S. BOLD-ERDENE
The government has announced that it will hold negotiations with companies operating in the Nariinsukhait strategic deposit to determine the state ownership share. The names of the five companies holding exploitation licenses for the deposit have been revealed. Mining Insight magazine reports on how many tonnes of coal have been mined by these companies and how much tax they have paid to the national and local budgets over the past period. The companies holding exploitation licenses for the Nariinsukhait deposit include MAK, Khurentolgoi Coal Mining, Southgobi Sands, Usukh Zoos, EAI, and Adiltsag.
Additionally, Net Gobi Energy holds an exploration license. All companies, except for Adiltsag, have been involved in coal mining in the past. The first mining license MV000227 for the Nariinsukhait deposit was granted to Mongolyn Alt LLC (MAK) in 1995. Since then, 4 additional mining licenses were obtained between 2003 and 2006. In 2003, a mining license was also obtained by the Qinhua MAK Nariinsukhait, which was established in partnership with China’s Qinhua Group. This company signed a Stability Agreement with the government, and the contract period has now expired. The shares of the company, previously held by Chinese investors, have been fully transferred to the MAK. Other companies acquired most of their mining licenses after 2013. One of the licenses held by SouthGobi Sands LLC was granted in 2003. Among the companies mentioned, MAK, Khurentolgoi Coal Mining, SouthGobi Sands, and Usukh Zoos have extracted the most coal. Their initially approved reserves amount to about one billion tonnes. EAI has reserves of 3.9 million tonnes and obtained its mining license in 2017.
This company operates a smaller mine with relatively lower reserves. In 2023, it extracted and exported 100,000 tons of coal. Adiltsag does not carry out mining operations. However, MAK, SouthGobi Sands, and Usukh Zoos have been active in their operations. These companies have become major coal exporters in Mongolia. Especially in the last 3 years, coal extraction and export have significantly increased in line with market growth. Mongolian mining companies actively participate in the Extractive Industries Transparency Initiative (EITI) and make their annual reports publicly available. The 2023 consolidated report of the initiative was published in March. The report contains data on the coal extracted and taxes paid by the companies operating in the Nariinsukhait deposit. Over the years, MAK, Khurentolgoi Coal Mining, SouthGobi Sands, and Usukh Zoos have extracted and exported about 130 million tonnes of coal.
The quality of coal from the Nariinsukhait deposit is mostly semi coking and thermal coal, which differentiates it from the Tavan Tolgoi deposit.
While the three companies exploiting Tavan Tolgoi began their extraction and export from 2004 to 2009, most of the companies mining at Nariinsukhait, except for MAK, have only started their extraction and export within the last 10 years. SouthGobi Sands, which trades its shares on the Hong Kong and Toronto stock exchanges, reported in the 2023 EITI report that it had extracted approximately 44 million tonnes of coal by the end of 2023. In 2024, the company plans to extract 10 million tonnes of coal and sell 7 million tonnes, according to the company’s 2024 Financial Report. This means the company has extracted a total of 54 million tonnes of coal to date. Usukh Zoos reported in the EITI report that it had extracted 22 million tonnes of coal by the end of 2023.
The initial confirmed reserves of the company’s mine are 80 million tonnes. As for MAK, it reported in Mining Insight magazine that it had extracted and exported a total of 63 million tonnes of coal from the Nariinsukhait deposit by the end of 2023. This includes the combined extraction of MAK and Khurentolgoi Coal Mining. The aforementioned companies collectively exported 16 million tonnes of coal in 2023, according to the 2023 EITI report. Of this, MAK accounted for 7.2 million tonnes, while EAI exported 100,000 tonnes. The four companies that exported the most coal together contributed MNT 1.052 trillion in taxes and fees to the national and local budgets. Of this amount, MNT 566 billion was from royalty. However, the information for 2024 has not yet been made publicly available. Only SouthGobi Sands, which is listed on the Hong Kong stock exchange, has disclosed its 2024 report. Its parent company, SouthGobi Resources, reported a revenue of approximately USD 493.4 million for 2024, up from USD 331.5 million the previous year. The operating profit was around USD 132.8 million. The average price per tonne of coal sold was USD 70.4, a significant decrease from USD 93 in 2023. The company paid USD 51.4 million in royalty last year.
Mining Insight Magazine, 2025 №03 (040)
