In its largest investment in Mongolia to date, the EBRD is raising the standards in the country’s mining industry with a US$ 250 million loan for the development of the Tsagaan Suvarga copper mine located in the Dornogobi province, south-eastern Mongolia.
Through the project the Bank is aiming to help develop a sustainable mining sector in Mongolia. The project also has a strong demonstration effect, as it introduces high environmental and social standards in the Mongolian copper industry, as well as supporting the further growth of a domestically grown company. Another US$ 100 million is expected to be syndicated by the EBRD on the international market.
Mongolian-owned mining company Mongolyn Alt (MAK) and the EBRD have been established business partners since 2007. The Bank’s first project with MAK financed the first development phase of the company and the creation of a clean-coal production facility. This project was launched in 2011 and has been instrumental in reducing air pollution in the capital city Ulaanbaatar.
The proceeds of the new loan will finance the development of an open-pit copper and molybdenum deposit in south-eastern Mongolia. With the EBRD’s financing, MAK will diversify its business by beginning production of these two commodities. The project enables a domestic company to produce a value-added product and boosts its competitiveness in both international and domestic markets.
In order to increase sustainability of the project and support linkages, MAK and the EBRD are providing joint grants to support the development of small private businesses in the mine’s surroundings, which will be managed by the Bank’s Enterprise Growth Programme (EGP) and Business Advisory Services (BASThe EGP/BAS team will be providing capacity building to some 20 local companies and start-ups that operate in the Dornogobi region. EGP/BAS combine direct assistance to enhance enterprise performance with systemic market development activities to create sustainable and commercially viable micro, small and medium-sized enterprises (MSMEs) and infrastructure for MSME support.
Since the EBRD began operating in Mongolia in 2006, it has committed approximately US$ 840 million across 46 projects in various sectors of the Mongolian economy, additionally mobilising US$ 1.8 billion for those projects from other investors. In terms of diversification, approximately 80 per cent of all the transactions currently in the EBRD’s portfolio are in the non-mining sectors.
*The Enterprise Growth Programme (EGP) and Business Advisory Services (BAS), managed by the Small Business Support (SBS) team, are essential components of the EBRD transition toolkit. The two programmes promote good management in the micro, small and medium-sized enterprise (MSME) sector in the EBRD region, by providing direct support to individual enterprises, helping them to grow their businesses. The SBS provides MSMEs with direct assistance from experienced business advisors and consultants, helping them to adapt to the demands of a market economy.