N.Ariuntuya talks to A.Chimeddorj, the geologist whose name has been synonymous with the Tavan Tolgoi deposit ever since he was the first person to estimate the massive reserve there. He talks about his decades in mineral exploration and what the future holds for Mongolia. He now works as Chief Geologist at SouthGobi Sands LLC.
How did it fall to you to estimate the reserve of Tavan Tolgoi?In 1975, I graduated as a prospecting explorer from the former Technical University. Prospecting is part of exploration and is essential for reserve estimation. I did exploration work at several mines such as Sharyn Gol, Bayateeg in Ovorkhangai, Khashaat Khudag in Dornogobi, Ulaan-Ovoo in Selenge, Ovorchuluut in Bayarkhongor, and Olonbulag in Gobi-Altai. Except for Bayateeg and Sharyn Gol I discovered most of these deposits. These two had already been discovered and their reserve estimate prepared.
I was almost addicted to my work in the field and was happiest when I found the wonderful thick coal seams that made a deposit but in May 1981, I was summoned to Ulaanbaatar by the ministry. This was because Mongolia needed to explore the Tavan Tolgoi deposit as part of the work plan for The Council for Mutual Economic Assistance (COMECON) between socialist countries. The exploration results were to be presented at the next COMECON conference and the ministry asked me to lead the exploration team. I had my hands full, with more than 10 exploring projects in coal alone, but the ministry order had to be followed, so in July I took up my new assignment.
Soon I was in Tavan Tolgoi along with experts from Russia. Work on exploration had already begun and I had to go through thousands of pages of results. It was an enormous project and the size made the work complicated. Many coal seams were found but they were not always connected. Coking coal was found only occasionally, so both Mongolian and Russian professionals believed that TT was not a coking coal deposit.
At that time, we did not have many experts who specialised in coal. I myself had only 6 years of work experience, though my stint at projects such as Sharyn Gol had trained me well. I decided to rearrange all the results, confident that the numerous coal seams were connected. This was not easy to establish, however, mainly because TT has as many as 16 separate seams. There was a sports hall at the site and maps of 600-metre drill holes were hung there from the roof, reaching to the floor. There was recurrent drilling, and accordingly there were a great many drill hole maps. Finally, we connected the coal seams by using the geophysical curve method like a cardiograph. It was a massive job.
I travelled all over the area. Just the Tavan Tolgoi part is 90 km quadrate long and 9 km across. At first I concentrated only on this part, making a map of the entire 90 км2. The total TT area including Ukhaa Khudag, the eastern part and Bor Tolgoi is 200 км2. We made cross sections and then joined them to get one complete map. It took us all of one year.
Our deadline to send the preliminary results of our exploration was the end of 1981 and so we submitted a reserve estimate, a map of the deposit and other geological data. All of this had been prepared by myself and my crew, but according to the practice then, I did not put my name in any document. I was an expert of the ministry and only people there were authorised to sign such documents.
When was Tavan Tolgoi actually discovered? Was there any previous exploration before you?
Between 1953 and 1956, Russians drilled 22 holes at the heart of the deposit. They found coal seams but could not connect these correctly. In the late 1960s, a Russian scientific team came, gathered samples and took them to Russia for testing. It was found that TT had thermal coal, but also coking coal. The main reasons why TT was included in the COMECON work plan were first, the largeness of the square; second, the number of coal seams; and third, the high probability of finding coking coal.
Mongolia and Bulgaria signed an agreement in 1974-1975 to carry on work in TT. That team took five samples from the center of TT where they had made a small open pit 5 metres deep. Tests in Bulgaria found that only one of the five samples was of metallurgical coking coal and the rest were thermal coal or mixed with other types.
Why did COMECON not develop Tavan Tolgoi? Was it that the preliminary results you sent did not show enough reserve?
The idea was to get the initial exploration done with Mongolian funds and then to pursue work if certain basic conditions were met. First, the deposit had to be of quality coking coal; second, it would not need extensive overburden removal; third, open pit mining would be possible; and, fourth, the reserve would not be less than 700 million tons. However, proper arrangements could not be made. It took three to four years just to start more extensive and serious exploration. The Russian expert who came did not have much experience and had never worked in a deposit like TT.
