Fluorspar: Resource nationalism complicates mining investment in Mongolia www.roskill.com
Mongolian fluorspar production has rebounded in 2018 and 2019 with output being increased to supply markets affected by less readily available Chinese material. There is no domestic requirement for fluorspar, so all production is exported, mainly to China and Russia. Small shipments (typically totalling less than 20ktpy) are also sent sporadically to Japan, South Korea and Ukraine. Exports of acidspar to the USA previously averaged 15–30ktpy but now average less than 500tpy. By far the largest export market for Mongolian acidspar in 2018 was China. Exports of acidspar to China grew tenfold between 2016 and 2018, reaching an unprecedented 79kt, worth US$37M, in 2018.
Fluorspar miners and investors in the country have, however, been rattled by the attention focused this year by one of Mongolia’s parliamentary working groups on other mining projects. The Mongolian government considers investment in mining projects as a key driver of economic growth in 2019, but development of fluorspar mining, particularly acidspar mining, has been erratic despite the need for more acidspar raw material in nearby Asian markets.
Foreign direct investment in Mongolia’s extractive industries—which are based on extensive deposits of coal, copper, fluorspar, gold, molybdenum, tin, tungsten and uranium—has transformed Mongolia’s landlocked economy from its traditional dependence on herding and agriculture. Exports now account for more than 40% of GDP. Mongolia depends on China for more than 60% of its external trade. China receives some 90% of Mongolia’s exports and supplies Mongolia with more than one-third of its imports.
Mongolia has experienced frequent political changes over the last decade which have complicated the investment environment in the country and resource nationalism is reported to have increased in recent years. By far the largest fluorspar producer is the Russian/Mongolian joint venture Mongolrostsvetmet but a significant proportion of Mongolian fluorspar still comes from small scale and artisanal producers. Amid political uncertainty, Mongolia’s relations with China, its largest mineral importer, continue to remain positive. Mongolia is the door into one of the economic corridors of China’s Belt and Road Initiative; both sides of this door are intent on maintaining close political and economic ties to facilitate future trade.
Acidspar and metspar supplies remain tight worldwide and much of Mongolia’s 2019 production has already been sold, mostly into the Chinese and other Asian markets, with continuing strong demand from these markets and good prospects for additional sales.
Roskill’s Fluorspar: Global Industry, Markets & Outlook report breaks down the complex fluorine supply chain considerations into clear forecasts with price forecasts based on analysis of both supply and demand. Roskill will be speaking and chairing discussions at both the FastMarkets Fluorspar 2019 event in London and the IMFORMED Fluorine Forum 2019 event in Prague in September/October 2019.