the current situation of energy sector

THE CURRENT SITUATION OF ENERGY SECTOR

ZORIGT.D, Minister of Mineral Resources and Energy, Mongolia

MINISTRY OF MINERAL RESOURCES AND ENERGY

CONTENTS Energy Statistics of Mongolia Main Energy Resources and Forms of Mongolia

Coal Oil Uranium Renewable

Current Situation and Investment in Mining Sector, Development and Policy

2


3

Energy Statistics of Mongolia


1990 1995 2000 2005 2010Жилийн дундаж өсөлт, (%)

’90-’95 ’95-’00 ’00-‘05 ’05-’10

Total Primary Energy Supply (1,000 TOE) 3,746 2,317 2,564 2,800 3,545 -9.2% 2.0% 1.8% 4.8%

Energy per capita (TOE) 1.74 1.03 1.06 1.09 1.27 -9.9% 0.6% 0.5% 3.1%

Population (thousand) 2,153 2,243 2,408 2,562 2,781 0.8% 1.4% 1.3% 1.6%

GDP (billion tog, at 2005 constant price) 2,107 1,826 2,100 2,780 4,154 -2.8% 2.8% 5.8% 8.4%

Energy/GDP Intensity (TOE/million Tog) 1.78 1.27 1.22 1.01 0.85 -6.5% -0.8% -3.8% -3.3%

Import Dependency (%) 22.3% 16.2% 19.4% 21.4% 25.6% -6.2% 3.7% 1.9% 3.7%

Total Primary Energy and Economic Indicator in Mongolia

1990 1995 2000 2005 2010

Жилийн дундаж өсөлт, (%)

’90-’95 ’95-’00 ’00-‘05 ’05-’10

Indigenous Production 2,709 1,980 2,019 3,592 11,591 -6.1% 0.4% 12.2% 26.4%

Import 836.01 375.55 497.13 597.88 908.89 -14.8% 5.8% 3.8% 8.7%

Export 171 1 3 1,405 9,028 -61.8% 18.4% 236% 45.1%

Total Domestic Energy Supply 3,746 2,317 2,564 2,800 3,545 -9.2% 2.0% 1.8% 4.8%

Energy Production and Net Import in Mongolia

(Unit : 1,000 TOE, %)*

(Unit : 1,000 TOE, %)

* 1,000 TOE- 1,000 Tonnes of Oil Equivalent

1990 1995 2000 2005 2010Growth rate p.a. (%)

’90-’95 ’95-’00 ’00-‘05 ’05-’10

Coal 2,365 1,695 1,798 1,895 2,324 -6.5% 1.2% 1.0% 2.8%

63.1% 73.1% 70.2% 67.7% 65.6% - - - -

Oil1,206 345 472 584 879 -22% 6.5% 4.3% 22.7%

32.2% 14.9% 18.4% 20.9% 24.8% - - - -

Hydro 0.00 0.00 0.25 0.28 4.73 0.0% 0.0% 2.1% 45.1%

0.00% 0.00% 0.01% 0.01% 0.13% - - - -

Traditional Fuels & Others

175 277 293 321 337 9.6% 1.1% 1.8% 0.6%

4.7% 12.0% 11.4% 11.5% 9.5% - - - -

Total3,746 2,317 2,564 2,800 3,545 -9.2% 2.0% 1.8% 7.3%

100.0% 100.0% 100.0% 100.0% 100.0% - - - -

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Energy Statistics of Mongolia


Structure of Primary Energy Supply by Source in Mongolia(Unit : 1,000 TOE, %)

Trend in Supply Shares (199520002010, %) • Coal : 73.1 70.2 65.6 • Oil : 14.9 18.4 24.8• Hydro :0.00.010.13 • Traditional Fuels & Others: 12.0 11.4 9.5

1990 1995 2000 2005 20100

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Coal OilHydro Traditional Fuels & Others

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Main Energy Resources and Forms of Mongolia


COAL OIL URANIUMRENEWABLE

HYDRO SOLAR WIND

Reserve 162 billion tonne

206 million tonne

68.6thousand tonne

56.2 billion kWh

1,400 kWh/м2

836.8 billion kWh

World Ranking by Reserve 9th - 15th - - -

Operation in 2010 25 million tonne

0.3 million tonne ~ 0.0 27.5

million kWh0.13

million kWh0.1

million kWh

Explored Main Energy Resources and its Operation

Explored and Estimated Energy Resources Coal

Lignite, Bituminous and Coking Coal Oil Shale Oil Uranium Renewable

Hydro, Solar, Wind, Biomass

Not Explored Energy Resources Natural Gas Renewable

Geothermal energy

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COAL- RESERVE


№ Index Central region Mountainous region Gobi region Western region Eastern region Total

1. Number of deposits 13 13 20 23 16 85

2. Reserves /million ton/ 26528.1 7704.1 49785.3 27157.9 51165.1 162340.5

3. Share in the total 16.5% 4.7% 30.6% 16.7% 31.5% 100%

Western Region

Mountainous Region

Central Region

Eastern Region

Gobi Region

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COAL- PRODUCTION


Coal Production, Export and Domestic Consumption in the last Decade, /thousand tonne/

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

5000

10000

15000

20000

25000

Production Domestic Consumption Export

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COAL - PROJECTION


Projection for Coal Production, Export and Domestic Consumption, /million tonne/

2010 2011 2012 2013 2014 2015 2020 2025Total production 25,34432,63438,34042,63553,35564,58081,58794,010Export 16,63525,00030,00033,00040,00050,00065,00075,000Internal consumption 7,344 7,634 8,340 9,635 13,35514,58016,58719,010