But we completed our assignment with two Russian experts, battling all odds. We estimated the reserve, and revealed the good quality of the coal. As a matter of fact, the work got easier with practice and time. Still, it was unexpected when the minister ordered me to choose the best experts from other projects to join me in Tavan Tolgoi and asked me to write the report of preliminary exploration. So I chose 20 of the most skilled people from various specialities. We wrote the report between 1982 and 1984, working 12 hours a day in 4 rooms as halls in the international expedition office, next to today’s central laboratory. We produced maps as as the roof. There was no computer, and everything was drawn by hand. The map of the Erdenet reserve estimate had also been made by hand. As a mater of fact, our work on Tavan Tolgoi basically followed the methods used in the case of Erdenet.
We had to spend long hours to arrange and order an enormous amount of haphazardly kept field data but finally the report was ready at the end of 1984. We compared notes and opinions with the Russians but did not agree with them always. I remember that each level of deposits had to be written by hand according to the Russian practice but seeing that this took too much time, we decided to skip the middle levels as the deadline approached. We wrote only the first and the last levels which the Russians did not like. We had arguments and they complained about us to their directors. They did not help us much in the beginning and were more cooperative only after we had finished work on the structure of the deposit. But they did give us some help, even if they complained.
The preliminary report filled 8 volumes. We offered the numbers everybody was hoping for. We said TT contained more than 700 million tons of good quality coking coal, most of it above ground and the clearing surface of 3.5-4.0 м3/tons of coefficient was very favourable for open pit mining. Mongolia presented the report at the COMECON conference, where the Scientific and Technical Committee discussed the parts relating to Tsankhi and the South West. People from the Ministry, the Program Commission, Russian experts and we attended the session. The entire report was written in Russian. Our report was termed excellent and our conclusion that the reserve, as a total of А+B+C1+C2, amounted to 1021.7 million tons was recorded.
As the report was prepared by Mongolians, we decided to get it ratified by an independent body. The Reserve Commission for assets did not have an expert for such a review so we approached Bibochkin, head of the Russian Reserve Committee, when he visited Mongolia in 1984. He agreed to get the report re-examined and asked us to send it to him. Soon after, our team was called to Moscow where four Russian Honored Geologists checked the report separately, and agreed with us that TT is a coking coal deposit. Next year, they came to Mongolia, and met our Reserve Commission to tell it they had found our report to be technically accurate.
After that, the Program Commission decided on a feasibility study. The mission statement signed by Prime Minister D.Sodnom and P.Jasrai said the study would decide how the mine site Tavan Tolgoi was to be developed. Russia chose The Institute of Lengiproshaht for the work from among 20 institutions which had expressed interested in preparing the feasibility study. They were very thorough and we were besieged with demand for material and information on an endless variety of things, including engineering-geological surveys of the road and railway route the minerals will take. Construction was to be finished in 2-3 years. The entire Mongolian Institute of Construction worked on the project. We did surveys of building a road to Choir. A power plant that would use 20 million tons of coal annually was to be built. The Feasibility Report consists of 130 volumes and can still be seen in the Ministry of Mineral and Energy.
It provided for everything from an airport to even a theatre. Tavan Tolgoi was all set to be developed. Exploration in Ukhaa Khudag, Bortolgoi and the East part began in 1985, but the results were disappointing as no good quality coking coal was found. It seemed the area I had focused on contained the quality resources. We chose Tsankhi to be developed first, as it had good quality coal, and would need less surface clearing.
Which countries showed interest in exploiting the Tavan Tolgoi deposit?
As instructed by Comecon, we asked countries like North Korea and Romania for cooperation. I myself went to Romania to tell them about the deposit. North Korean officials came here to see Tavan Tolgoi for themselves. I used to accompany foreign visitors there. North Korea wanted the coal but it had to be shipped via Vladivostock. Romania was very interested but finally no decision was taken by Comecon.
So what has happened to the 130 volumes of feasibility study? Did you make a new study?
Adoption of the free market economy rendered that study irrelevant. The technical part including where and how to mine, would be mostly valid still, but the economic part was now pointless. All accounting had been made in roubles and exchange rates were now very different and prices of everything had changed. The ministry made me responsible for the project. After the transition, we needed to produce the feasibility study in ways followed in the west. When Mongolian officials visited a developed country, I prepared for them a presentation on the deposit for use in that particular country. My presentation skills have been greatly improved this way.
