Five Mongolian fluorspar projects in pipeline, government says

By Michael Greenfield
Published: Friday, 01 November 2019

Reports have been heard that work has started at five new fluorspar projects in Mongolia, but there are no clear production guidelines and China may be reprocessing some material for re-export.

Mongolia has five fluorspar mines in development, a representative of the Asian country’s mining ministry told delegates at Fastmarkets’ Fluorspar Conference 2019 event in London in September.

Tsogtgerel Bayanjargal, adviser to the minister of mining, could not give clear details about the expected ratio of production between acid and metallurgical grades from these assets nor about when the output from the various projects would reach the market.

"[The five mines] are reporting to us that they are starting, and within our investment program we will start to issue permissions once we have cleared the environmental issues," Bayanjargal said.

The identities and capacities of four of these mines was not disclosed, and their ultimate effect on the market could not be predicted because of the varying timelines for each one to commence operations.

Mongolczechmetal, however, is developing an acidspar-only plant with nameplate capacity for 40,000 tonnes per year that is scheduled to start up in September 2020, executive director Dalai Bicheerei told Fastmarkets.

Meanwhile, Mongolian stalwart Berkh Uul suspended operations at its Delgerkhaan mine this year, according to Oliver Rhode, managing director of chemicals and raw material sourcing company Xenops Chemicals, which has strong links to the sector in Mongolia.

Although Delgerkhaan’s capacity is unknown, such figures are often merely indicative for Mongolian plants because winter in the East Asian country often halts mining altogether or stymies efforts at transportation of the material, which contains as much as 10% moisture and freezes in the harsh winter temperatures.

Mongolian export volumes to China have grown significantly, rising to 550,000 tonnes in 2018 from 319,000 tonnes in the previous year. That figure was itself up from 248,800 tonnes in 2016.

Mongolia’s only other customer for fluorspar exports in 2018 was Russia, which took less than 200,000 tonnes. This means China takes almost three quarters of Mongolia’s current output.

Acidspar material accounted for 164,000 tonnes of the 2018 total, which was up from 69,400 tonnes in 2017 and 46,800 tonnes in 2016.

This suggests China has raised its downstream consumption, given that its own export volumes appear to have been flat for the past few years. But speculation that Chinese companies bring in fluorspar and then reprocess it to a desired purity for later re-export blurs the picture.

Reprocessing in this way was common when Mongolian companies lacked the technology to produce acidspar through the flotation process although they now have the technology and expertise.

On the sidelines of the Fastmarkets event, a trader questioned the acid- and met-grade split of material because import receipts may be misleading. There are different import tariffs on the two products - China has a 3% import duty on acid-grade material while metallurgical grade material is subject to a duty of 1.5%.

Queries are commonplace in the market about the true quality of Mongolia-origin material. What is claimed to be acidspar, 97% CaF2 content, can be of lower grade - more akin to 95% CaF2.

Market sources in China have already warned that any crackdown on exporters which avoid payment of the 13% VAT that applies to fluorspar exports would risk disrupting the market.

Mongolia, which relies heavily on its mining industry to bring in foreign direct investment, is looking to enhance its downstream technologies.

An unnamed company is also developing a copper smelter and oil refinery in Mongolia, Tsotsgerel said. This will also produce the sulfur needed to create hydrofluoric acid, which is the feedstock for fluorochemicals.