Could you introduce Mongolrostsvetmet?

Mongolrostsvetmet was established in 1973 through an agreement between the Mongolian and Soviet governments. However, in 2016 full share ownership was transferred to the Mongolian government, making us a 100% state-owned entity by 2019. This transition followed years of negotiations to reconcile interests between the Russian and Mongolian governments. Mongolrostsvetmet has since emerged as a pivotal player in the country’s mining sector, serving as a cornerstone of Mongolia’s social and economic environment. With 1,600 direct employees, we have an indirect socio-economic impact on the livelihoods of 200,000 people. Small cities were developed in the vicinities of our main facilities in six provinces of Mongolia. We take pride in shaping the communities we work with and being the biggest taxpayer in each of these provinces. According to Mongolian law, Mongolrostsvetmet contributes 40% of overall taxation to the regional budgets. Our vision is to actively and holistically contribute to the well-being of our host communities. Could you provide an overview of Mongolrostsvetmet’s current asset base?

Mongolrostsvetmet operates in fluorspar, iron ore, and gold mining, with our gold output notably contributing to the National Gold Treasury Fund. In the past, we deposited about 32.5 t of gold. Annually, we produce 400,000 t of iron ore and process between 10,000 to 20,000 t/y of fluorspar. Based on the reserves of the existing fluorspar deposits, we anticipate mining for another 10 to 15 years. However, we are currently working on an underground expansion that will increase the life of the mine for another 25 years. I believe we are looking at another half-century of fluorspar mining from the current assets. The expansion of the underground development is currently underway and is expected to be commissioned in July 2024. Mongolrostsvetmet aims to restructure into a joint stock company. Could you elaborate?

Currently, Mongolrostsvetmet operates with its own funds, but we are planning to bring in foreign and domestic investors to partner and take the project into the next phase. Our current production model needs optimization to derive higher fluorspar concentrates at better margins. To achieve this, we require new technology and investment within the operation. As fluorspar becomes an increasingly attractive component in the electric systems of EVs, we believe there is an appetite from foreign investors to secure that supply. In Mongolia, we are restricted between two big neighbors, and we are dependent on both, with our fluorspar exports limited to them. To move into the next level of production, with a higher-purity product going into higher-value end markets, we need a partner. To attract a third-neighbor partner, we are preparing for a judicial application to become a joint stock company. We hope to make the transition by 2025. How could Mongolia’s regulatory environment improve, not least to encourage greater transparency and trust in state-owned enterprises?

One of the areas that require further improvement in Mongolia is lawsuits and the judicial courts. The current legal framework presents multiple challenges for foreign investors, as we learned from our own transition from Mongolian-Russian ownership to a state-owned entity. Moving from dealing solely with Russia as a foreign investor to dealing with a plethora of other cultures and standards is certainly a learning curve for Mongolian companies. Historically, all of Mongolia’s documentation and guidelines were in Russian and molded after the Russian standard. Yet, we realize today the necessity of switching to English and to the frameworks adopted by the West. For example, more companies today are adopting JORC standards for their resources. Moving forward, the entire reporting system needs to align with international rules.

Do you have a final message for our readers?

Mongolia is a democratic island between two very influential nations. Our country stands testament to a highly resilient democracy and reflects geopolitical diversity in the region. Echoing this geopolitical position, Mongolrostsvetmet is eager to actively contribute to the global mining industry, supporting the creation of new value chains as the world becomes more interconnected. We extend open invitations to foreign investors and collaborations. We are looking forward to adapting, evolving, and ensuring mutually beneficial partnerships.