Why Mongolia Might be the Next Mining Powerhouse

Within the world of energy, coal mining is perhaps one of the most important processes in existence. This is because mining is how a large part of the world’s energy is brought into existence. Mining is also somewhat controversial, with countries having disputes over coal deposits and debate over the industry’s future.

As the dust settles from the COVID-19 pandemic, it seems that the country of Mongolia is set to benefit immensely from mining activities and, more specifically, its incoming future as an energy powerhouse. This comes as Erdenes-Tavan Tolgoi (ETT), a subsidiary of Erdenes MGL and a Mongolian company, has announced new infrastructure projects that capitalize on the power of crypto mining.

Incoming Projects and Fundraising Efforts 

One of the issues plaguing the world today is access to reliable and consistent energy, especially within Asia. China, for example, is facing an energy crisis due to a combination of coal shortages and flooding in several coal-producing regions of its country. In other neighboring countries like Australia who would usually be looked to for coal supply, a ban has been put in place that shows no signs of letting up.

In the midst of this, the Mongolian government, in conjunction with Erdenes-Tavan Tolgoi (ETT), will be setting up a number of new projects to develop the coal mining industry within the country. According to the official press release, the goal of these projects is “to utilize the potential of the developing nation as a resource powerhouse and create long-term value for its citizens.”

ETT has also announced new fundraising efforts in pursuit of these projects and this will include a three-tranche bond-issuance for S$700 million. The first tranche of the bond issuance has already taken place, having been concluded in April 2021 in the Mongolian domestic market. A second and third round of bond issuance is scheduled for late 2021 and 2022 and will be available to international investors. An IPO is also being considered as part of the fundraising efforts.

Among some of the projects to be developed with the funds raised are a Tavan Tolgoi railway,  a coal-fired power plant, a coal processing plant, and a water supply pipeline. Some of the operations are already underway or in the planning stage and more announcements are expected.

The Landscape of Coal

All these projects are being developed at a very crucial point in the energy sector. Many countries are focused on sustainability these days and natural disasters such as the one in Indonesia mean that the coal sector is somewhat overlooked.

In addition to a relatively stable climate, the Tavan Tolgoi coal deposit does not suffer from issues of ownership dispute like other deposits in places like Erdenet and Oyu Tolgoi. The state wholly owns the deposit and this upcoming string of projects by ETT aims to benefit the citizens of Mongolia. The deposit, first discovered in the 1940s, has 7.5 billion tons of coal and is located in Mongolia's South Gobi Desert.

Should this strategic partnership succeed, Mongolia can position itself as a world leader in coal production and supply, right as world powers like China are in need of coal supply and neighbor Mongolia directly.

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