S.BOLD-ERDENE
bolderdene@miningonsight.mn
Erdenes Tavantolgoi (ETT) JSC's sales revenue exceeded USD 3 billion in 2024, with a net profit of nearly USD 1.3 billion. Just a few years ago, the company was struggling and on the brink of bankruptcy but managed to recover in a short period. It can be said that ETT has reached its highest peak since its establishment in 2010. Over the years, the company has exported 150 million tonnes of coal, generated USD 11 billion in revenue, and paid MNT 10 trillion in taxes. In the past three years alone, it has earned USD 7 billion in revenue and achieved nearly MNT 10 trillion in profit, an outcome no one had anticipated.
Beyond the monetary figures, the company has implemented significant infrastructure projects, including a coal processing plant, a railway, and a coal loading logistics center, evolving into a major mining corporation with largescale infrastructure comparable to the world's leading mining companies. Fifteen years ago, ETT was established as part of Mongolia's ambitious national vision. The goal was to economically leverage one of the world's largest coking coal deposits, ensure every citizen benefited from the country's natural resources, and support economic growth. Unfortunately, harsh market conditions and domestic populist influences led the company into a decade long struggle. The cost of coal extraction far exceeded its selling price, and employee salaries were paid through high interest loans from commercial banks, pushing the company to the edge of bankruptcy a fact that cannot be denied. In its early years, ETT confidently announced plans to become a key player in the global coking coal market and implement largescale mega projects.
The company's primary goal was to conduct an IPO on international stock exchanges, transform into a publicly traded company, and partner with strategic investors to become a major coal exporter. With fewer than 50 employees and just over a dozen pieces of equipment at its inception, the company had no choice but to pursue an IPO to secure the significant capital required to achieve its ambitious goals. The company's initial objectives can be recalled from a speech by its first CEO, B. Enkhbish, at the "Discover Mongolia" conference in the fall of 2012. He stated, "We opened the East Tsankhi mine and extracted 1 million tonnes of coal in 2011. By 2012, we had prepared 1.7 million tonnes of coal for sale. Our goal is to increase the East Tsankhi mine's production capacity annually, reaching 20 million tonnes by 2016 and becoming a major international scale mine. Regarding infrastructure and production projects, they are as largescale as those of Energy Resources LLC.
Within the Tavantolgoi project, we must independently implement essential projects such as a coal washing and processing plant, energy supply, water supply, railways, and roads. These integrated projects are critical for Mongolia's economic impact and to secure a significant position in the regional coal market. The West and East Tsankhi mines each aimed to extract 1520 million tonnes of coal annually, with a combined target of 3040 million tonnes of coal extraction and export per year, which was the company's primary goal. The projects discussed at the time required approximately USD 1 billion in funding. Remarkably, most of these once seemingly ambitious "dream" goals have been realized 15 years later. By the end of 2024, the company extracted and exported a total of 30 million tonnes of coal from the West and East Tsankhi mines, achieving the target set 15 years ago. Now, the company is preparing to further expand its extraction capacity by opening new mining sites, operating in new areas, and extracting coal through underground mining. In the coming years, the company is aiming not just for 30 million tonnes but for 50 or even 60 million tonnes of coal production. Additionally, most of the initially planned infrastructure projects have been completed and put into operation, marking another fulfilled "dream." The Tavantolgoi Power Plant and over 650 km of railway construction for the TavantolgoiGashuunsukhait and Tavantolgoi Zuunbayan routes have been completed with a total investment of USD 1.5 billion. These railways have enabled "Erdenes Tavantolgoi" to export coal through three ports at a lower cost. Within two years of the railway's completion, the company invested around USD 320 million to launch a coal processing plant with a 10 milliontonne capacity. Additionally, a coal loading logistics center, constructed with a USD 100 million investment, was also commissioned. Nearly USD 2 billion has been spent on these projects alone. Smaller projects, such as a conveyor system and water pipelines, are also underway.
However, there have been unsuccessful efforts too, such as two failed attempts to launch an IPO on international stock exchanges, unsuccessful efforts to secure a strategic investor, and the ongoing failure to complete the Tavantolgoi Power Plant. Nonetheless, these phased infrastructure developments are expected to be key to ensuring the company's longterm stable operations. Should market crises or coal price drops occur again, ETT is positioned to withstand such challenges with its reduced costs and expanded capacity.
Mining Insight Magazine, December 2024, №12 (037)
