THE CURRENT SITUATION OF ENERGY SECTOR MINISTRY OF MINERAL RESOURCES AND ENERGY THE CURRENT SITUATION OF ENERGY SECTOR ZORIGT.D, Minister of Mineral Resources and Energy, Mongolia

contents Energy Statistics of Mongolia MINISTRY OF MINERAL RESOURCES AND ENERGY contents Energy Statistics of Mongolia Main Energy Resources and Forms of Mongolia Coal Oil Uranium Renewable Current Situation and Investment in Mining Sector, Development and Policy 2

Жилийн дундаж өсөлт, (%) Жилийн дундаж өсөлт, (%) MINISTRY OF MINERAL RESOURCES AND ENERGY Energy Statistics of Mongolia Total Primary Energy and Economic Indicator in Mongolia (Unit : 1,000 TOE, %)*   1990 1995 2000 2005 2010 Жилийн дундаж өсөлт, (%) ’90-’95 ’95-’00 ’00-‘05 ’05-’10 Total Primary Energy Supply (1,000 TOE) 3,746 2,317 2,564 2,800 3,545 -9.2% 2.0% 1.8% 4.8% Energy per capita (TOE) 1.74 1.03 1.06 1.09 1.27 -9.9% 0.6% 0.5% 3.1% Population (thousand) 2,153 2,243 2,408 2,562 2,781 0.8% 1.4% 1.3% 1.6% GDP (billion tog, at 2005 constant price) 2,107 1,826 2,100 2,780 4,154 -2.8% 2.8% 5.8% 8.4% Energy/GDP Intensity (TOE/million Tog) 1.78 1.22 1.01 0.85 -6.5% -0.8% -3.8% -3.3% Import Dependency (%) 22.3% 16.2% 19.4% 21.4% 25.6% -6.2% 3.7% 1.9% Energy Production and Net Import in Mongolia (Unit : 1,000 TOE, %)   1990 1995 2000 2005 2010 Жилийн дундаж өсөлт, (%) ’90-’95 ’95-’00 ’00-‘05 ’05-’10 Indigenous Production 2,709 1,980 2,019 3,592 11,591 -6.1% 0.4% 12.2% 26.4% Import 836.01 375.55 497.13 597.88 908.89 -14.8% 5.8% 3.8% 8.7% Export 171 1 3 1,405 9,028 -61.8% 18.4% 236% 45.1% Total Domestic Energy Supply 3,746 2,317 2,564 2,800 3,545 -9.2% 2.0% 1.8% 4.8% * 1,000 TOE- 1,000 Tonnes of Oil Equivalent

Energy Statistics of Mongolia MINISTRY OF MINERAL RESOURCES AND ENERGY Energy Statistics of Mongolia Structure of Primary Energy Supply by Source in Mongolia (Unit : 1,000 TOE, %)   1990 1995 2000 2005 2010 Growth rate p.a. (%) ’90-’95 ’95-’00 ’00-‘05 ’05-’10 Coal 2,365 1,695 1,798 1,895 2,324 -6.5% 1.2% 1.0% 2.8% 63.1% 73.1% 70.2% 67.7% 65.6% - Oil 1,206 345 472 584 879 -22% 6.5% 4.3% 22.7% 32.2% 14.9% 18.4% 20.9% 24.8% Hydro 0.00 0.25 0.28 4.73 0.0% 2.1% 45.1% 0.00% 0.01% 0.13% Traditional Fuels & Others 175 277 293 321 337 9.6% 1.1% 1.8% 0.6% 4.7% 12.0% 11.4% 11.5% 9.5% Total 3,746 2,317 2,564 2,800 3,545 -9.2% 2.0% 7.3% 100.0% Trend in Supply Shares (199520002010, %) • Coal : 73.1  70.2  65.6 • Oil : 14.9 18.4 24.8 • Hydro :0.00.010.13 • Traditional Fuels & Others: 12.0 11.4 9.5

Main Energy Resources and Forms of Mongolia MINISTRY OF MINERAL RESOURCES AND ENERGY Main Energy Resources and Forms of Mongolia Explored Main Energy Resources and its Operation   COAL OIL URANIUM RENEWABLE HYDRO SOLAR WIND Reserve 162 billion tonne 206 million tonne 68.6 thousand tonne 56.2 billion kWh 1,400 kWh/м2 836.8 World Ranking by Reserve 9th - 15th Operation in 2010 25 0.3 ~ 0.0 27.5 million kWh 0.13 0.1 Explored and Estimated Energy Resources Coal Lignite, Bituminous and Coking Coal Oil Shale Oil Uranium Renewable Hydro, Solar, Wind, Biomass Not Explored Energy Resources Natural Gas Geothermal energy

COAL- RESERVE MINISTRY OF MINERAL RESOURCES AND ENERGY Western Region Central Region Eastern Region Mountainous Region Gobi Region № Index Central region Mountainous region Gobi region Western region Eastern region Total 1. Number of deposits 13 20 23 16 85 2. Reserves /million ton/ 26528.1 7704.1 49785.3 27157.9 51165.1 162340.5 3. Share in the total 16.5% 4.7% 30.6% 16.7% 31.5% 100%

Coal Production, Export and Domestic Consumption in the last Decade, MINISTRY OF MINERAL RESOURCES AND ENERGY COAL- PRODUCTION Coal Production, Export and Domestic Consumption in the last Decade, /thousand tonne/

MINISTRY OF MINERAL RESOURCES AND ENERGY COAL - PROJECTION Projection for Coal Production, Export and Domestic Consumption, /million tonne/

