Could you introduce Euro Khan?

Euro Khan was founded in 2011, with the vision to bring European technology, know-how and engineering to Mongolia. The first year went well, but the collapse of commodity prices in the following years was testing. Rather than leaving, we chose to re-orient towards renewables.

Today, Euro Khan has an investment arm with the operation of Sainshand Wind Park, a green hydrogen project in Australia; we also partly own a fluorspar mine and processing plant that we acquired as a brownfield project before the pandemic. Today, we sell fluorspar concentrate to China. Finally, we also provide engineering and EPC works for companies like Oyu Tolgoi (OT), and we act as an exclusive distributor of 25 different equipment and technology brands. We provide drilling rigs, material handling system, conveyor systems, as well as feasibility studies and do commodity trading. Could you tell us more about the Sainshand Wind Park and Mongolia’s energy scene?

Mongolia’s renewable resources are incredible. Mongolia’s altitude makes it ideal for photovoltaic (PV). However, when we started to look deeper into setting up a solar farm, we bumped into wrong expectations of Mongolian landowners. Meanwhile, wind power is much more capital-intensive and needs substantial foreign investment. We bought a project in 2013, amended the PPA with the government, and reached a final agreement in 2017, commissioning the plant in record time, by 2018. The Sainshand Wind Park became Mongolia’s largest renewable energy project, with an installed capacity of 55 MW, which is serving over 300,000 people with clean energy.

In terms of the energy scene, the government did everything right from a legislative perspective; we had the renewables law as early as 2007, an established corridor of tariffs for solar, wind, and hydro, and an attractive PPA scheme based on a take-or-pay clause, which means that the government committed to pay for the full amount of energy that the plant can produce.

The problem is that the government did not respect the contract. For the past five years that we have supplied clean energy to the grid, the government owes us already US$170 million. This has become a point of contention at a very high level; not to mention, it has completely stopped other private companies from making substantial investments in renewables in Mongolia. What potential does Mongolia hold in the renewables space, if current issues are solved?

Mongolia could become a net exporter of energy; there were projects under discussion to build a super grid, with transmission lines via China through offshore cables to Japan and Korea.

Wind and solar hold great potential, while hydropower projects are a bit more geopolitically problematic. There could also be an option for China to build massive renewable plants in Mongolia, but Mongolia wants to keep its energy sovereignty, as one of the last things it can protect outside of China’s influence. In all cases, even OT is mostly powered by a company in Inner Mongolia (Inner Mongolia Power Corporation).

The good news is that OT is taking a stronger stance on net zero and investigating the possibility to build a 250 – 300 MW combined wind and solar and they are looking now for a JV partner. The fact that the elephant in the room is looking at this issue is a good sign already. What is the opportunity you identify in green hydrogen?

We established a company in Perth, Western Australia, and we are working on a pilot plant to produce green hydrogen from renewable energy.

At the moment green hydrogen is still not fully economically viable, so you need an strong off-taker, who is willing and capable to lead the path, which naturally would be the OT in Mongolia. OT has a plan to electrify all of its underground equipment and as many of its light vehicles on the mine, but what they cannot do is electrify the long-haul trucks because these are running to China on a 24/7 basis, so, replacing them with electric-powered vehicles would entail quadrupling their fleet. Green hydrogen could fuel those long-haul trucks. This is what we are working on right now on a conceptual level. Do you have a final message?

I will repeat Robert Friedland’s message: Treat your investors kindly. Sometimes, the best thing politicians can do is nothing at all.