Mining More Value: Assessing the Fiscal and Environmental Implications of the Erdenet Smelter Project

The Government of Mongolia aims to capture more value from its copper resources by developing domestic processing capacity. The proposed Erdenet smelter is a major part of this ambition, with the potential to support industrial diversification, employment and new industries.

In this report, Dorjdari Namkhaijantsan and Zoljargal Naranbaatar assess the financial, fiscal and environmental implications of the project. Their analysis compares three scenarios: continuing to mine and export copper concentrate, developing a stand-alone smelter and integrating a smelter with the existing mine.

The findings suggest that, under the model’s assumptions, continued mining and concentrate exports would generate higher project-level financial returns than an integrated smelter, while a stand-alone smelter would not be commercially viable. The report also highlights the importance of managing sulfur dioxide emissions and sulfuric acid, alongside greater transparency and independent scrutiny before major investment decisions are made.

The financial model behind the analysis is available to download.