Narrative
Full Description
Project narrative
On December 28, 2000, the Export-Import Bank of China and the Government of Mongolia signed an RMB 100 million government concessional loan (GCL) agreement for the Tumurtin Ovoo Zinc Mine Construction Project. The face value of the loan was increased to RMB 200 million in March 2002 (as captured via Record ID#40198). The loan carried the following borrowing terms: a 11.75-year maturity, a 5.25-year grace period, and a 3% interest rate. The borrower was to use the proceeds of the loan to co-invest in Tsairt Mineral Co. Ltd. (also known as Xindu Mineral Industry Co., Ltd. and Цайрт Минерал ХХК - Баруун-Урт) — a special purpose vehicle and joint venture of China Nonferrous Metal Industry's Foreign Engineering and Construction Co. Ltd. (NFC) [51% ownership stake] and Metalimpex Company (Металлимпекс ХХК) [49% ownership stake] — and thereby support the implementation of the Tumurtin Ovoo Zinc Mine Construction Project. The proceeds of the loan were apparently on-lent to Tsairt Mineral Co. Ltd. and expected to cover 55.1% of the total cost [RMB 350 million ($44,880,400 USD)] of the investment project. At the end of the China Eximbank loan repayment period, NFC and Metalimpex Company agreed to hold equal shares (50% ownership stakes) in Tsairt Mineral Co. Ltd. The portion (44.9%) of the project cost that was not financed by the concessional loan from China Eximbank (RMB 150 million) was contributed by NFC as an equity investment in Tsairt Mineral Co. Ltd. (see Record ID#72884). NFC, in turn, secured an RMB 150 million commercial loan from China Eximbank (as captured via Record ID#85885) to finance its equity investment. Both loans entered their repayment periods in March 2006 and were scheduled to reach their maturity dates on or around August 28, 2012 (7 years from the commissioning date of the mine). It then on-lent the proceeds of the loan to Tsairt Mineral Co. Ltd. As of April 1, 2017, Tsairt Mineral Co. Ltd. (the ultimate borrower) had repaid $36,650,721.04 of loan principal and interest to China Eximbank. The purpose of the project was to construct an open-pit zinc mine — with a concentrator that has 300 kt/a ore treatment capacity — in the Gobi area within Sükhbaatar sum (district) and Sukhbaatar Province (exact locational coordinates: 46.7825, 113.326389). The zinc concentrate would then be transported from the mining site to the transfer railway station Sainshand and exported via the Trans-Mongolian Railway. China Nonferrous Metal Mining Co., LTD (CNMC) was the EPC contractor responsible for implementation. It signed an EPC contract (No. MG259001) with Tsairt Mineral Co. Ltd. (No. MG259001) on an unknown date. A formal foundation stone laying ceremony took place in April 2000. Then, in June 2003, President Hu Jintao visited the mine site. However, the main mountain stripping work did not commence until May 29, 2004. Then, in December 2004, Tsakhia Elbegdorj, Mongolia’s then Prime Minister, conducted an on-site project inspection. Construction began on June 15, 2005. The mine was officially commissioned and put into production on August 28, 2005, with 300,000 tons ore dressed and 80,000 tons zinc concentrate produced each year thereafter. By the end of July 2009, Tsairt Mineral Co. Ltd. had reportedly hired 600 workers (including 450 Mongolian workers) and produced a total of 2,220,200 tons of zinc concentrate. As of October 2019, Tsairt Mineral Co. Ltd. had cumulatively paid $255 million in taxes to the Government of Mongolia.
Staff comments
1. This project is also known as the Tumurtiin Ovoo Zinc Mineral Project, the Mongolian Zinc Mine Project, and the Tömörtiin Ovoo Zinc Mine Project. The Chinese project title is 图木尔廷敖包锌矿 or 设的蒙古国图木尔廷–敖包锌矿项目. The Mongolia project title is Төмөртийн овооны цайрын ордын төсөлд or Төмөртийн цайрын орд or Сүхбаатар аймгийн Төмөртийн цайрын ордынтөслийг. 2. The China Eximbank concessional loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 3. China Nonferrous Metal Construction Co., Ltd. (NFC) is a subsidiary of China Nonferrous Metal Mining Corp (CNMC). Established in April, 1983, the CNMC is a large central enterprise directly managed by the state-owned Assets Supervision and Administration Commission of the State Council. 4. AidData assumes that the proceeds of the China Eximbank GCL were on-lent to Tsairt Mineral Co. Ltd. However, this issue requires further investigation. 5. The RMB 200 million GCL that China Eximbank issued in March 2002 appears to be based on two general loan agreements (each of which committed RMB 100 million) that China Eximbank and the Government of Mongolia signed in 1998 and 2000. This issue warrants further investigation. 6. For the time being, AidData assumes that the RMB 150 million commercial loan was issued at the same time and on the same borrowing terms as the RMB 200 million GCL. However, this issue warrants further investigation.