An agreement between Orano and Erdenes Mongol LLC sets out the framework for an investment agreement that will lay the foundation for a long-term relationship for the development and industrial operations of the Zuuvch-Ovoo uranium project in south-western Mongolia. The investment agreement is expected to be signed by the end of the year. Erdenes Mongol LLC is a Mongolian state-owned investment company.
The protocol was signed on the 12th of October at the Elysée Palace in Paris by Orano Chairman Claude Imauven and Erdenes Mongol CEO Sanjaagiin Narantsogt. President Emmanuel Macron of France and President Ukhnaagiin Khürelsükh of Mongolia were present.
Pilot operations over 2021-2022 have already confirmed the economic, environmental, and societal feasibility of operating the Zuuvch-Ovoo site, according to Orano. The project has been developed by Badrakh Energy which is a joint venture between Orano Mining and the Mongolian state-owned company MonAtom.
The joint Franco-Mongolian project will be based on international standards and best practices in terms of safety, security, and the environment according to Orano. Orano said that it is "committed over the long term, alongside communities for responsible mining with a development and cooperation program in favor of local populations".
Imauven said that the signature of the protocol “marks a decisive step” in a relationship with Mongolia that has been in existence for over twenty-five years. He added that “This cooperation will enable us to develop the uranium sector in Mongolia while furthering the Group's strategy of diversifying its mining activities.”
Agnès Pannier-Runacher is France's Minister for Energy Transition. She said on X that the agreement contributes to the diversification of French sources of Supply. She added that “This is good news for our nuclear industry and our energy sovereignty.”
Badrakh Energy’s on-site pilot at Zuuvch-Ovoo in the Gobi Desert took place from July 2021 to December 2022. The pilot tested uranium extraction by in-situ leach methods. The pilot produced ten tons of natural uranium concentrate. Orano has previously stated that over a forecast thirty year mine life, the Zuuvch-Ovoo project has the potential to earn Mongolia around one billion six hundred million dollars of direct investment over the life of the project as well as one billion dollars in tax income nationally and locally. The report Uranium 2022: Resources, Production and Demand is a joint publication of the OECD Nuclear Energy Agency and International Atomic Energy Agency, also known as the Red Book, said that the deposit has ninety-three thousand two hundred and ninety on tons of uranium resources at a grade of 0.022% uranium.
Mongolia has substantial known uranium resources. However, no uranium has been mined there since the closure in 1995 of an open-pit mine at the Dornod deposit in the north-east of the country. The Dornod mine was operated by Russian interest. It produced five hundred thirty-five tons of uranium over six years of production. Uranium ore from the mine was transported by rail to the Riargunsky facility in Frasnokamensk, Russia, for processing.
The price of uranium ore on the international market has been soft but is currently rising to the point where more dormant mines are being brought online.