As Mongolia’s mining sector expands, so too does the mining equipment market alongside it. However, Mongolia does not produce heavy machinery and equipment domestically and is therefore completely reliant on imports.
Imports of heavy machinery and mining equipment have been mostly in line with the mining operations over the years with noticeable growth during higher activity and slowdown in sluggish years.
Mining equipment import (heavy machinery), million $
China alone supplies 64% of Mongolia’s heavy equipment imports, followed by South Korea, Japan, the United States, and India.
Heavy Machinery and Equipment imports as of 2020
(bulldozers, angledozers, graders, levelers, scrapers, shovel loaders, excavators etc.)
Mining machinery and equipment types and operations in Mongolia
The main mining equipment used in Mongolia are dump trucks, excavators, bulldozers, bucket loaders and drilling rigs.
MACHINERY AND EQUIPMENT USED IN THE MONGOLIAN MINING INDUSTRY
1. In 2020, a total of 2,104 dump trucks operated in the mining sector, of which 35% were the Chinese HOVO brand, 20% were US CATERPILLAR, 8% were US TEREX and 8% were Belarusian Belaz.
MACHINERY AND EQUIPMENT USED IN THE MONGOLIAN MINING INDUSTRY, EXCAVATORS
2. In 2020, MRPAM reported that a total of 704 excavators were operating in the Mongolian mining sector. Of these, 27% are made by US CATERPILLAR, 25% are produced by the South Korean HYUNDAI, and the remaining 10% are manufactured by the South Korean Doosan Group
In terms of bucket capacity, the CAT 7495 excavator has a bucket capacity of 53 m3 and operates at the Oyu Tolgoi copper and gold mine.
MACHINERY AND EQUIPMENT USED IN THE MONGOLIAN MINING INDUSTRY – BULLDOZERS AND SHOVEL LOADERS
3. 50% of bulldozers are made by US CATERPILLAR, 19% by the Chinese SHANTUI, and 17% by the Japanese manufacturer KOMATSU.
34% of the shovel loaders were made by the Chinese LIUGGONG, 22% by the Chinese brand XCMG, and 13% by the US company CATERPILLAR.
Machinery and equipments used in the Mongolian mining industry - drilling rigs, explosive charging, and stemming equipment
4. 52% of all drilling rigs were supplied by ATLAS COPCO.
5. In addition to specialized mining equipment, special explosive charging services are being provided in Mongolia. Currently, a total of 93 explosive charging and stemming pieces of equipment are provided by 19 companies that hold blasting license for mining purposes.
EQUIPEMENT OWNERSHIP - EXCAVATORS, DUMP TRUCKS, BULLDOZERS, SHOVEL LOADERS
More than 80% of mines in Mongolia use their own equipment with the remaining 20% being leased, according to MRPAM.
Based on operating reports by licensed mining companies, MRPAM classified heavy equipment used in mines by age and type as follows:
Placer gold mining (100 mines):
Placer gold mines use dump trucks with a capacity of 12-36 tonnes, excavators with a bucket capacity of 1.2-12 m3, and shovel loaders with a capacity of 1.2-8 m3. On average, equipment is six years old and therefore does not qualify for a fleet upgrade. However, some mines still use ES-6/45 excavators manufactured in the 1980s.
Coal mining (55 mines):
Coal mines use dump trucks with a capacity of 17-240 tonnes, excavators with a bucket capacity of 10-36 m3, and shovel loaders with a capacity of 1.2-14 m3. On average, equipment is seven years old, and therefore requires no fleet upgrade. However, some local mines require specialized technical upgrades.
Iron ore mining (19 mines):
Iron ore mines use dump trucks with a capacity of 12-60 tonnes, excavators with a bucket capacity of 1.2-16 m3, and shovel loaders with a bucket capacity of 2.7-7.8 m3. In terms of age, all equipment is aged around seven years, meaning that there is no need to upgrade the fleet.
