BAYARTOGTOKH.B
The feasibility studies for these projects will have to be revised with detailed costs
New Recovery Policy” aims at making a significant turn in six sectors. One of these is the industrial sector. The numerous plants that are always “marked” in the manifesto paper of all parties during the parliamentary election are included. If Oyun-Erdene.L’s cabinet manages to manifest these development plans in the mid-term, they will surely be a highlight in history. Failure to do so will make them no better than their predecessors. “The fact that Mongolia exports 90 percent of natural resources at a low price without processing, and imports 90 percent of its consumption from abroad is a bitter lesson of policy failure in the industrial sector. Mongolia is venturing away from a commodity exporter to an industrialized country by refining its copper, washing coal, purifying gold, processing oil, and domestically producing food,” addressed Prime Minister Oyun-Erdene.L at the general session of the Parliament while introducing the “New Recovery Policy”.
The PM promised that at the end of the journey, the economy will double, and income per capita will reach at least USD 6,520. The PM confidently stated that the “New Recovery Policy” is being implemented under this goal.
Socio-economic challenges, such as increasing budget revenues, bolstering foreign exchange reserves, reducing the balance of payments deficit, halting the depreciation of the national currency, repaying debt, supporting household incomes, and eradicating poverty, are still piling up. The hope of “liberating” from this burden is to process exportable products and add value to them. This is the real value of these over 10 products in the industrial sector. The industrial projects include an oil refinery, crude oil pipeline, coal processing plant of Tavantolgoi, Industrial technology park-Copper refinery, Copper cathode plant from oxidized ore, Oyu Tolgoi copper concentrate processing plant, Altanshiree industrial park, Mongolian steel complex factory, and Erdenet Metallurgical Plant Complex. We are highlighting mineralbased heavy industry projects. In terms of timing, these projects should realize and commence operations by 2025. During the preliminary discussion of the Mongolian Economic Forum, relevant experts from the Ministry of Economy and Development said that the majority of these projects were poorly calculated and are in need of re-feasibility studies and clarify previous estimates.
The new ministry is working to re-identify the social and economic impacts of the projects and required investment. The Ministry of Finance, Ministry of Mining and Heavy Industry, and Ministry of Economy and Development are currently working on estimating the projects. As such, there are several ongoing projects. The oil refinery, which began construction with USD 1.2 billion soft loans from the Indian government, has been postponed until 2025, although it was initially scheduled to inaugurate next year. The company in charge of the project is pointing to the epidemic for the delay. Major projects under the “New Recovery Policy” are linked to the mining sector, which accounts for 69 percent of total industrial output. The mining sector will be the key driver of economic recovery and short-term economic support. Initiated by “Erdenet Mining Corporation” SOE, the first discussion on introducing the upcoming projects and their effective implementation was held in Orkhon province on March 11. During the discussion, all 22 projects that will be implemented until 2025 were presented. The Government of Mongolia issued the license for the first-ever industrial plant “Industrial technology park”. Within this framework, evaluation and research on the construction of a copper concentrate smelter, copper processing plant, an oxidized ore leaching plant, and a molybdenum concentrate processing plant. The construction of the Industrial Technology Park will require an investment of USD 2 billion, with Erdenet Mining Corporation planning to use 50 percent of its total investment from its own sales revenue and the rest from foreign and domestic investment and low-cost financing. An investment worth USD 2 billion is required for establishing the “Industrial technology park”, and “Erdenet Mining Corporation” raised 50 percent of this amount from its sales revenue and the rest from foreign and domestic investors, as well as cheap financing sources. Furthermore, the development of the coal processing plant of Tavan Tolgoi is expected to be completed next year.
The plant will export 30 million tons of value-added processed coal annually. The total project cost is over USD 900 million, which is estimated to be covered within 7 years. There is a growing concern about increased project costs caused by the price hikes. Erdenes Tavan Tolgoi estimates that about USD 208.45 million worth of revenue will be generated for the state and local budgets once the plant becomes operational.The private sector-led “Altan Shireet’’ industrial and technology park is progressing well and the construction of a wet iron concentrator is also underway. “Boldtumur Yeruu Gol” LLC is implementing the project, which is in plans to expand to an industrial complex by 2025. The industrial park projects will allow Mongolia to refine 2.1 million tonnes of copper concentrates, produce 422,500 tonnes of copper, and boost coal exports to over 50 million tonnes by 2025. In particular, the preliminary discussion of the Mongolian Economic Forum showed that the share of enriched coal will increase by five times and that 50 percent of the total consumption of petroleum products will be supplied domestically. Industrial projects are not similar to SMEs. It requires a significant investment, time, and effort.
