Subscription in the Company’s equity to enable it to establish a medium-size coal mining operation at Ukhaa Hudag (UHG) deposit in southern Mongolia.
The project transition impact potential is expected to arise from:
(1) Support of Private Sector Development. Through the proposed financing, the Bank will contribute to support ER in establishing itself as a successful domestically-grown private mining company, able to plan its operations over the medium term and compete successfully with the large international players.
(2) Transfer and dispersion of skills. Significant transfer and dispersion of skills within the project sector and around it, through vertical and horizontal linkages:
(a) it will introduce best-practice mine management, by learning form an international contract mine operator, which will initially mine the deposit for the Company;
(b) it will introduce advanced mine management software in ER, such as ‘MicroMine’ and ‘Surpac’;
(c) it will transfer skills thus contributing to the long-term sustainable development of the mining sector in Mongolia, through the support of substantial industrial linkages within local SMEs (including catering companies, logistics companies, and hospitality companies) in the region. Such smaller companies will benefit from the higher operating standards and corporate governance requirements introduced by the UHG project (including advanced EHS standards for its contractors and transparent procurement policies)
(3) setting higher standards of transparency, business and environmental conduct.
(a) it will introduce the requirement for the UHG project to comply with the Extractive Industries Transparency Initiative in Mongolia;
(b) it will improve corporate environmental and social management practices through the introduction of appropriate covenants in the financing documents including the preparation of mine closure plan and compliance with the Environmental and Social Action Plan (ESAP).
Energy Resources LLC (“ER” or the “Company), an independent Mongolian mining company.
Straight equity of up to USD 30 million.
USD 70-80 million.
The project was screened A/1. UHG coal mining will involve shallow open pit operations and are therefore not associated with significant environmental, health and safety issues. Independent environmental due diligence, including an site assessment conducted by international consultants, and a site visit by the Bank's Environmental Specialists confirmed that the Company's ESIA has been carried out in compliance with national as well as international requirements and it correctly identifies and addresses environmental, social and health and safety issues that may arise from constructing and operating the mine.
An Environmental and Social Action Plan (ESAP) is being developed which will detail the actions and commitments required to manage the environment and social impacts of the Project. The ESAP will be developed to meet the requirements of the Mongolian EIA process and EBRD’s Performance Requirements.
Changes to the landscape will be mitigated through the implementation of a Mine Closure and Rehabilitation Plan to make the post mining landscape a safe, stable and non polluting landform that, as much as practicable, reflects the contours and surface characteristics of the surrounding landscape. Social Impacts from the UHG coal mine and associated mine camp will be generally positive. Once the mine commences production, employment of local people is expected to increase significantly, with the potential for a large proportion of the mine’s potentially 1,000 workers (including drivers and subcontractors) being sourced from within the Umnogobi aimag.
There is an Environmental and Social Impact Assessment available for this project.
See the Transition Impact section.
Gotov Battsengel, CEO
Energy Resources LLC
Tel: (976) 7012 2279
Fax: (976 ) 7012 2280
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