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“ERDENES-TAVANTOLGOI” JSC
Үйл ажиллагааны тайлан ANNUAL ACTIVITY REPORT OF 2019
WORLD CLASS MINE-ERDENES TAVANTOLGOI
CONTENTS
01 03
02
1. About “Erdenes-Tavantolgoi” JSC
2. History
COMPANY REVIEW FUTURE PLANS
1. Highlights of 2019
2. Key performance indicators
3. Market positioning
4. Investment and construction costs
5. Impact on the Mongolian economy
KEY ACTIVITY INDICATORS
1. Strategic objectives
2. Project information
3. Action plan of Infrastructure and projects
04 1. Registration of shareholders SHARES
3
COAL BODIES AFFIRMATIVE SUBSTANTIAL POSSIBLE TOTAL
EAST TSANKHI 410 726 126 1,262
WEST TSANKHI 576 706 452 1,734
OTHER - 1,554 2,833 4,387
TOTAL 986 2,986 3,411 7,382
The state-owned Erdenes-Tavan Tolgoi JSC operates the Tavan
Tolgoi deposit, Mongolia's largest coking coal deposit. Holds
mining licenses for areas other than Ukhaa Khudag. Currently, it
operates only at the Tsankhi mine and exports to the Chinese
market through the Gashuun sukhait-Gantsmod port.
Advantages of the company:
- It has rich reserves of good quality hard coking coal
- Close to China, the largest market
- The stripping coefficient is low and the layer is thick
- Other parts of the deposit are available for operation
COAL TYPES ¹ A, % (ad) S, % (ad) VM, % (daf) CSN
Hard coking 9-10.5 0.5-0.8 23-28 7-9
Semi-soft coking 9-11 0.5-0.8 31-35 5-7
Thermal coal ~20 0.6-1
ООRTSOG
BORTEEG
TSANKHI
ONCH KHARAAT
BOR TOLGOI
UKHAA KHUDAG
“MMC”
“Тavantolgoi” JSC
Note: ¹ Quality indicators after washing and concentrating coal.
About the company Coal bodies, reserves
“ABOUT “ERDENES-TAVANTOLGOI” JSC
BRIEF HISTORY
Establishment of “Erdenes-Tavantolgoi” JSC under the relevant decisions of the State
Great Khural(Parliament of
Mongolia) and the Government of
Mongolia to engage in the operations of the Tavantolgoi deposit.
Signed a contract
with Chalco and
received an
advance payment
of $ 350 million.
Feasibility study
for East Tsankhi
mine has been
approved and
mining
operations have
commenced .
Decision by the State Great Khural to
allocate 1072 shares of “Erdenes-
Tavantolgoi” JSC to all citizens of
Mongolia. Sold the shares of Erdenes-
Tavantolgoi JSC to a number of
companies in Mongolia.
Estimation of 7.4 billion tons of coal
reserve under Norwest
Corporation’s assessment (JORC
compliant)
Commencement of the mining operations
of the East Tsankhimine site.
Since the start of
“Erdenes-Tavantolgoi”
JSC's operations, the
amount of coal extracted
has reached 20 million
tons.
Information
center for 1072
shares opens.
Celebration of the
milestone achievement
of successfully
extracting 40 millionth
ton of coal
Тавантолгойн
ордын нөөцийн
нэгдсэн тайланг
ЭБМЗ-аар
батлуулав.
Full repayment of its US$ 350 million debt
obligation to CHALCO, through supply of coal
products..
Full repayment of its
$200 million debt to
Development Bank.
Introduced ISO 9001:
2015 quality
management, ISO
45001: 2018 OSH and
ISO 14001: 2015
environmental
standards to their
operations.
“Erdenes-
Tavantolgoi” JSC
successfully
extracted 60
millionth ton of coal.
For the first time in
Mongolia, sales
revenue of the company
reached USD 1 billion
and earned net profit of
MNT 1 trillion.
An 8.2 km paved road
between Tavantolgoi
Gashuun sukhait has been
commissioned.
“Erdenes-Tavantolgoi” JSC successfully
extracted 50 millionth
ton of coal.
HIGHLIGHTS OF THE 2019
✓ Start funding major
projects
✓ TT-Zuunbayan -357
billion MNT
✓ ТТ—Gashuunsukhait
308.9 billion MNT
1Sales revenue reached
1 billion USD
Net profit earned 1 trillion
MNT
✓ Taxes and fees– 736
billion MNT
2Oct 11, 2019
achievement
of successfully
extracting 60 millionth
ton of coal✓ In 2019 – 16.2 million ton.
