Sep 08, 2021

Mr. Delgersaikhan: Having comprehensive and systematic recommendations to carry out geological exploration would improve investment

AMEP 2 spoke with Mr. Delgersaikhan, A., Division Head, Geological Exploration and Planning at the Ministry of Mining and Heavy Industries. 

Could you please explain what is methodological recommendations to an average reader? 
In order to explain to lay people I would say it is a handbook/manual designed to help people involved in exploration, it tells them about characteristics of the mineral or the element, in particular, what are the main minerals and elements that make up the ore, what is their use, significance, major and minor minerals, types of deposits, their geological structure, origin, type of production involved, how they are classified by their structure, what kind of surveys and exploration are to be done in order to estimate the reserves of the deposit, in other words, how the geological exploration is to be properly done in their entirety and sequence.
On the other hand, “methodological recommendations”, in short, mean a reference that helps enterprises holding mining licenses, geologists and miners prepare reports on estimation and evaluation of mineral deposit reserves, register those reserves at the national integrated mineral reserve database, or make any changes to the previously registered reserves. Therefore, it is one of the materials that any expert or consultant in geological sector should know.
Implementation of the project to develop such recommendations is of historic importance because it is the first time that we have an official methodology to guide exploration work for different types of minerals, and it is to serve as one of the main manuals in the sector. Having comprehensive and systematic recommendations to carry out geological exploration would improve mutual understanding and coordination between the companies and government agencies regarding prospecting and exploration. Parties involved would have clear understanding about expected results, as well as effort and investment needed to bring them about.

There are now seven (on rare earth elements, lithium-caesium, sand and gravel, salt, carbonate rocks, graphite, aluminum) methodological recommendations developed with the help of AMEP program so far. What was the rationale behind this selection of minerals?  
The Minister of Mining and Heavy Industry issued Order No. A/195 in 2018 to approve the terms of reference of the project to develop methodological recommendations on classification of mineral resources and deposit reserves. The plan was to develop, first, over 30 methodological recommendations that cover the main minerals, which play important role in Mongolia’s geological survey, mining industry, and economy. The list included high technology raw materials and elements with prospects and potential, and common minerals. Within this framework a decision was made to develop methodological recommendations on rare earth elements, which are essential for technological advancement, lithium used in batteries to store energy, graphite, and industrial minerals such as sand, gravel, carbonate, and aluminum.
Furthermore, I would like to say that methodological recommendations were being developed since 2018 and now we have methodological recommendations on 13 types of minerals finished and printed in two volumes. In 2019 we successfully finished developing recommendations on five different types such as primary gold deposits, fluorspar, iron, placer deposits and oil within the framework of the AMEP program. It is my pleasure to mention that just before the 82nd anniversary of Mongolia’s geological sector we are ready to print the third volume which covers seven more types.

How are these recommendations to be used by the Professional Minerals Council?  
The companies specialized in geological exploration perform the exploration works on the mineral deposit. The results of these works help develop a report with estimation of reserves, which is submitted to the Professional Minerals Council (PMC) together with an expert opinion. The council reviews the materials and passes its own conclusion that serves as basis for the decision made by the government administrative organization and the minerals are registered in the national registry. However, in the absence of methodological recommendations on how to perform mineral exploration works and how to estimate reserves, there have been differences in understanding that often lead to misunderstanding among the PMC, experts, domestic and foreign exploration companies slowing down the work process.
As these methodological recommendations are issued now, any legal entity carrying out exploration works on the territory of Mongolia, should be able to abide by them in their mineral prospecting and exploration. The PMC shall work to ensure it. I hope that the issuance and enforcement of standards, instructions, and recommendations on how to estimate and report on the reserves of the deposit explored, would clarify the issues such as how to define stages of exploration work, and what are the processes to estimate the mineral reserves, to determine their level, and to register them. This would help resolve any disputes that might arise and enable effective process which ensures thorough and high-quality exploration work to attract investment essential for operation and use of these deposits for economic benefit.

