EBRD to take stake in private Mongolian coal mine

By Anthony Williams
@ebrdtony

The EBRD is taking an equity stake in a privately-held Mongolian mining operation, in an investment that will strengthen the role of the private sector in this crucial industry, boost competition and set a new benchmark in environmental and health and safety standards.

The investment of up to $30 million in Energy Resources LLC (ER) will support the production of high-quality coking coal from the Ukhaa Hudag deposit in southern Mongolia, north of the border with China, a major importer of Mongolian coal.

The EBRD’s backing for project will also help to bring sustainable economic growth to this region at the foot of the Gobi desert, stimulating new enterprise in an otherwise depressed area.

Energy Resources is an entirely Mongolian consortium, comprising three large domestic groups. This project, at a mine which has a future expected production life of over 100 years, will allow ER to compete with the Mongolian state mining industry and with larger foreign investors.

By working initially with one of the world’s foremost international contract mining operators, ER will also ensure that the mine is operated according to the highest industrial standards. The EBRD’s investment also reflects the company’s commitment to high governance and transparency as well as environmental and health and safety standards.

“The EBRD is particularly proud to be associated with this project that will raise standards in the Mongolian mining industry, support the growth of the private sector and bring a new spirit of economic dynamism to this region,” said the EBRD’s Director for Mongolia John Chomel-Doe.

Energy Resources Chairman J.Odjargal said: “ER is very pleased that EBRD is joining the UHG project that would create 450 jobs immediately, especially during these times of crises when business opportunities are limited and the country’s foreign currency reserves are scarce.”

While developing the main mining project, Energy Resources will also work with the EBRD’s TurnAround Management and Business Advisory Services Programmes that help enterprises adapt to the demands of a market economy.

The TAM/BAS projects will support economic development in the Gobi region by helping small businesses expand and so support the long-term development of the region.

The EBRD started investing in Mongolia in October 2006 and has made provision of finance to the support the mining and mining services sector a priority. However, its total investments to date of around $120 million have stretched across a wide range of sectors, also including the financial, the retail and the beverages industries.