3 4Introduced ISO
standard to their
operation. ✓ ISO 45001:2018
✓ ISO 9001:2015
✓ ISO 14001:2015
5
The company created 7,000
jobs.
✓ “Tavantolgoi tulsh” LLC
✓ - 3745
✓ “Tavantolgoi tumur zam”
LLC - 3130
✓ “ETT Mining” – 125
6 7Successfully organized
“Citizen with savings and
shares“ campaign in 330
soums of 21 province.
Increased exports and
encouraged drivers.
15.5 million tons of coal
were sold.
122 drivers were
rewarded with 300 million
MNT
10
"Erdenes-Tavantolgoi" JSC was
selected as the company with
"Best Management" and topped
the TOP-100 enterprises of
Mongolia.
Contributed to reducing air
pollution in Ulaanbaatar.
Briquettes - 370 thousand tons
Emissions have been reduced
by 55 percent.
9As part of addressing the
social issues of employees,
salaries were increased by 25
percent and performance
bonuses equal to the 13th
month's salary and 4 months'
salary were provided.
8
0.4 25.5 20.2
320.9
426.2
2016 2017 2018 2019 гүйц 2019 төсөв
<75%
7.7
10.1 11.1
16.2 18.0
2016 2017 2018 2019 гүйц 2019 төсөв
<90%
ECONOMIC INDICATORS FOR 2016-2019
1. COAL MINING, million ton
7.5 8.5
13.1
15.5 14.95
2016 2017 2018 2019 гүйц 2019 төсөв
>104%
467.1
1,182.4
1,986.9
2,661.0
2,158.9
2016 2017 2018 2019 гүйц 2019 төсөв
>123%
(198.8)
461.1
807.6
1,035.6
728.7
2016 2017 2018 2019 гүйц 2019 төсөв
>142%
72.2
235.5
478.8
736.1
522.3
2016 2017 2018 2019 гүйц 2019 төсөв
>141%
2. SALES, million ton 3. SALES, billion MNT
4. INVESTMENT, billion MNT 5.NET PROFIT, billion MNT6. TAXES AND FEES, billion
MNT
In 2019, 16.2 million tons of coal was mined, an
increase of 46% compared to the previous year,
and the implementation of the plan is 90%.
In 2019, 15.5 million tons of coal were sold, an
increase of 18% compared to the previous year,
and the implementation of the plan was 104%.
Sales revenue of 1.0 billion USD or 2.66 trillion
MNT increased by 34% compared to the previous
year and the plan was fulfilled by 123%.
In 2019, 320.9 billion MNT was invested and the plan
implementation is 75%. Of this, 96% or 308.9 billion
MNT was invested in the TT-GS railway.
The company's net profit of 1.0 trillion MNT which
resulted increase of 28% compared to the previous
year and exceeded the plan by 42%.
Company paid 736.1 billion MNT to the State
Budget, which is 1.5 times higher compared to the
previous year and exceeding its plan to 141%.
Chinese coking coal imports Total coal exports of Mongolia (oxidized, coking, etc.)
MARKET POSITIONING
➢ “Erdenes-Tavantolgoi” JSC is the largest coal exporter in
Mongolia, accounting for 41% of Mongolia's coal exports, or 18% of
China's total coking coal imports.
➢ In 2019, Mongolia exported 33.8 million tons of coking coal, 45% of
China's imports. This is an increase of 26% or 6.9 million tons
compared to the previous year.
FUNDING FOR INVESTMENT AND DEVELOPMENT
Funding for ETT mining
ETTM LLC was established in 2019as a subsidiary of ETT JSC in orderto issue an IPO on the internationalstock exchange, and in 2019, a totalof 29.3 billion MNT was disbursed.
Acquisition of other assets
In 2019, the company spent a total of 12 billion MNT on geologicalexploration, mining equipment and software.
ТТ-ZB railway
In 2019, the company invested357.0 billion MNT in the TA-LBrailway in order to reducetransportation costs and create areliable transport and logisticsnetwork.
Within the framework of socialresponsibility, the company providedMNT 111.8 billion for the investment,production and operation of Tavan TolgoiFuel LLC, which will produce improvedbriquettes to reduce air pollution inUlaanbaatar in 2019.
“Тavantolgoi Tulsh” LLC
In 2019, the company has invested 308.9billion MNT in the TA-GS railway inorder to reduce transportation costsand create a reliable transport andlogistics network.
