Vasily Konuzin, head of Analytical Department of Alemar IFC

– The JV with Mongolia will help Rosatom not only to increase its raw material base but also to expand into Asia

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.

Mongolia has always been in the sphere of interests of Russia and has shown pro-Russian position in economy for a long time. In the last years that country has substantially diversified the circle of its partners in the field of development of mineral resources. In this light, the JV agreement with Mongolia can be considered as a big success for Russia as it will give Rosatom a bigger foothold on one of the most attractive mineral resource markets of the region.

The JV with Mongolia will help Rosatom not only to increase its raw material base but also to expand into Asia

For ARMZ the establishment of JV means not so much an increase in uranium reserves as stronger positions on the promising Mongolian uranium market, a market that is receiving increased attention in the light of the global renaissance. The deposit the JV will develop has 28,000 tons of uranium, i.e. just 4%-5% of ARMZ’s reserves. But in the future the JV may enlarge its activities as Mongolia may have as much as 1,300,000 tons of uranium. The JV will help Rosatom not only to increase its raw material base but also to expand into Asia. This will give the Corporation quite good additional cash flow. In the longer run the parties may consider building an NPP or nuclear waste treatment complexes. This will substantially diversify Rosatom’s proceeds from Mongolia.

For Mongolia this agreement is an instrument for developing its own mineral resources and an access to advanced technologies not only in uranium mining but also in power engineering.