Recently published research from Business Monitor International, "Mongolia Mining Report Q4 2012", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 12/12/2012 -- Growth in Mongolia's mining industry will be led by the Oyu Tolgoi copper-gold mine. The bulk of this growth will occur in 2013 as the mine begins commercial production. We have downgraded our coal production forecast due to the suspension of SouthGobi Resource's mining licences and the lack of competitiveness of landed Mongolian coal in key consuming Chinese regions versus imports given current infrastructure constraints.
Rapid Growth Through Oyu Tolgoi
We expect the downward trend in Mongolia's mining sector to come to a halt as the sector undergoes substantial growth. The impressive growth rates in copper and gold production will be driven by the Oyu Tolgoi mine, a joint venture (JV) between Turquoise Hill Resources (66% ownership) and the Mongolian government (34% ownership). We expect copper production to reach 559,000 tonnes (kt) by 2016, an annual average growth rate of 27.9% from 2010 levels. Decreasing ore grades at the country's largest mines have led to a slow decline in Mongolia's copper production. We expect gold production to reach 892,000 ounces (koz) by 2016, more than four times 2010 levels.
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We have substantially downgraded our coal production forecast given recent political intervention in the coal mining industry. The mining licences of SouthGobi Resource have been suspended by the Mongolian government following news that Aluminium Corporation of China was interested in acquiring a 60% stake in the Mongolian coal miner.
In July 2011, the government announced that it had chosen US miner Peabody Energy, China's Shenhua Energy and a Russian Railway/Mongolian-led consortium to develop the western bloc at Tavan Tolgoi. However, the government later recanted the decision and announced that a final decision would come in 2012. With the elections over, we hope for a resolution by the end of 2012 although we note risks that investor appetite for such large coal projects might have abated given our revised views on the global economy.
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