Mikhail Stiskin, analyst of Troika Dialog

– Mongolia is our second biggest partner, after Kazakhstan, in terms of uranium mining prospects

Russia and Mongolia have agreed to set up a joint venture in the field of uranium mining. The agreement was signed as a result of the negotiations of President of Russia Dmitry Medvedev and President of Mongolia Tsakhiagiin Elbegdorj in Ulan Bator.

Russia is the first country with which Mongolia is establishing a uranium mining joint venture. “This is an important political signal,” Director General of Rosatom State Nuclear Energy Corporation Sergey Kiriyenko said.

The founders of the JV will be AtomMon (Mongolia) and Atomredmetzoloto (Russia). According to the agreement signed by Rosatom State Nuclear Energy Corporation and Mongolian Nuclear Energy Agency on Mar 17 2009, the JV will be set up on a parity basis.

Russia has long been interested in developing the Dornod uranium area as well as in the deposits of East Gobi district of Mongolia. “One more reason why we are interested in Dornod is that it is situated just 200 km from our Priargun Mining Chemical Combine. So, we will be able to create a unified infrastructure and to recruit our specialists,” Kiriyenko said.

The parties are confident that the reserves of Dornod can be increased. It is not known how much exactly Russia is ready to invest in this project but this is, obviously, a matter of hundreds of millions USD.

Of all countries we have good political relations with, Mongolia is our second biggest partner, after Kazakhstan, in terms of uranium mining prospects. The Dornod deposit has both pluses and minuses.

On the one hand, this area is in a neglected state and will need serious investments at the initial stage. The operational costs will be quite high.

But, on the other hand, this area has been prospected by Soviet specialists and we know this deposit quite well. It is situated not far from our Priargun Mining Chemical Combine, which is a good basis for serious logistical synergies, like processing the concentrate from Dornod at Priargun.