010,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000

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COAL– EXPORT


COAL EXPORT MAINLY TO CHINACurrent major Coal exporters are located in the Southern part of Mongolia, close to China = 50 - 270 km

1. MAK Co: 5.0 mln2. Qinhua –MAK: 1.8 mln3. South Gobi Sands: 2.5 mln

1. Tavan Tolgoi Co: 5.1 mln2. ER Co: 3.8 mln3. Erdenes TT: 0.0 mln

• Infrastructure: electricity, water, transportation

• Finance: high interests, short term

• Lack of qualified personnel and equipment

• Border station capacity

PROBLEMS FACED

8.9 сая тонн9.3 сая тонн

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COAL- EXPORT


Coal Transport Routs to Russian and Chinese Ports from Tavan Tolgoi Coal Mine

TT-Sainshand -Naushky-Vanino: 5100 kmTT-Sainshand -Naushki -Vostochny: 5125 km

TT-Sainshand-Choibalsan-Vanino 5044 kmTT-Sainshand -Choibalsan-Vostochny: 5069 km0

TT-G/Sukhait-Qinhuangdao port: 1722 km

TT-GSukhait-Huanghua: 1638 km

TT-Sainshand-Z/Uud- Qinhuangdao 1779 km

TT-Sainshand-Z/Uud-Huanghua: 1819 km

TT-Sainshand-Z/Uud- Tianjin: 1570 km

Routs

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COAL- POLICY


GOVERNMENT POLICY ON COAL SECTOR

• Improve legal environment: – Amendment into Minerals Law– Regulations: environmental issues, licensing, taxation

• Increase of exploration budget and intensify geological survey • Increase of production and export:

– Target Markets: China, Japan, Korea, Taiwan• Introduction of value added production:

– Preparation, Washing plants – Lignite upgrading: semi-coke– Gasification and Liquefaction

• Responsible mining principles

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OIL- EXPLORATION


Petroleum Exploration Blocks

Open Blocks

PSC Blocks

To approve by Government

To discuss and make decision by Government and National Security Council Co-Exploring Blocks

OIL- EXPLORATION

• Petroleum Sharing Contracts were signed on18 blocks and started activities.

• Co-geological survey agreements were made for Coal bed Metane gas on 5 blocks and for oil on 8 blocks.

29,5%

39%

29,5%

Монгол Хятад Бусад

• International open tenders have been announced on 5 blocks

EXPLORATION BLOCKS

Mongolia China Others

PSC were made on 18 exploring blocks with total 13 companies


Oil Production and Export Growth (thousand bbl, by 20-12-2010)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

500

1000

1500

2000

2500

OIL – PRODUCTION AND EXPORT

Production

Export


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URANIUM


• Mongolia contains six uranium strata and more than 100 uranium deposits.

• Mongolian geologists now believe that Mongolia has 60,000 metric tons of uranium reserves, while Russian experts have much higher estimates, ranging from 120,000 to 150,000 metric tons.

• Main uranium deposits located in the Western province.

– Dornod Deposits-28868 tonne, – Gurvanbulag Deposite- 16073 tonn, – Mardai Deposit 1104 tonne.

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RENEWABLE ENERGY


Maps of Renewable Energy Recourses

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CURRENT SITUATION OF MINING SECTOR INVESTMENT


MINERAL SECTOR’S IMPACT ON MONGOLIAN ECONOMY

GDP Industrial Goods Экспорт

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CURRENT SITUATION OF MINING SECTOR INVESTMENT


Mining Sector Investment and Production

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*0

200

400

600

800

1000

1200

0

500

1000

1500

2000

2500

3000

12 14 16 18

41.6

33.2

33 53 82 126.

1

436.

8

502.

5 750.

9

1121

260.4 255.3 265.6 318.3323.6 392 378.4

635.1790.6

678.3

1268.9

1583.21496.2

2633.2

Хөрөнгө оруулалт/сая ам.доллар/ Бүтээгдхүүн үйлдвэрлэлийн хэмжээ/сая ам.доллар/

INV

EST

ME

NT

/ M

ILL

ION

USD

PRO

DU

CT

ION

IN M

ININ

G S

EC

TO

R

Investment Production

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Establishing multiple industrial parks based on

regions and processing close to mine sites


лNorthern Industrial Region: • Leveraging Darkhan Erdenet

existing infrastructure • 11 processing plants Erdenet Industrial Park - Copper Cathode - Ferro - Molybdemnum - AgricultureDarkhan Industrial Park - Iron ore pellets - Steel products - Cement plant - Gold - Agriculture

Souther Industrial Region:• Biggest coal and copper mines• 12 processing plant Тavan Tolgoi Industrial Park -Electricity -Cooking coal -Termal Coal Оuytolgoi Industrial park -Cement, Bricks -Copper Cathode -Gold - Agriculture

Central Industrial Region:• Leveraging Choir Sainshand

workforce and infrastructure • 8 processing plantsChoir Industrial Park -Electricity - Syngas -Diesel - CementSainshand Industrial park -Chemical Industry - Copper Extrusion/Cable - Agriculture

MINING SECTOR POLICY OF THE GOVERNMENT

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MINING SECTOR POLICY OF THE GOVERNMENT


• To support the strategic deposits to develop economically

• To produce the Value added products and support the production such as concentration, processing, melting and purification.

• To develop and implement the complex plan to industrialize the Mongolia.

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Ministry of Mineral resources and Energy, Mongolia

the current situation of energy sector

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