Mark Gabel, CEO, MSM GROUP
Could you detail the work MSM is doing with the Oyu Tolgoi (OT)?
OT accounts for about 35% of the business, being our largest customer. What helped us stand out in front of OT is our offer of fully electric-powered products, supplemented by technicians trained on high-voltage systems. In one of our most recent projects for the OT, we developed a 22 m road-train autonomous solution with a very small turning ratio. This solution does not exist anywhere else in the world, and it has been created specifically for the OT mine. What specific challenges do you face?
Keeping a balanced supply is tricky. Mongolia is a landlocked country and the border often clogs up. Goods get stuck at the border for three months at a time. More than that, interest rates in the local currency are at around 18%. Logistics make up for about 12% of the total cost of the product in Mongolia, above the average in most other markets.
At the same time, on the demand side, we face the perpetual issue of last-minute decisions, specific to emerging and developing markets. The business is capital-intensive and keeping all this inventory available for customers who don’t plan ahead is not affordable for many. Do you have a final message for our international audience?
If mining continues to take off, Mongolia will not have enough technicians, operators, and skilled professionals, which opens more room for automation. MSM is already partnering with Indurad Xtonomy for the autonomous road trains at the OT, but also with RCT out of Australia to bring in remote-controlled dozers.
At MSM, we focus a lot on company culture and values to retain and attract the best talent. Conducting business ethically is at the core of our values; continuous improvement and commitment to excellence come next. We take a bottom-up approach, encouraging our employees to tell us how to do better, and delegating much of the decision-making.
David Turnbull, Managing Director, TRANSWEST (MONGOLIA)
Could you introduce Transwest to our audience?
Transwest Mongolia (TM) was established in Mongolia in 2009 as the authorized Komatsu distributor in the country. We officially began activity in 2010, spending the first six months working at the Oyu Tolgoi (OT) project, supplying the open-pit operation with approximately 100 pieces of Komatsu equipment. For the next few years, we were solely invested in developing our company infrastructure, and ensuring OT’s success. At the same time, we signed a five-year MSA (Maintenance Services Agreement) contract with the OT. This partnership with OT allowed us to build a robust platform and distributorship business within the country. While OT remains a vital component of our business activities, our diversification and development of other customers has been very successful. Recently, we signed a deal with Mongolyn Alt MAK LLC for a fleet of equipment approximately the same size as that at OT. Currently, we have approximately 300 employees and we expect to grow that number to grow in excess of 350 in 2024. What do you identify as the biggest challenge of operating as an equipment supplier in Mongolia?
The biggest challenge is finding and retaining people. First, there are just not enough skilled people available; and second, there are not enough people in general. Basically, the population is both very small and very young. Businesses need to work on two fronts: training and retaining. Mongolians are very capable, but we need more, and the government is not committing enough resources to further skills development or improving the labor laws, leaving this issue to be dealt with by the private sector. Could you elaborate on the new Transwest Training Institute?
Effective Jan 2024 we will commence training 40 graduate engineers from local universities in an intensive two-year apprenticeship program, based on global standards, in the mechanical, electrical, welding and machining trade disciplines. We plan to up this level to 200 in three years. This builds on our long-term relationship with MUST University (Mongolian University of Science and Technology), which started in 2010.