In 1990, I almost became unemployed. Financial constraints led to an end of coal exploration in the country and Tavan Tolgoi was at a dead end. For a time, I worked for small stuff like spar, phosphorite or oil. Then when the Geology and Mining Ministry became the Heavy Industry Ministry, I left it altogether. I thought I’d do scientific research, and when the National Center of Coal Gas Technology was established I worked there for 2-3 years. It was quite an important and responsible job.
I was invited back to the ministry in 1993 to prepare a master plan for the coal sector with Japanese collaboration. Tavan Tolgoi’s development was part of the Government’s policy and foreigners had been visiting Mongolia to check on the deposit. Then I got an opportunity to do some research work in Australia for a year, but I was told by our institution director that I would need at least 3-4 years. So I came back to Mongolia, and my friends in the ministry got me back to work with the Japanese. We produced a two-volume master plan that gives detailed information on almost all aspects of all Mongolian deposits, including a English section on Tavan Tolgoi. I sent this to many countries.
I found that the Japanese were very good in planning. Then I worked in the ministry as a coal specialist for a while, while the name of the ministry was changed to Ministry of Infrastructure. My responsibility was coal deposits and coal quality etc. Tavan Tolgoi was very much on our mind but we could see no way of getting finance for its development. When the World Bank offered funds to modernise equipment in the Baganuur mine. I took a chance and approached the project officials for financial help to prepare an updated and revised feasibility study of Tavan Tolgoi that would help promote the project in the international market. I did get USD300 million.
We floated a tender to select a company to do the job and received bids from companies based in the UK, Australia, Canada and the US. Interestingly, an Australian company offered to prepare the feasibility study on their own, without any funding from us. We were advised by many against this, so we decided to select a Canadian company, Norwest. Canada is somewhat similar to Mongolia in its weather and also in the fact that its coking coal has to travel a long way by train to reach ports from where it is exported to Japan. Later a US-based sister company of Norwest Canada also applied and it was this company that got the contract.
The Norwest study recommended an annual production level of 11 million tons, lower than the 20 million tons originally considered. At that time thermal coal prices were low so the company wanted only coking coal to be sold. The company worked under standards set down in the World Bank’s Technical Reform Project so the study was of a very high quality. I worked with Norwest for 6 months, including in the deposit area, where I explained all Russian materials and my own geological reports to them. The main ideas of the 130-volume study were translated into English. We also invited the Russian experts who had prepared the study to act as consultants but for unexplained reasons they did not come.
The Norwest study was completed in 1998, and a ger world was now made aware of the massive deposit in Mongolia. What did this study conclude?
The conclusion was that it is a massive deposit, but profitability was low. There was no infrastructure and if it was to be built that would have to be only for TT, at great cost and thus lowering profits. This was in 1999, when coal prices were not high. Things changed in 2003, when Oyu Tolgoi was discovered and it was realised that OT and TT could share the cost of developing infrastructure. Then coal prices started increasing. Everything has changed so much since 1999 that now there is fierce fight for TT.
What happened with BHP Billiton?
They came before we announced the tender, and made their own feasibility study. I believe this was thorough and competent. The company felt that despite its huge reserve, the deposit was unlikely to be commercially attractive because of several factors.
Has Norwest made another study?
The company now works as a consultant for Erdenes MGL. Its first study had one weakness at hindsight. It recommended mining only coking coal but as I explained, this was quite justified at that time. Norwest has written a second report, targeting western investors. It did not drill again because it already knew the quality of the coal. It just converted the reserve into JORC code.
I want to stress that Norwest accepted our exploration results in toto and did not do a single drilling of its own. We had drilled 3,000 times in the ten years before 1990. The deepest drilling was 650 metres. It was a remarkable achievement for us. The merit and accuracy of our exploration has been universally recognised. Of course, our Russian brothers helped, but we surpassed Russian standards to reach world standards. All information we gathered was translated into English and the data of 3,000 drillings were put into computers and then turned to 3D. With all data now accessible, later feasibility studies have become easier. Geologists after us made an estimate of reserve in the part which is being used first: Ukhaa Khudag and Bortolgoi.
When did you finally leave the TT project? But you have not cut your ties as all interested in Tavan Tolgoi, foreigner or Mongolian, seek your advice.
