Government says SouthGobi Sands will not conduct mining activities at Erdenes TT

Tavan Tolgoi mine

The public and some mining sector representatives have been critical of the Cabinet’s solutions to collecting the tax evasion fine imposed on SouthGobi Resources by the Court of Mongolia in 2015. Following the public’s outcry, it has been reported that the company will not be permitted to conduct mining activities at the Erdenes Tavan Tolgoi mine to finance a portion of the fine.

On Monday, the Cabinet reported that 15 billion MNT of SouthGobi Resource’s 35.3 billion MNT fine should be paid over two years, and the remaining 20.3 billion MNT could be paid by conducting company financed mining activities at Erdenes Tavan Tolgoi. The fine was imposed when the company was found financially liable in a tax evasion case resulting in guilty verdicts for three of its former employees.

Critics believe that allowing SouthGobi Sands to conduct operations at Tavan Tolgoi means that the deposit will be under the management of a Chinese company.

In an interview with, economist and Director of Glogex LLC L.Naranbaatar said, “SouthGobi Sand’s parent company is a Chinese company. The Cabinet allows the conducting of mining activities at Erdenes Tavan Tolgoi’s Western Tsankhi mine. In the Eastern Tsankhi, which has high quality coking coal, TTJV Co. – another Chinese company – is operating. Erdenes Tavan Tolgoi has now been fully transferred to authorities of China.”

“Some politicians were happy that the domestically owned Energy Resources LLC was bankrupted and went into debt, but when it comes to a Chinese company, they give them the right to operate at Erdenes Tavan Tolgoi. I really don’t understand this, but it seems that Mongolians are losing their investment in Mongolia,” Naranbaatar said.

In response to concerns about the SouthGobi Sands proposal, an official source reported that SouthGobi Sands will be responsible for stripping and piling at their own expense and will not be conducting mining activities. The official source underlined that local media and social media reports claiming that Chinese companies will occupy the mine are not accurate.

SouthGobi Resources reported on Wednesday that even though the company has been seeking to amicably resolve the dispute giving rise to the tax verdict through negotiations with the Government of Mongolia, the company has not received any formal notice from the government in relation to any settlement proposal.