“Improving the competitiveness of Mongolia sheep wool processing sector” Ulaanbaatar, December, 2013 Ministry of Agriculture & Industry Unit of Wool, Woolen Product`s Project

Content Executive summary Current Situation Current Production Issues Future Infrastructure

Executive Summary Raw material production in sheep wool is about tonnes per year. Its possible to process wool without waste. Wool can be used for producing the woven, knitted and many other products even the bristles are used to produce construction insulation materials. Wool sector`s production takes percent of GDP. 30% of raw materials exported to China without processing. Government providing soft loan to the local companies with 8% interest fee for 4.5 years (Financial source is from Chingis Bond. Market study case is necessary in wool sector, and Government policies ought to be based on study case and value added woolen product's production.

a/ down fibre b/ intermediate fibre c/ top hair d/ dead hair Special quality of Mongolian sheep wool: Mongolian sheep wool is consist of 4 different fibers. Which makes Mongolian sheep wool`s extraordinary value with average 20 microns

Average percentage of Mongolian sheep wool fibers: 6% Dead Hair 58% Down Fibre 7% Intermediate Fibre 29% Top Hair

Raw material production in sheep wool is about tonnes per year. Its possible to process wool without waste.

6100 tonnes of wool is exported after scouring to China (91% of total sheep wool export). Other 30% Carpet Raw material export 30%

Raw material resource by area 26% 22% 15% 23% 7% Sheep wool Yak wool Camel wool

Processing of raw material: Value added products Primary Processing 33% Non woven & other 30%

In the scope of “Mongolian Wool” program wool processing factories should clustered as raw material`s source. (1) 1) Information from: “Mongolian Wool Processor`s Association“ Operating wool processors including washing & scouring Wool processing factories planned to build ( capacity >1000tn)

Current wool made products: Knitted garmentsKnitted & woven socksWoven Blankets Carpet (Using the 1/3 of total raw material)Woolen Felt (Made by course wool)

Products going to be produced in the scope of “Chinghis Bond” loan: Construction Insulation MaterialWoven Fabrics/ Wool blends

Comparative advantages of exporting the Mongolian Sheep Wool made Insulation Material in Japanese market: Cheap & High Quality Raw Material (course from all livestock) Lower labor cost

Comparative advantages of exporting the Mongolian Sheep Wool made Insulation Material in Japanese market: Japanese wooden houses mostly use the woolen insulation materials due to it`s low cost, eco friendly and many other advantages.

Feasible & valuable products can be produced other than carpet and construction insulation material: Worsted Yarns & wool blends Knitted wearsTechnical FeltCar InsulationSouvenirHousehold goods Airplane & Hotel amenities, Restaurant Blanket etc.

Problems we have: Market study is necessary in wool sector

Unit of Managing the Wool, Woolen Product`s Projects Government & Parliament Resolutions Related Organization & Governor Implementing Unit of 141th resolution of Parliament Projects implemented by co-work of Government & Companies Ministry of Agriculture and Industry Development Bank of Mongolia Golomt Bank 30 th Government Resolution 141th Resolution of Parliament А/63 Enactment of Minister Commission of Project Administration / CPA / Woven Fabrics Wool Processor Knitted wears Construction Insulation Ministry of Economy & Development Government of Mongolia decided to provide 45 million USD soft loan (8% interest fee & 4.5 years repayment ) to the wool processing companies as per following Government Resolutions schemed below:

Work Plan Market StudyTesting of spinning, weaving for woven fabrics.Implementation of woven fabric project 11/2013– 01/ – 2015 Woven fabrics will be produced and project will be implemented by top 5 companies in Mongolia wool processing industry as shown below schedule: ( Master Plan 2 үе MIA (Advisors) Зөвлөл Хэрэгжүүлэх шийдвэр Ажлын хэсгийг тараах Зогсоох шийдвэр Market Study 1 үе Market study is necessary in wool processing industry and it should include case study of at least 4 companies (2 big and 2 smaller) Woven Fabric Project Proposal 3 үе Agreement signing 4 үе MIA Golomt Bank WWPP Machinery Installation and Construction work 5 үе Үйлдвэр 1 “Mongolian Wool” program 1 PMC+ 12/2013 – 1/2014 MIA Woolen Product Processors Association WWPP Daewon Co.,LTD

We would like to create the TOR for market study with support of SDC. We wish SDC to be our donor on Market Study

Хонины ноос үнэ цэнэтэй болсноор дараах сайн үр дүн гарна: Малчидын орлого нэмэгдэнэ, сүргийн бүтцийн харьцаа хэвийн хэмжээнд очсоноор бэлчээрийн талхлалт багасна, нэмүү өртөгийг дотооддоо шингээн эцсийн бүтээгдэхүүн үйлдвэрлэж нэхмэл даавуу, сүлжмэл хувцасны дотоодын хэрэгцээг хангана, барилгын дулаалгын материалыг гадаадын зах зээлд экспортлож, дотоодын хэрэгцээнд нийлүүлнэ.

We want SDC to be our official partner and advisor on implementing programs and projects in wool sector: Your advice Our partnership Value chain improvement and VA products