MONGOLIAN URANIUM | FUEL & FUEL CYCLE
Above: The government of Mongolia has signed an investment agreement with Orano to collaborate on a uranium mining project
Badrakh Energy’s exploitation license covers three areas: Zuuvch-Ovoo, Dulaan-Uul, and Umnut, located in Dornogovi province. The Zuuvch-Ovoo uranium deposit was discovered by geologists from Kogegovi LLC. Once developed and operational, the Zuuvch-Ovoo will
be the 5th or 6th largest uranium mine in the world with an annual production capacity of some 2,500 tonnes. Once production begins, 1,600 workers will be needed, 100 km of power lines and 160 km of roads will be laid, and the Zuunbayan railway will also be expanded. Uranium from the Zuuvch-Ovoo project will be transported to China by rail and then delivered to France by sea. China will also receive a certain portion of the uranium from Zuuvch-Ovoo.
The investment For the initial investment, it has been agreed that the financing of the project’s investment and operations will not be financed through loans, but will be financed through equity. If shareholder loans are not approved during the project period and an urgent need for loans arises, it will be decided by a shareholders’ meeting, and the shareholder loans granted to the project implementing company before the date of entry into force of the agreement will be transferred to the project implementing company’s equity. The 34% state-owned common shares will be replaced with 10% preferred shares and a 5% special royalty, with the possibility of an incremental royalty of up to 9%. This arrangement is expected to generate an estimated $593m in dividends from preferred shares, $2bn in royalties, and a total of $5.2bn in revenue for the state and local budgets throughout the project. Rather than directly using the financial calculations
submitted by the investor, the Mongolian side will develop its own financial calculation model in accordance with the international FAST (Flexible, Appropriate, Structured and Transparent) standard based on the feasibility study, and after verification with the investor, Mongolia confirmed the conditions for receiving the majority of the benefits of the strategically important mineral deposits, or at least 51%, annually in the accumulated amount.
The agreement specifically mentions the income to
be calculated as direct benefits for the Government and the investor, and if the direct benefit of the Mongolian side does not reach 51%, the investor and the project implementing company will be obliged to reimburse the Government for the additional benefit adjustment payment necessary to reach that target. Under the Law of the National Wealth Fund of Mongolia,
the project dividends will be directly credited to the savings accounts of Mongolian citizens within the Savings Fund. The project is anticipated to bring significant societal and economic benefits, including increased foreign investment, enhanced state and local budgets, job creation, technology transfer, and strengthened international cooperation. New technologies will be introduced and a sulphuric acid plant will be established. The feasibility study also includes $2.4m for waste management and $96.2m for the sulphuric acid plant, which will have a daily production capacity of 700 tonnes and will be built starting in 2028. If Mongolia decides to produce and sell elemental sulphur domestically, the project’s implementing company will have the exclusive right to purchase it at a reasonable price. In addition, the Investment agreement shows that the
International Atomic Energy Agency will conduct research and monitoring every three years. Marc Meleard, General Director of Badrakh Energy,
noted: “According to our current plan, the main operation should begin by the end of 2028. Related development and construction works will begin in the second half of 2025. We have already started recruiting new staff. It was also considered necessary to establish a city
where 700 people would work and live in the first phase of the project. To this end, an international open tender will be announced, and a tender of $600m will be announced within the next two years.
Future prospects From 2030 onward, existing mines will not be able to meet the full demand for nuclear fuel globally. So, the Orano group also plans to resume exploration campaigns in
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