ТТ-GS railway
Total 819billion MNT
IMPACT ON THE MONGOLIAN ECONOMY
5. Jobs created
+7000
6. Amounts spent on social responsibility
4. Tax revenue of State Budget
1. Gross Domestic Product of Mongolia
118 billion MNT
7% 41%
8%
3. Coal export of Mongolia2. Coking coal imports of China
18%
“Erdenes-Tavantolgoi”JSC in 2019: :
VISION
World class mine-”Erdenes-Tavantolgoi”
MISSION
We create high quality coal products with “ETT 1, 2, 3, 4” brand codes, develop safe, stable and responsible mining
and industrial complex production, and make a real contribution to the economic growth of the country and the region
which will be beneficial to the government and citizens of Mongolia.
STRATEGIC OBJECTIVES
CURRENT SITUATION TARGET APPROACH
Mining
Processing
Transportation
15 million ton
0 million ton
15 million ton
70 million ton
30 million ton
60 million ton
Project funding
+
Internal
resources of the
company
Mine
CHPP+water
Railway, paved road
Power plant
Coal chemistry and others
Urban development
Coke plant
PROJECT INFORMATION
Choir
Oyutolgoi
Gashuunsukhait
Khangi
Sainshand
Zamiin-uud
Zuunbayan
RAILWAYS
5. Tavan Tolgoi-Gashuunsukhait
6. Тавантолгой-Зүүнбаян
Purpose Increasing capacity and cost reduction
Support domestic industry and railway network
Capacity 30 million tons 15-30 million tons
250 km 415 km
CAPEX ~$1.07 billion ~$1,1 billion
Investment ETT $792 million(66%)
ETT $300 million (Bond)
Paved road
7. Тavan Tolgoi-Gashuunsukhait
8. Tavantolgoi-Manlai Khangi
Purpose Increase capacity, improve driver conditions, new exits
Capacity 30 million tons 20 million tons
250 км 467 км
CAPEX ~$280 million -
THERMAL COAL USE
9. Power plant 10. Coke chemical plant
Purpose Production of power sources and value-added products.
Capacity 300 мВт 5 million tons
- -
CAPEX ~$1 billion ~$500 million
PROCESSING
3. CHPP 4. Water supply
Purpose Concentrate and sell coal, mix and enrich coal
Capacity 30 million tons 68 l/sek
4-6 module 72 km
CAPEX ~$500 million ~$28 million
Dalanzadgad
INCREASING PRODUCTION
1.Production technics
2. Conveyer system
Purpose Reduce costs, damage, and improve readiness
Capacity 15 million tons 35 million м3
- 6-8 кm
CAPEX ~$282 million ~$100 million
Tsagaandel-Uul
Existing roads and railways
Planned railways
Planned road
Location and routeof projects
№ Project nameTotal
investment
Investment
approachCurrent situation
1. Production equipment $282 millionShareholder
companyResearch is underway
2. Conveyer system $100 million Own assetsFeasibility study and blueprint are
underway
3. CHPP $500 million Own assetsFeasibility study and blueprint are
underway
4. Water supply $28 million Own assets Planning
5. Tavantolgoi-Gashuunsukhait railway $1,070 millionShareholder
company
Construction has begun. ETT will
own 66% of the project company
and will invest $ 792 million.
6. Tavantolgoi-Zuunbayan railway $1,100 million Bonds
Started construction work. 750
billion bonds will be purchased from
ETT to invest
7. Tavantolgoi-Gashuunsukhait road $280 million Concession Implemented through a concession
8. Tavantolgoi –Manlai Khangi road - Concession Implemented through a concession
9. Coke chemical plant $500 millionShareholder
company
Feasibility study and blueprint are
underway
TOTAL $3,860 million
ACTION PLAN O INFRASTRUCTION AND PROJECTS
ABOUT SHAREHOLDERS REGISTRATION
• On March 15, 2019, the Financial Regulatory Commission officially approved the registration of
shares of “ETT” JSC in the Central Securities Depository.
• On April 12, 2019, an agreement was signed with “Central Securities Depository” to register shares
for deposit and make related payments.
Registration of shareholders of “Erdenes-Tavantolgoi” JSC.
№ Shareholders Number of shares Nominal price per share
/ in MNT /
Number of
shareholders
1
State property /Ministry of Mining and
Heavy Industry, State Property Policy and
Regulation Agency/
9,780,711,099 933 1
2 Citizens of Mongolia 2,212,223,863 933 2,511,332
3 National companies 7,065,038 933 486
Total 12,000,000,000 2,511,819
THANK YOU