Fluorspar mining (36 mines):
Fluorspar mines use dump trucks with a capacity of 1-40 tonnes, excavators with a bucket capacity of 0.9-11 m3, and shovel loaders with a capacity of 1-5 m3. In terms of age, equipment used has an average age of six years, which means there’s no requirement to upgrade.
Mining equipment market trends in Mongolia
Mongolia has seen increased efforts by domestic companies to upgrade mining equipment and technology used in both processing mine management, thereby making substantial contributions to Mongolia’s economy.
According to a study by Mongolia’s Council for Sustainable Development and Social Responsibility (CSS), modern information and communication technologies such as satellite imaging GPS technologies, and the use of drones are used in geological exploration and mine planning, especially at overseas mining companies that have invested locally. In addition, major mining companies have been contributing significantly to the productivity of the sector and improving environmental management.
For example, Oyu Tolgoi’s total operational cost was reduced by 5.2% in 2019 over the previous year by reducing maintenance costs at its processing plant and completion of some of its larger infrastructure projects. By using the Teetered Bed Separator (TBS) technology, an “easy production” reporting software, and processing technology, Energy Resources LLC coal mining company has managed to increase its productivity by 6% and fine coal output by 15%, all while minimizing environmental negative impacts.
Large mining companies tend to have enough specialized staff capable of using advanced equipment. However, small, medium, and state-owned companies lack such in-house expertise. And the study concluded that most of these companies have limited financial resources to attract these specialized professionals.
Overview of key mining equipment suppliers
WAGNER ASIA EQUIPMENT LLC
Wagner Asia Equipment LLC is an official Caterpillar dealer in Mongolia and sells products used in mining, construction, infrastructure and the energy sectors. It operates with 100% US investment. As of 2019, Wagner Asia alone accounted for 33% of all mining equipment supplied to the Mongolian market.
Since the equipment they buy comes in from all over the world including the USA, Japan, Russia, China and India, Wagner Asia operates a global supply chain. The product support division includes servicing and repair, and draws its main support for Caterpillar parts from their Asian distribution center located in Singapore, with stock orders shipped to Tianjin, China and then by railroad to Ulaanbaatar. Despite the fact that both Caterpillar and Wagner Asia operate some of the most sophisticated logistics systems in the industry, lead times can be as long as 90 days given the long distances, potential delays at border crossings, and changing weather conditions. To further improve the level of support to the large export mines located in the Govi Desert region of Southern Mongolia, Wagner Asia has recently commissioned a 5,000m2 parts distribution center. This southern distribution center represents Phase 1 of a larger service complex that the company intends to build in order to support the growing mining fleets operating in the Govi.
The Johannesburg Stock Exchange-listed equipment supplier – Barloworld acquired 100% of Wagner Asia Equipment, and 49% of the share capital SGMS, also from Mongolia, for a $216.8m in 2020.
TRANSWEST MONGOLIA LLC
Transwest Mongolia LLC is a Mongolian mining and construction equipment distributor with exclusive KOMATSU dealership rights. This exclusive distribution agreement authorizes Transwest to represent KOMATSU Ltd. on all equipment sales, parts, service, component remanufacture, and rebuilds provided by KOMATSU Ltd
KHISHIG ARVIN INDUSTRIAL LLC
Khishig Arvin Industrial – a Mongolian mining equipment supplier company – has been in the industry for 24 years. The company performs mining, road, and construction works with more than 600 machines and equipment. 80% of the equipment is provided by Caterpillar, with the rest of the equipment being provided by Komatsu, Libher, and Hitachi.
The company has contracted mining and infrastructure works for large mining projects such as Erdenes Tavan Tolgoi’s West, East Tsankhi, SouthGobi Sands’ Ovoot Tolgoi, and Oyu Tolgoi underground mines in accordance with international standards and requirements. The company also works as a general and subcontracted supplier in infrastructure, road, airport runway, apartments and hospital development projects.