A new ferrous metallurgy to be built in Darkhan could fully supply domestic iron demand

The Mongolian Government has set a goal to support the ferrous metallurgy sector. A ferrous metallurgy complex is planned to be built in Darkahn-Uul and Selenge Provinces, and also at the Sainshand Industrial Complex. This is an interview with Ch. Tsogtbaatar, Head of Mining Heavy Industry Strategy Department at the Ministry of Mineral Resources and Energy:

-It is known that the production capacity of the ferrous metallurgy plant in Darkhan is being increased. Can you elaborate on this?

-This metallurgy plant in Darkhan Province makes metal objects from disposed iron. Although there are a few other smaller iron smelting plants, this metallurgy plant can be considered the only iron processing plant in Mongolia. In Darkhan and Selenge areas, there are a number of large iron ore mining sites: Tumurtei, Khust Uul, Tumur Tolgoi, and Bayangol. Based on these deposits, a goal was included in the Government program to build ferrous metallurgy plants in that area.

Right now, the current metallurgy plant we have cannot process iron ore, it is immediately exported. As I said, it is only intended to smelt disposed metal objects, and right now the supply of disposed metals is very low at the plant.

This metallurgy project is majority-owned by the Government, and also has rights to nearby iron mining projects. But if it wants to process the iron ore extracted from these sites, there needs to be upgrades to its technology. 

A large ferrous metallurgy project is about to start in the Darkhan and Selenge areas. It is one of the Government’s 56 major projects included in its goal to industrialize Mongolia. We are currently developing the technical and economic assessment of the project through the World Bank’s project to develop Mongolia’s mining infrastructure. It will be ready by this year. 

-Will this complex be a part of the Darkhan metallurgy or will it be a separate one?

-It will be decided when the time comes. But it is favorable to be located in Darkhan as major iron mines and reserves, including the other production infrastructure located there. 

-When will it be in operation? Once the technical and economic assessment is ready?

-Obviously, everything from the electricity to the water supply will be studied and researched. It will be built soon. 

The Government of Mongolia is trying its best to export products that have a high value. In the scope of this objective, we are being urged to complete the metallurgy as soon as possible. Once the assessment is complete, then we will commence building. 

-If the plant is built, is it safe to say that it will completely supply the domestic market and at the same time export processed and refined iron to other countries?

-Yes, that is possible. Generally, domestic demand for iron products is relatively low, but it has been steadily increasing with many new construction projects taking place in Mongolia lately. If we build a metallurgy that has the capacity to produce at least 3 million tons of iron per year, then we can both export and completely supply ourselves with iron. 

-What will be the environmental effects of the metallurgy?

-The metallurgy bears some significant effects on the natural environment. There are many plants like these in other highly developed countries like Korea and Japan. Their metallurgy plants cause an insignificant amount of effects on their nature as the plants’ eco-friendliness is carefully planned from the beginning. They have many additional tools and equipment to greatly reduce negative impacts on the environment. But its costs are very high and decreases profit. 

Metallurgy is not like burning wood or coal in a stove. We will have to choose from many different technologies that each have different attributes. The type of iron to be processed and the mining site’s characteristics will affect this decision. The choice of equipments will decide the environmental effects. 

-What developments can be seen in Mongolia’s mining sector with the construction of the new metallurgy?

-Of course, the new operational ferrous metallurgy will produce more jobs. Also, by supplying ourselves with domestically produced iron, we would be keeping all those expenses that go out to foreign countries for importing iron. The overall income of the Government funds will increase as the plant will be paying taxes. The new metallurgy will have many other social and economic benefits.

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