How are these methodological recommendations used by geologists?  
When developing the methodological recommendations we involved experienced teachers, scholars, experts in the sector and advisor geologists. We organized discussions with domestic and foreign organizations, economic entities and geologists on methodological recommendations for each particular type of mineral and collected their feedback that were reflected in the recommendations. The implementing agency of the project made necessary revisions and submitted them to the editorial board established by the order of the Minister who provided experts’ review on the recommendations. Then they were reviewed by the PMC and finally published by the decision of the state central administrative organisation.
The first methodological recommendations on 8 minerals were published in 2019. Since then, recommendations were developed on five more minerals with the support of Geoscience and Natural Resource Institute (BGR) of the FRG. In 2020, 92 out of 176 reports that were discussed and reviewed by the PMC and MRPAM, which make 52% of all reports submitted in that year, followed the eight methodological recommendations approved as mentioned above. In 2021 as of today there were 95 reports reviewed and 57 out of them followed the methodological recommendations.
Methodological recommendations have been adopted widely for use by foreign invested and domestic enterprises that run geological exploration and mining operations as well as experts in the sector and various authorities. Adherence to these recommendations demonstrates the tangible result of this work.

What is the benefit of having such methodological recommendations for Mongolia’s mineral sector?  
The geological sector of our country, especially the mineral sector has been developing rapidly since 1930s, 40s. But no instructions or standards were adopted on mineral geological survey or exploration works. We used to apply at the time Soviet Union and currently Russian Federation’s “METHODOLOGICAL RECOMMENDATIONS on use of classification of deposit reserves and prospects of solid mineral resources”. Even today we use this material for some types of minerals. But for the last 30 years we have seen how technology and practice of other countries were introduced to Mongolia creating the need for its own unique mineral resource prospecting and exploration methodology that reflects the western approach. This need is fulfilled by adoption of the methodological guidelines. Such transition usually takes decades and needs consistent policy to enable step by step actions to yield concrete results.
For instance, in 2014 our country became a member of CRIRSCO, which is an international standardization committee on mineral reserve reports. So, we had started bringing “Classification of Mongolia’s solid minerals reserves and resources” in line with similar international standards and instructions. In this connection, it was clear we needed to develop methodological recommendations and instructions on reserve classification for each main type of common minerals in our country.
As a result of the open economic policy that often is referred to as the market economic policy adopted in the 1990s, Mongolia’s geological and mining sector has attracted foreign investment which led to increasing participation in foreign markets by selling mining products or shares and raising capital. Foreign investors trading stock in international exchange markets use Australian “JORC” code, or Canadian “NI43-101” or coal resource/reserve reporting standardized system “GSC Paper 88-21”, NI 51-101 or “Standards of Disclosure for Oil and Gas Activities”, "COGEH - Canadian Oil and Gas Evaluation Handbook" in order to estimate the reserves of certain solid minerals.
In this connection, I believe it is possible to develop our global competitive edge through improving our methodology on conducting mineral surveys and classification system of minerals using our traditional base so that they are internationally acceptable and compatible.
The methodological recommendations need to be developed in line with the similar instructions and guidelines used internationally in geological sector so that we not only help organisations conducting geological surveys and exploration works in the mineral sector but also contribute to the development of the sector. The recommendations serve as a common methodology or set of instructions and standards for many foreign and domestic entities to report the results of their work regarding the mineral exploration that would help them pave their way to trade their stock in foreign exchange markets.

What are the results you see since adoption of methodological recommendations?  
Now we have standardized guidelines on estimating and reporting on deposit reserves of each type of minerals. Adherence to these recommendations helps clarify the processes of obtaining data on geological exploration, estimating mineral reserves, and registering them, which enables more effective and transparent operations resulting in good quality comprehensive exploration work. The findings of the exploration work play crucial role in attracting investment, enabling decision-making, and developing those resources for economic benefit. Therefore, I advise geologists, who are involved in geological exploration, to use these recommendations as their main manual.
Finally, on behalf of the Ministry of Mining and Heavy Industry, I would like to express my gratitude and wish all the best to the AMEP staff, who supported successful implementation of this project, and all geologists, who carried out this work, namely the Research, Geodata and Training Center of the Geology and Mining School of MUST.