVELY
STRUCTURED APPROACH
23 MAY 2012
STRENGTHES OF THE ORGANIZED APPROACH:
◦ Reduce number of middle traders and procedural steps
◦ Price stabilization, easy and organized trading
◦ Strengthening of mutual trusts
◦ Easy information exchange and communication
◦ Easy way to organize joint seminars, conferences and experiences exchange
◦ Efficient and effective usage of equipment and machineries, thus environmentally
friendly mining operation will be developed.
◦ Reduce of overlapped investment and financial resources
◦ As a result long term, reliable cooperation will be developed.
MISSION: NEW GATE FOR COAL EXPORT:
23 MAY 2012
MISSION: NEW GATE FOR COAL EXPORT:
OUTPUTS
Improvement of mutual relations between state organizations .
Quick determination of problems, as well as ways / proposals of solving the
obstacles.
Quick exchange of valid information.
Expanded cooperation with both local and international partners,
stakeholders.
Cohesively structured approaches are matching first necessities of the
sector stakeholders.
Non government organizations are actively participating in the sector
operations and practices.
23 MAY 2012
First Tianjin Mongolia Coal Meeting
2011-1-20
Main purpose: to study opportunity of
delivering Mongolian coal to Tianjin
and other Chinese consumers through
Tianjin port and then to third market.
About 20 representatives from 10 coal
mines from Mongolia participated
MoU on Cooperation between
Mongolian Coal Association and
Tianjin Coal Association signed
Field visit to Tianjin port Bulk
Exchange Center, Coal loading center
CREATING PARTNERSHIPS: TIANJIN
23 MAY 2012
First Erlian Mongolia Coal Meeting
2011-10-21
Main purpose: to study opportunity of
delivering Mongolian coal to Erlian
station and other Chinese consumers.
About 20 representatives from 10 coal
mines from Mongolia participated
MOU on Cooperation between
Mongolian Coal Association and Erlian
Coal Association signed on 2011-9-15
Field visit to Erlian station Bulk
transloading yards.
CREATING PARTNERSHIPS : ERLIAN
23 MAY 2012
ERLIAN BORDER STATION:
23 MAY 2012
ERLIAN BORDER STATION:
23 MAY 2012
Overview of current trade flow in Ulaanbaatar city
(mine gate to end-buyer and mine gate to port this
will include a brief overview of costs associated with
the supply chain – border prices, customs, china taxes
and surcharges at various borders, sales from border
vs end user and inefficiencies in current supply chains
etc)
Field visits: Noble’s Beijing office, China Investment
Corporation, Capital Steel Mill, JingTang Port
STRENTHENING TIES WITH SUPPLY CHAINS:
NOBLE GROUP, 2011-11-21
23 MAY 2012
KOREA COAL: MOU
POSCO: MOU
JICA/JAPAN COAL: TA-MASTER PLAN OF COAL SECTOR
KYUNGDONG, KOREA: CLEAN COAL PRODUCTION
THYSSEN KRUPP UHDE, GERMANY: GASIFICATION AND LIQUEFACTION, COKING PLANT
Private companies contracts, MOUs, agreements
STRENTHENING TIES WITH OVERSEAS
CONSUMERS:
23 MAY 2012
THANK YOU FOR YOUR
ATTENTION
Contact details:
E-mail:
Tel: + 976 – 51 – 260701
Fax: + 976 – 11 – 311122
Ministry of Mineral resources and Energy, Mongolia