MAK

Location:

Mongolia

Project number:

37729

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Target board date:

06 Nov 2007

Status:

Completed

PSD disclosed:

06 Nov 2007

Project Description

The proposed transaction will enable the Company to:

(a) introduce advanced mine management information systems,
(b) restructure its balance sheet, and
(c) expansion of the Company’s coal mining operations and production of higher quality cleaner (smoke-less) coal.

Transition Impact

Support of private sector development

Through the proposed financing, the Bank will contribute to support MAK in establishing itself as a successful domestically-grown company, able to plan its operation over the medium term and compete successfully in the domestic market.

Setting standards of transparency, business and environmental conduct

The proposed transaction will improve standards in various areas of corporate and industry life:

(a) it will improve corporate environmental and social management practices through the introduction of appropriate covenants including the first ever mine closure plan implementation by a Mongolian mining company and compliance with ESAP;
(b) it will introduce best-practice MIS for the company, based on the industry standard ‘MicroMine’ and ‘Surpac’ MIS;
(c) it will improve domestic standards of project preparation via the first international-standards feasibility study for a semi-coke plant by Mongolian mining company.
(d) it will contain for the first time in Mongolia the requirement for a domestic mining company to comply with EITI.

The Client

Mongolyn Alt Corporation (‘MAK’ or the ‘Company’), a medium-sized Mongolian mining company producing coal.

EBRD Finance

Corporate loan of up USD 45 million.

Project Cost

USD 45 million.

Environmental Impact

The project was screened B/1. MAK’s coal mining comprise shallow open pit operations and are therefore not associated with the significant environmental, health and safety issues normally found in other types of mining (such as underground mining). Independent environmental due diligence, including a Phase I site audit conducted by international consultants, and a site visit by the Bank's Environmental Specialist confirmed, that whilst there are a number of outstanding environmental, health and safety issues that need to be addressed, overall the Company's operations are in compliance with national requirements and there are few if any significant issues. All of the outstanding issues are contained in an environmental and social action plan (ESAP) which forms part of the Loan Agreement. These include the provision of geotechnical assessments of pit slope stability to reduce risks to mine operations and worker safety; a waste management plan and dust reduction plan; and the creation of a mine closure plan (the first such plan for a Mongolian domestic mining company).

Coal combustion in power stations and in the cookstoves of the 134,000 households living in peri-urban ger areas in Ulaanbaatar represents the single largest cause of both indoor and outdoor pollution in the capital. The public health impact of the high level pollution is significant and is reportedly responsible for major increases in acute respiratory diseases, chronic bronchitis, tuberculosis and other lung diseases, particularly in children. Part of the Bank's financing will go towards the expansion of operation at its Eldev coal mine and the production of higher quality (smoke-less) coal. The project is also supported in this respect by the World Bank and Asian Development Bank environmental specialists working on the issue of promotion of clean coal technology and other technical and legislative initiatives to reduce urban air pollution.

Technical Cooperation

The Bank mobilised up to USD 90k for project preparation through the Mongolia Cooperation Fund to hire an Independent Mining Engineer. The Technical Cooperation is to ensure a successful preparation of the comprehensive environmental and capital expenditure programmes of the Company to be perfected to international standards.

Company Contact

MAK
Building 14, XIII Microdistrict
Bayanzurk district
PO Box 237
Ulaanbaatar 210349
Mongolia

 

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