D.Bat-Erdene, Public Relations Manager at South Gobi Sands LLC, answers
questions on the mining sector.

When will your
company make paved roads?

Work on paved roads is 50 percent finished and should be over by August.
Many accidents happen when transporting coal, sometimes resulting in death
also. Such risks will now be less. The road will be 18 meters wide.

Where do you
operate?

All our exploration work is in Umnugobi province. We have mining licenses
of Ovoot Tolgoi and Tsagaan Tolgoi mines. We have exploration licenses in 18 areas
but for now we do more extraction than exploration.

 It is good
that you are creating jobs but even when you say you will work on the mine for
20-30 years, workers are living makeshift arrangements.

Mines-based towns fall into hard times when mining ends and the
international practice now is against establishing townships. Our arrangements
for workers provide for satisfactory living conditions. We shall help develop
nearby soums and towns.

You are listed
in the Toronto
stock market. How is trading there?

We started selling shares in Toronto
in 2005. The initial share price of USD 2 
reached a peak
of USD 21 but fell to
USD10 after the economic crisis of 2008. We started trading in Hong Kong on January 29. The price is similar there.

When will you
build the coal refinery?

The Chinese have built a refinery with a capacity of 11-13 million tons very
near the border. Decisions in China
are taken very fast while here things move much more leisurely. A lot of time
is spent on every step. Chinese regional authorities settle everything
themselves while we in Mongolia
have to take permission from many ministries, agencies and government
organizations.

You import electricity
from China.
How much does it cost? Wouldn’t it be better to establish a power plant based
on the many coal mines and export the electricity?

We are buying electricity from China at twice the domestic cost
because we don’t have a choice. We have proposed setting up a power plant but
the ministry is yet to respond.

China has a coal reserve not smaller than ours. Why does it
import coal from Mongolia
instead of using its own? 

China had to close down
over 7,000 coal mines because they were uneconomical to operate. Inner Mongolia has vast coal reserves but it is all
300-400 meters below surface.

 What must be
done to retain the Chinese market in the face of stiff competition from other
countries?

We need to increase production and refine the coal. We can use the low
quality coal for electricity production. The electricity can be exported too.