The Ministry of Minerals and Energy
began studies on setting up a copper smelter following the Parliament
resolution in its Spring session that Mongolia would have one by 2012. Its
report, to be submitted to a working group of MPs, suggests Erdenet as the most
suitable site for a smelter with a capacity of 90,000-130,000 tons. B. Batkhuu,
Director General of a department in the Ministry, has said the cost would be
around USD500 million.

The Ministry has started formulating a draft law that would exempt technology
and equipment to be used in coal processing and copper smelting from paying
Customs tax and VAT when they are imported, on the ground that they will be
used to generate value addition. The proposed smelter will be using ore produced
in the Erdenet mines, but many in the Ministry feel that a larger one will be
needed when copper begins to be mined at Oyutolgoi and Tsagaan Suvarga.