COAL– EXPORT COAL EXPORT MAINLY TO CHINA MINISTRY OF MINERAL RESOURCES AND ENERGY COAL– EXPORT COAL EXPORT MAINLY TO CHINA Current major Coal exporters are located in the Southern part of Mongolia, close to China = 50 - 270 km PROBLEMS FACED Infrastructure: electricity, water, transportation Finance: high interests, short term Lack of qualified personnel and equipment Border station capacity 8.9 сая тонн 9.3 сая тонн Tavan Tolgoi Co: 5.1 mln ER Co: 3.8 mln Erdenes TT: 0.0 mln MAK Co: 5.0 mln Qinhua –MAK: 1.8 mln South Gobi Sands: 2.5 mln

COAL- EXPORT MINISTRY OF MINERAL RESOURCES AND ENERGY Coal Transport Routs to Russian and Chinese Ports from Tavan Tolgoi Coal Mine Routs TT-G/Sukhait-Qinhuangdao port: 1722 km TT-GSukhait-Huanghua: 1638 km TT-Sainshand-Z/Uud- Qinhuangdao 1779 km TT-Sainshand-Z/Uud-Huanghua: 1819 km TT-Sainshand-Z/Uud- Tianjin: 1570 km TT-Sainshand -Naushky-Vanino: 5100 km TT-Sainshand -Naushki -Vostochny: 5125 km TT-Sainshand-Choibalsan-Vanino 5044 km TT-Sainshand -Choibalsan-Vostochny: 5069 km0

COAL- POLICY Improve legal environment: MINISTRY OF MINERAL RESOURCES AND ENERGY COAL- POLICY GOVERNMENT POLICY ON COAL SECTOR Improve legal environment: Amendment into Minerals Law Regulations: environmental issues, licensing, taxation Increase of exploration budget and intensify geological survey Increase of production and export: Target Markets: China, Japan, Korea, Taiwan Introduction of value added production: Preparation, Washing plants Lignite upgrading: semi-coke Gasification and Liquefaction Responsible mining principles

Petroleum Exploration Blocks MINISTRY OF MINERAL RESOURCES AND ENERGY OIL- EXPLORATION Petroleum Exploration Blocks PSC Blocks To approve by Government Open Blocks To discuss and make decision by Government and National Security Council Co-Exploring Blocks

MINISTRY OF MINERAL RESOURCES AND ENERGY OIL- EXPLORATION EXPLORATION BLOCKS Petroleum Sharing Contracts were signed on18 blocks and started activities. Co-geological survey agreements were made for Coal bed Metane gas on 5 blocks and for oil on 8 blocks. Mongolia China Others PSC were made on 18 exploring blocks with total 13 companies International open tenders have been announced on 5 blocks

Oil Production and Export Growth (thousand bbl, by 20-12-2010) MINISTRY OF MINERAL RESOURCES AND ENERGY Oil – Production and export Oil Production and Export Growth (thousand bbl, by 20-12-2010) Production Export

MINISTRY OF MINERAL RESOURCES AND ENERGY Uranium Mongolia contains six uranium strata and more than 100 uranium deposits. Mongolian geologists now believe that Mongolia has 60,000 metric tons of uranium reserves, while Russian experts have much higher estimates, ranging from 120,000 to 150,000 metric tons. Main uranium deposits located in the Western province. Dornod Deposits-28868 tonne, Gurvanbulag Deposite- 16073 tonn, Mardai Deposit 1104 tonne.

Maps of Renewable Energy Recourses MINISTRY OF MINERAL RESOURCES AND ENERGY RENEWABLE ENERGY Maps of Renewable Energy Recourses

MINERAL SECTOR’S IMPACT ON MONGOLIAN ECONOMY MINISTRY OF MINERAL RESOURCES AND ENERGY CURRENT SITUATION OF MINING SECTOR INVESTMENT MINERAL SECTOR’S IMPACT ON MONGOLIAN ECONOMY GDP Industrial Goods Экспорт

Mining Sector Investment and Production MINISTRY OF MINERAL RESOURCES AND ENERGY CURRENT SITUATION OF MINING SECTOR INVESTMENT Mining Sector Investment and Production Investment Production

MINING SECTOR POLICY OF THE GOVERNMENT MINISTRY OF MINERAL RESOURCES AND ENERGY MINING SECTOR POLICY OF THE GOVERNMENT Northern Industrial Region: Leveraging Darkhan Erdenet existing infrastructure 11 processing plants Erdenet Industrial Park - Copper Cathode - Ferro - Molybdemnum - Agriculture Darkhan Industrial Park - Iron ore pellets - Steel products - Cement plant - Gold л Central Industrial Region: Leveraging Choir Sainshand workforce and infrastructure 8 processing plants Choir Industrial Park -Electricity - Syngas -Diesel - Cement Sainshand Industrial park -Chemical Industry - Copper Extrusion/Cable - Agriculture Souther Industrial Region: Biggest coal and copper mines 12 processing plant Тavan Tolgoi Industrial Park -Electricity -Cooking coal -Termal Coal Оuytolgoi Industrial park -Cement, Bricks -Copper Cathode -Gold - Agriculture Establishing multiple industrial parks based on regions and processing close to mine sites

MINING SECTOR POLICY OF THE GOVERNMENT MINISTRY OF MINERAL RESOURCES AND ENERGY MINING SECTOR POLICY OF THE GOVERNMENT To support the strategic deposits to develop economically To produce the Value added products and support the production such as concentration, processing, melting and purification. To develop and implement the complex plan to industrialize the Mongolia.

THANK YOU FOR YOUR ATTENTION NEAR INTERNATIONAL FORUM 2011 THANK YOU FOR YOUR ATTENTION Tel: + 976 – 51 – 266222 Fax: + 976 – 11 – 311381 Ministry of Mineral resources and Energy, Mongolia