I left the Ministry in 2000 when the project was going nowhere. I retained my interest in coal after so many years with it. Earlier I had sent a paper on locating coal bed methane to an international conference in Beijing. This caught the eye of some Americans who offered me a job to do the work in Mongolia, but our ministry refused permission to me. In 2000, I received a call from a man in Canada who had read my article and wanted to do business in Mongolia. That summer Canadians came here to do research on coal bed methane and I worked with them in the coal basins of Nariinsukhait and Borzon in SouthGobi province. We found coal bed methane but not so much as the investors had expected and also not enough to make their project viable. They invited me to join their coal project.
Now I’ve been working for SouthGobi Sands for six years. But, yes, I meet hundreds of people who want advice on Tavan Tolgoi. Mitsui was interested in Tavan Tolgoi so I went with them to TT, and showed them places where they took samples and conducted tests. I also wrote a report for them.
How are geological reports written now? Is there an internationally accepted format?
We still follow Russian practices in coal exploration. During the Soviet Union days, we used Russian standards in estimating the reserve of 80 types of minerals. We wrote geological reports in Russian so there was no problem in using the Russian format. After the transition we began writing these reports in Mongolian and faced problems in finding the right terminology that would be acceptable to all. Then guidelines were published but it has not been of much help.
A committee is presently working on resolving all terminological inaccuracies and confusions. This will be akin to a constitution for the mineral resource sector. The first part, dealing with reserve classification, is almost done. Then there will be exclusive terms and concepts for each mineral, such as gold, coal, copper etc. This is serious scientific work and in Russia it is done by institutions. Here I have been asked to determine the terminology and format for the coal sector. I can do it following the Australian and Canadian models because I am familiar with them but we shall need time and funding from the private sector.
It was almost impossible to convert the old Russian norms into something intelligible to Western users but now the Russians have updated their guidelines, and consulting companies are working on ways to convert these into standards used elsewhere in the world. Russia has also realised the need to adopt norms in international use, so a combined method, incorporating features of both formats, could soon be available. Until that is done, we could work with Russian standards but I’d prefer Mongolia to have its own way, taking the best of all and leaving out what is unsuitable for Mongolia. For example, the JORC has no chapters, and the Canadian 43-101 has its own local features. Australian deposits are different from ours, as their origins were different. For example, coal seams there can stretch for 300 km without any change in their thickness. In that way, Canadian conditions are more like ours. There are also subtle differences in the way reserves are treated. In the West, underground resources are for commercial exploitation, and the geological report fetches money in the stock exchanges. In Mongolia, however, we look at our reserves differently.
Now with 3D data permanently stored, one can use different areas of the underground resource at different times and feasibility studies can be made for only the part that is to be exploited, and which is then “the reserve” for that particular commercial venture. Our legal requirements are different. We treat as reserve all the deposit area that can be profitably exploited and prepare feasibility studies for it as a whole. This causes lots of confusion with foreigners. For example, Western practices include narrow seams while estimating a reserve but we don’t. Maybe it will be better to make two different estimates of the reserve in any deposit. One would include only what can be profitably exploited, and the other all the resource in a deposit. Economic viability is a major concern of any feasibility study and the local legal definition of what constitutes a reserve of the deposit and what its resource should be more clear, less ambivalent, and more based on commercial profitability.
Is this why the Tavan Tolgoi reserve was increased by use of JORC code?
Yes, Tavan Tolgoi is a good example of different results achieved by use of different standards. We considered only coal 2 metres or more thick and put the total reserve at 6.4 billion tons. But in JORC coals 0.6 metres thick is also included and so the new reserve estimate was raised by one billion tons to 7.4 billion tons. The cross sections are also drawn differently. I think mining coal of 0.6-metre thickness is very difficult with present digging techniques, especially from slopes where the coal is mixed with rocks. However, this may not be much of a problem in Tavan Tolgoi, given the topography there. In Indonesia, they do mine narrow coal seams and they also separate the coal from the rocks. But of course, there is a limit and you cannot extract coal 50 cm thick.
Why do foreign companies prepare their own estimate, ignoring the work done by Mongolian experts?
A reserve estimate is needed to raise capital in the stock exchanges. Large investors trust only reserve estimates prepared or certified by professional persons or companies who hold internationally recognised licenses. For historical reasons, we don’t hold that licence and so our work, no matter how good it is, will not be accepted.
Please subscribe to our journal to read more.