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By John Wood
For Mining News 

Mongolia: A country of contrasts

AMA members participate in an unprecedented tour of mines in a land rich in the tradition of Genghis Khan but poor in mining law


Last updated 8/30/2009 at Noon

No, no….stop, stop, stop" muttered Ken Yockey from the front seat of the land cruiser as we zoomed past a lumbering fully loaded end dump truck on the inside shoulder of the narrow road; while trying to keep up with our companion land cruiser,which was zooming past the same truck on the outside!

Visions of Mad Max and the Blues Brothers flashed through my mind.

Charles Howard, wedged inside the front seat of that land cruiser, was thinking he had finally found drivers like those in Johannesburg, South Africa, while Sabre Reid sat in the back seat with her eyes closed, trying her best to be anywhere else. What a fitting end to another adventurous day in Mongolia! And we thought we would never top pelting hailstorms, roadside mare's milk stands, throat singing and camel riding! And did I mention millions of tons of surface-outcropping, thick seamed, low moisture steam coal just waiting to be mined, or arguably the world's largest undeveloped copper/gold resource getting mired in bureaucracy after spending US$1 billion towards production?

Welcome to Mongolia!

Mongolia, a country about 1,500 miles wide and 500 miles deep, is entirely landlocked, with Russia to the north and China to the east, west and south. A socialist republic from the early 1930s until 1992, it is now a democratic republic with an elected president and representatives.

Mongolia is known for its friendly people, beautiful horses, undeveloped resources and vast expanses of land.

Mongolia is a land of contrasts. Trucks waiting to be loaded with coal destined for hungry power plants in China are watched by a peasant youth on horseback tending a flock of sheep and goats on a nearby hillside.

Mongolia has a developing copper mine's construction thrown into turmoil because the government decided to renegotiate the mine's mining license with terms more favorable to itself.

Mongolia is a land struggling to develop a mining law that is fair and equitable to both the state and the miners.

Mongolia is a country in desperate need of a revenue source, any revenue source.

Finally, Mongolia is rich in the tradition of Genghis Khan.

In mid-July, members of the Alaska Miners Association received a wide overview of mining in Mongolia in a way that no other tour has been done for the general public. Led by AMA executive director Steve Borell, the group journeyed from Alaska to Mongolia, where it visited two operating coal mines, an operating open-pit lode gold mine, several operating "mom and pop" placer mines, and the construction - suspended Oyu Tolgoi copper/gold mine. Also included were meetings with operating companies and local service providers, city and museum tours and a wide variety of cultural events.

The first two mines that the group visited are controlled by Ivanhoe Mines Mongolia and were accessed from a base of operations at Ulaanbaatar via a 1 ½-hour charter flight south across the Gobi desert in a Saab 340B turboprop aircraft. The first visit was to Ovoot Tolgoi, an open-pit coal mine that is on target to produce 2 million tons of steam coal this year.

The main seam being mined outcrops at the surface, averages 40 meters thick and dips at 45 degrees.

The 200-member mine work force, with the exception of 3 expats, is composed entirely of Mongolian citizens.

All of this mine production is loaded onto 120-ton Chinese haul trucks and transported along dirt roads 85 kilometers into China, where it is loaded into rail cars and transported to power plant sites.

The next mine visited, after a 70-minute flight over terrain that looked like pictures of Mars, with an occasional road trace and ger (traditional Mongolian dwelling), was Oyu Tolgoi (OT) , Ivanhoe's copper/gold project. A very large project, OT will be a combination of a large open pit mine and an underground block-cave mine. Associated with the mine will be the construction of an adjacent 300 megawatt coal-fired power plant, transportation system to get thermal coal to the power plant, and possibly a smelter. Oyu Tolgoi has been under care and maintenance since November 2007, waiting favorable outcome of its "mining license" re-negotiations with the Mongolian government.

We were told about US$1 billion has been spent on the project to date, including the sinking of a 1,300-meter shaft to access the underground deposit. After spending the night at OT - the visit was highlighted by a tour of the underground facilities - followed by the return charter flight to UB.

After another day of cultural events, the group loaded into four land cruisers and headed north to visit hardrock gold, coal and placer mines. For most of the day, we traversed rolling "steppe" terrain, with only an occasional grove of trees on the hilltops. Small flocks of sheep, goats, horses, cattle, and an occasional ger dotted the landscape as far as the eye could see. Very pastoral!

Mid-afternoon found us at the Boroo gold mine, a conventional open-pit gold mine; with gold being recovered by CIL + gravity circuit and heap leach. Run of mine ore averages about 3 grams per metric ton, with a stripping ratio of about 3:1. The mine has been open for 5 years and will operate for several more. Boroo has 600 employees, all but 18 expats being Mongolian citizens.

The evening was spent in traditional Mongolian ger lodging, with the traditional dinner of cut-up boiled whole sheep. Quite tasty!

Our next day's travels began with an hour's drive on a two-lane paved road, then an additional hour over dirt trails across rolling hillside, all driven at the normal Mongolian break-neck speed, to the Shayrn Gol coal mine. This mine, supplied via railway, was begun by the Russians in 1965 to supply about a million tons per year of steam coal to power plants located in Russia. Fittingly, no road access to Mongolian towns was ever constructed! The surface coal reserves are now all but played out and the mine managers are attempting to move some of the operations underground.

The mine tours then concluded with visits to two local placer mines. Each appeared as if it employed less than a dozen workers, and each recovered gold with the typical "Russian" layout of a small tromel feeding a small sluice box. There was a fair amount of new equipment in use. After this last tour, the group headed back to UB in the helter-skelter fashion described at the beginning of the article.

Finally, after another two days of meetings with local industry representatives, shopping, sightseeing and culture, our exhausted group boarded a KAL jumbo jet for the long ride back to Seattle.


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