Supreme Court orders Government to enforce mining ban

Supreme Court orders Government to enforce mining ban

The Supreme Court has ordered the Government to enforce the ban on mining in river and forest areas following an appeal submitted by activists who said the country’s fragile environment was threatened by reckless mining. The court ruling explicitly blamed the Government for failing to implement a 2009 law banning all mining in river basins and forests.

The Mongolian Government is constitutionally obliged to ensure that the country’s environment is protected, but activists claim that dozens of rivers and lakes have dried up in the last two decades as a direct result of mining-friendly, laissez-faire legislation. The 2009 ban was drawn up by parliamentary backbenchers and passed despite opposition from the Government. Many foreign investors were expecting the law, derided as “half-baked”, to be revoked during the current session of parliament.

While a small number of mines have been shut down as a result of the ban, many more have continued to operate, with the Government saying it was unable to afford compensation to the owners for closing them down. Ban supporters reject the argument, saying that the damage done to Mongolia’s ecosystem far outweighed the compensation costs. “We have to discuss it seriously, one MP said. “Even if we give them compensation, they have to pay for the damage they have done.”

Developer says Tavan Tolgoi production to begin on December 1

Production at the eastern block of the giant Tavan Tolgoi coal deposit will start on December 1, the head of one of the companies entrusted with its development has said. “We have all the necessary rights to start production on December 1,” said Wolfgang Peters, chairman of Germany’s BBM Operta Group, which was awarded the contract to develop the eastern Tsankhi block of Tavan Tolgoi with Australia’s Macmahon Holdings in August. Peters, who was in Mongolia as part of a delegation accompanying German Chancellor Angela Merkel, said output from the block is expected to reach 3 million tonnes in 2012, and eventually rise to 15 million tonnes per year.

Chinalco gets first delivery of Tavan Tolgoi coking coal

A statement by Aluminium Corp of China Ltd (Chinalco), the country’s top aluminium producer, says it will buy 15 million tonnes of coking coal per year from Tavan Tolgoi over the next three years.  The first delivery of coal by state-owned Erdenes MGL was made in the third week of October.

Erdenes said in July that Chinalco would resell 30 per cent of the coking coal to Japanese trading houses Itochu Corp and Mitsui & Co Ltd, and state-owned Korea Resources Corp.

SouthGobi continues to see robust market conditions

At the end of the third quarter, SouthGobi Resources has reiterated its optimistic and confident guidance issued on August 10, 2011 with the expectation that each of sales volume and average selling prices will be at or above the mid-point of the ranges previously provided. The Company also says that direct cash costs are returning to recent trend levels through the second half of 2011.

With respect to the coking coal market, SouthGobi is not currently observing weakness among its customers and the regions of China in which its coal is generally consumed. The company’s current expectation is that fourth quarter sales volume will be similar to third quarter volume at moderately higher selling prices than the third quarter. Most coal for fourth quarter has already been contracted.

Leighton gets loan to expand capacity at  Ukhaa Khudag

Export Finance and Insurance Corporation (EFIC), the Australian Government’s export credit agency, has provided a US$81.7-million loan to facilitate the lease of mobile mining fleet and equipment by Leighton Asia, for use in its contract mining operations in Mongolia. Leighton Asia has operated the Ukhaa Khudag coal mine since 2009. As a result of the company’s strong performance, Leighton Asia is expanding capacity, creating a requirement for additional mining equipment. 

“This transaction with the Leighton Group demonstrates EFIC’s ability to tailor our solutions in supporting Australian exporters,” said Peter Field, Executive Director, Origination and Portfolio Management at EFIC. “Major projects like Leighton Asia’s Mongolian mining operations have significant and complex financing needs which cannot all be met by the commercial market. EFIC will work with all parties involved to provide the necessary support the Leighton Group requires to continue to expand its mining services business in Mongolia,” said Mr Field. 

According to Chief Financial Officer Peter Gregg, “EFIC’s understanding of the fundamentals of Leighton’s business and support of the Ukhaa Khudag mine project will enable Leighton to further cement its position in the Mongolian mining industry.”

Petro Matad receives valuable data from tests of DT-4 well

Petro Matad says it has received “valuable information” from the DT-4 well at its Davsan Tolgoi project. The company has completed the analysis of initial test results for the well and has designed a stimulation programme as well as contracting stimulation services for final completion of the well.

“The testing has provided valuable information regarding the reservoir characteristics in the deeper parts of the Davsan Tolgoi area,” said Doug McGay, Petro’s chief executive officer. “The recovery of oil without water provides encouragement for the development of the DT-4 oil accumulation.  The Lower Tsagaantsav reservoir characteristics at DT-4 compare favourably with historical production data from Block XIX, where all but four wells are reported to have required fracture stimulation, and where fracture stimulation is believed to have substantially increased production.” McGay added that the 42.5-degree API oil recovered has confirmed Petro’s previous statement about the quality of the oil being expected to vary across the Davsan Tolgoi prospect. 

Erdene finds Altan Nar drill results “encouraging and exciting”

Erdene Resource Development Corp. has called results from the first drill programme at the company’s 100% owned Altan Nar property “encouraging”. These polymetallic-gold assay results are from a shallow, four-hole drill programme, focused on epithermal-style gold, silver and base metal mineralization. “Altan Nar is proving to be an exceptional new discovery based on the size of the system and the extensive precious and base metal mineralization now confirmed through drilling,” said Peter Akerley, President and CEO. “We are very encouraged by these initial, near surface, drilling results and look forward to the continued exploration of this exciting prospect.”

Several factors support the significant exploration potential of the Altan Nar area. Additional in-fill soil sampling to better define the regional extent of the soil anomalies at Altan Nar is under way as well as detailed geological mapping which will further refine the geological setting and controls for the epithermal mineralization. The company is also extending the regional magnetic survey (100 metre line spacing) to aid in interpretation of the geological setting. More drilling is expected to commence on completion of the above work programmes.