The Mongolian government has granted ION Energy one of the largest exploration licenses in the country for the company’s Baavhai-Uul project in the Sukhbaatar province. The 81,758-hectare asset contains high-grade near-surface lithium brines of up to 810ppm with low potassium and magnesium ratios, which makes for better crystallization of the lithium hydroxide. ION Energy is the first company to be granted a license for this asset, which has never been mined previously. Previous exploration work has been conducted on the project by the Technical University of Mongolia and the Mongolian government.

The global lithium market was worth US$2.86 billion in 2017 and is projected to grow to US$5.88 billion by the end of 2025, according to data by Adroit Market Research. Lithium’s growth is being driven by demand from the green energy and electric vehicle markets. Rising concern over global carbon emissions is leading to the rising adoption of renewable energy generation technologies including electric vehicles and large-scale energy storage technologies, all of which require massive amounts of battery metals like lithium, cobalt and nickel.

The International Energy Agency projects the number of electric vehicles on the road to reach 125 million by 2030, with each one containing a large lithium-ion battery. Battery-producing megafactories, including Tesla’s famous giga-factories, are being built around the world, with 91 such facilities expected to be operational by 2028. Governments around the world, including the United States and Chinese governments, are working to secure supplies of battery metals to prepare for a green energy future.

The ceremony was attended by national contractors who were crucial for the development of one of the world’s largest and most modern shafts project and other key stakeholders.

In special remarks delivered at the celebration event by Ambassador Batsukh Galsan, Chairman of the Board of Directors of Oyu Tolgoi LLC, highlighted the great support provided by the Government of Mongolia for this remarkable achievement, which increases Mongolia’s global competitiveness in terms of the mining and technology development.

Armando Torres, Chief Executive Officer of Oyu Tolgoi LLC said, “Shaft 2 construction – from sinking through to equipping – has taken three years and four months in total. Close to 50 national companies and 2,500 people worked safely on Shaft 2 for approximately 2.6 million hours to complete this critical and complex piece of infrastructure that will accelerate the underground development of our Oyu Tolgoi mine”.

Shaft 2 with a depth of 1,284 metres is the main production shaft and primary access point for people and materials and provides infrastructure for the materials handling system in the underground mine. Its production hoist is the largest Koepe (Friction) rope hoist system in the world with two 60 tonne capacity skips capable of hoisting 28,000 tonnes of ore per day at a maximum speed of 59km/hr.

Shaft 2 can carry 300 people per cage cycle versus a maximum of 60 people per cage cycle through Shaft 1. Shaft 2’s hoist rope-up process took 23 days by a team of approximately 500 people – one of the safest and most efficient rope-ups undertaken anywhere in the world.

Once Shaft 2 is fully commissioned and receives state licensing, it enables the following two important steps forward for the underground mine:

- Additional crews, materials and equipment to be transported and operate underground and,

- More rock to be removed from underground to enable further development and access to the ore body

From this point, the number of people working underground will no longer be constrained by the Service lift capacity of Shaft 1, but rather by volume of air moving through the underground via the existing ventilation (shafts 1, 2 and 5). Additional ventilation capacity is under construction with two more ventilation shafts - shaft 3 (intake) and 4 (exhaust). Currently, 700 people are able to work underground per shift.

39.1 percent of carried freight by railway transport was domestic freight, 36.3 percent was exports, 10.6 percent was imports and 14 percent was transit, which means transit and export freights increased by 0.8 and 0.4 points respectively, whereas domestic and import freight decreased by 0.8 and 0.4 points from the same period of the previous year.

In the first 11 months of 2019, 83.2 percent of carried freight by railway transport was mining freight, 10 percent was construction materials, 1.3 percent was iron, 1.3 percent was agriculture product, 0.9 percent was food products, 0.6 percent was wood products, 0.1 percent was factory equipment and 2.5 percent was other products.

In November 2019, equilibrated revenue and grants of the General government budget reached MNT 842.9 billion, decreased by MNT 252.0 billion or 23.0% from the previous month and total expenditure and net lending reached MNT 901.7 billion, decreased by MNT 132.5 billion or 12.8% from the previous month.

