Sh. Dorjgarchaa: Diversifying exports by turning brown coal into the final product

Mongolian Economy Magazine spoke with Sh. Dorjragchaa, Head of the Shivee Energy Complex Project of Energy Export.

-The Shivee Energy Complex Project is a megaproject that will require as much investment as the Oyu Tolgoi mine. Would you mind telling our readers about the project?
-Upon the invitation of the President of China Xi Jinping, the President of Mongolia Ts. Elbegdorj made an official visit to the People’s Republic of China in 2015. During the visit, the two Presidents signed a Memorandum of Understanding to execute the feasibility study for the Shivee Energy Complex Project of Energy Export at the Shive-Ovoo coal deposit. Subsequently, the feasibility study was conducted jointly by the Ministry of Energy and the State Grid Corporation of China.

As stipulated in the preliminary study, we plan to build a coal-fired power plant with an installed capacity of 5,280 MW located at the Shivee-Ovoo strategic coal deposit, a transmission line with the capacity to transmit 4,600 MW ± 660 kV UHV and a coal mine with the capacity to extract 20 million tons of coal per year. The energy produced at Shivee Ovoo Power Plant will be supplied for domestic consumption and exported to the People’s Republic of China. The project will receive total investments of approximately 7,1 billion USD.

In terms of capacity, the new power plant will be close to the Taichung Power Plant, one of the largest coal-fired power station in the world. Its distance for power transmission is expected to be over 1,200 kilometers.

In short, the Shivee Energy Complex Project will play a vital role in transforming Mongolia into an energy-exporting country.

-What has the project unit accomplished in the last year? What are you planning to achieve in near future?
-Under the Decree of the Minister of Energy, a working group comprised of 22 representatives of all existing stakeholders was established. The working group is responsible for assessing the feasibility study of the Shivee Energy Complex Project located in the Shivee-Ovoo coal deposit. Earlier we planned to invite top experts from the State Grid Corporation of China. But our plan was postponed due to the pandemic.

-The success of megaprojects primarily depends on the investment flow. How are you planning to secure sufficient funding for the Shivee Energy Complex Project?
-The project will require 7.1 billion USD in total. Twenty percent will be financed by the State Grid Corporation of China and eighty percent by investment banks in China.

-As a result of the Shivee Energy Complex Project, Govisumber Aimag is expected to become twice as big as Nalaikh District. What other positive impacts could the project bring to the society and economy of Mongolia?
-Following the Shivee Energy Complex Project of Energy Export, the flow of foreign investments to Mongolia will substantially increase. It is estimated that in the first five years of operations, the GDP of Mongolia could grow by four percent per year. In addition, it will create over 5,000 new jobs since the production begins.

For the construction of the power plant, we will hire around 20,000 workers who will be taking professional training in Mongolia or be enrolled in universities in China. Moreover, the new power plant will become a major source of government revenue through mining royalties, corporate income tax, local tax, air pollution tax, VAT, customs duties and others. The plant will generate around two billion MNT as profits which will further increase the government revenue.

The project will certainly lead to export diversification by turning brown coal with the lowest heat content and quality to value-added export products.

Choir City where the Shivee Energy Power Plant will be located will become a modern advanced city without any doubt. In the future, we plan to develop infrastructure, healthcare, education sectors of the Choir City.