OT spends MNT 1.9 trillion and Erdenet spends MNT 390 billion on procurement

Journalist B.Erdenechimeg

2017-04-11 11:15 GMT+8

Mongolian biggest producing and processing companies such as Erdenet, Darkhan Metallurgical Plant, Oyutolgoi, and Erdenes Tavan Tolgoi introduced their procurement plan for 2017 at the Mining Mongolia expo that was held on Apr 5-7 in Ulaanbaatar city. 

All mining experts agree to purchase safety, healthy, environmentally friendly, value-added, quality and competitively priced products. Meanwhile, they consider that supplier must meet general requirements, such as the supply of products on time and adherence to business ethics

Oyu Tolgoi has made service contracts worth $760 million at the end of 2016 and 82 percent of the expenditure or $63 million was spent with Umnugobi supplier companies. The total amount of national procurement was relatively high compared to other mining companies.

In other words, every $8 out of $10 spent by the Oyu Tolgoi has remained in Mongolia. In 2017, the company plans to make a $83 million contract with local suppliers.

Moreover, 83 percent of the underground equipment was purchased from local suppliers. National producers supply cast balls, chalk powder, concentrate bags and staff clothing for the first time. Procurement notices and proposals of Oyu Tolgoi are published on their website. 

In addition, Oyu Tolgoi enabled their suppliers to receive a soft loan from commercial banks, which considered as an important step in supporting their business partner.

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Erdenet Mine was established in 1978 with a capacity to mine 4 million tons of copper per year. Now it is processing 32 million tons of copper ore per year. 

In 2016, Erdenet mine centralized approximately MNT 400 billion to state budget and MNT 50 billion to local budget. As 100 percent national company, they changed its procurement policy. 

We announce tender and directly purchase from manufacturers, said D.Nemekhbayar, Head of Development Policy Department. 

Erdenet mine is not only one of the major consumers but also supplier due to they manufacture many types of products such as maintenance, mechanic and car plant. 

Erdenet mine spent MNT 397 billion on procurement last year which is equivalent to half of annual investment of the Ulaanbaatar city. ;

  • 47 percent of domestic suppliers, 
  • 36 percent of local suppliers, 
  • 17 percent of foreign suppliers. 

Moreover, the company purchased products worth MNT 6 billion from 14 manufacturers in scope of supporting small and medium-sized enterprises. These manufacturers created more than 600 workplaces in Orkhon aimag.

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