In the first 11 months of 2019, tax revenue reached MNT 8.8 trillion, increased by MNT 1.4 trillion or 19.0% compared with the same period of previous year. This growth was mainly affected by increases of MNT 422.2 billion or 22.5% in income tax, MNT 323.1 billion or 22.8% in social security revenue, MNT 260.9 billion or 13.3% in value added taxes, MNT 175.0 billion or 26.4% in other tax, MNT 102.2 billion or 14.8% in excise taxes and MNT 101.3 billion or 16.4% in revenue from foreign activities.

General Government budget revenue was comprised of 81.6% of tax revenue, 8.7% of non-tax revenue, 8.8% of the future heritage fund and 0.9% of the stabilization fund.

In the first 11 months of 2019, total expenditure and net lending of the General government budget reached MNT 9.2 trillion, increased by MNT 1.2 trillion or 15.6% compared with the same period of previous year. This increase was mainly due to MNT 755.3 billion or 11.7% increase in current expenditure and MNT 561.2 billion or 45.9% increase in capital expenditure.

General government budget expenditure and net lending was comprised 78.2% of current expenditure, 19.4% of capital expenditure and 2.4% of net lending.

Source: National Statistics Office

In November 2019, the gross industrial output reached MNT 1.5 trillion, it is decreased by MNT 102.8 billion (6.6%) compared to the previous month.

In November 2019, the seasonally adjusted industrial production index was 171.5 (2010=100), decreased by 2.9% from the same period of previous year and by 3.6% from the end of previous year, whereas, it is increased by 1.5% from the previous month. In the first 11 months of 2019, in mining sector, coal, crude oil, gravel, fluorspar and iron ore are increased by 7.9-37.4% compared to the same period of previous year. In manufacturing sector, production of vacuum windows and doors, cashmere products, buuz and dumpling, wooden window and door are increased by 0.1-86.0%.

On the other hand, in mining sector, extraction of zinc concentrate, copper concentrate, extraction of molybdenum concentrate and gold are decreased by 2.3-22.9%. In manufacturing sector, productions of beer, sausage products, wooden products, alcoholic beverage, horse meat, copper cathode, fodder and combed cashmere are decreased by 0.5-34.5% compared to the same period of previous year.

In the first 11 months of 2019, the sales of industrial production reached MNT 18.4 trillion, increased by MNT 1.9 trillion (11.7%) from the same period of previous year. From the total sales of industrial production, MNT 12.5 trillion (68.1%) were export.

Source: National Statistics Office

The report says, in November 2019 in Ulaanbaatar, average daily concentrations of the sulfur dioxide and nitrogen dioxide in the air were increased by 0.028 mg / m3 or 82.5 percent and 0.007 mg / m3 or 15.9 percent compared with the same period of previous year, respectively.

An average daily concentrations of the PM10 particles and PM2.5 particles in the air were decreased by 0.084 mg/ m3 or 41.0 percent and 0.048 mg/ m3 or 43.9 percent compared with the same period of previous year, respectively.

Moreover, according to the air quality measurement stations in Ulaanbaatar city, cases exceeded the acceptable level in air quality standard of air pollution concentration in Ulaanbaatar were the most in the 1st micro-district, West Crossroad, Khailaast, Bayankhoshuu areas.

The National Statistics Office of Mongolia

The legislators’ resolution brings an 18-month review on the deals governing the copper-gold mine to a close, allowing the company to continue with an ongoing $7 billion expansion of the operation.

The news is something of a relief for Rio Tinto, which feared the government might try to completely renegotiate the agreements on the asset’s development — a 2009 investment agreement, a 2011 amended and restated shareholder agreement and a 2015 underground mine development and financing plan.

The resolution, however, recommends to explore options to improve the deal, including looking at the Mongolian government’s equity share in Oyu Tolgoi, a re-definition of the reserve report and updated feasibility report, and a renewal of environmental and water assessments.

“Adherence to these agreements by all parties has underpinned a total in-country spend of around $10 billion since 2010,” Rio Tinto’s chief executive copper and diamonds, Arnaud Soirat, said in the statement.

Soirat acknowledged there was still “a lot of work to do” to ensure Oyu Tolgoi reaches its full potential.

Oyu Tolgoi was discovered in 2001 and Rio gained control of it in 2012. The ongoing mine expansion is expected to lift production from 125–150kt this year to 560kt at full tilt from 2025, making it the biggest new copper mine to come on stream in several years.

The giant operation is one-third owned by Mongolia’s government and two-third held by Canada’s Turquoise Hill Resources (TSX, NYSE:TRQ). Out of Turquoise’s 66% share, Rio owns 51%.