German engineering giant Siemens recently organised Siemens Industry Day Mongolia 2014 in Ulaanbaatar to mark the 10th anniversary of the opening of its Mongolia office. This was something of a prelude to “Made in Germany”, a German-Mongolian business event scheduled for June 16-18. MMJ spoke to three Siemens group employees to know about their business plans and prospects in Mongolia. Could you please introduce yourselves and tell us your specific responsibilities in the company? I am Roland Ofen.
I’ve been with Siemens for 7 years, and work in the Minerals and Mining Department, in Germany. From there we keep close contact with our regional organisations all over the world.
As for my specific responsibility, I work with sales representatives and our main focus is eastern Asia, especially Russia and Mongolia. I’m the Sales Director in the minerals department, responsible for all portfolios in this market. In Mongolia, we offer our mining products and solutions to customers like Baganuur, Erdenet, Shivee Ovoo etc. We keep them abreast of developments in equipment and technology and they use our excavators, conveyor systems, stockyard systems, crushing and grinding systems, automation system etc.
We deal not just with products but also solutions. Solutions aim at saving energy, increasing productivity, and protecting the environment.
Our head office in Erlangen is in constant touch with our partners, affiliate companies, and branches in Asia. Our China office has been very successful and we have had dealings with Mongolian companies such as Oyu Tolgoi and Erdenet.
We support our Mongolian office mainly through China. Their coordinated work takes good care of all needs of our Mongolian customers for our industrial products. Any problem in the solution business is overseen by the local office, or that based in China, or the head office itself. Whoever is responsible, we always give our customers the best satisfaction. I am Xiao Gang Li
and I’m located in Beijing as head of the mineral department in Siemens China. We are responsible for northeast Asia which is mainly China and Mongolia. We have very good and close contact with our head office in Erlangen and no matter what the complexity and the size of a project is, our customers receive our best support whenever necessary. Mongolia being so close to Beijing, we can respond to any customer call from here quickly. My name is Wang Biao
and I’m responsible for customer services under Siemens East Asia, which covers Mongolia. Our responsibility is to our international customers who use our products and systems including solutions. Our goal at all times is to provide complete customer satisfaction. This is our first mandate. Our second mandate is that no matter what the situation is, a customer’s productivity and efficiency should not be affected. So we work with our head office to ensure both mandates are strictly observed. What kind of projects do you see coming up in Mongolia and what fields do you identify as needing Siemens technology?
We want to help in the development of Mongolia and would like to be true partners of our customers. This means we learn from our customer and the customer learns from us. We have experience with the Erdenet slurry pump station and would like to be the company’s partner for two more years as the mine is extended, to increase output. We have already discussed with them our ideas about conveyor solutions and truck solutions plus electrical drive. I would like to repeat that our target is “more productivity with less energy use”.
Erdenet wants to increase annual copper production from 25 million tons to 35 million tons. Some of the increased extraction will be of lower grades which means they will have to move more bad material. We see several small projects coming up. First, they have to modernise the slurry pump station. Second, they have to modernise and raise the capacity of the crushing and grinding mills. Third, they have to install a new transport system that can be either an impact crushing conveying system or trucks based on the trolley system. So we have four projects coming up: conveyors, trucks, mills and pumps. We have to follow up on these and convince Erdenet of how Siemens can contribute to its modernisation and ability to increase output.
We have been to Baganuur several times, where a project funded by the World Bank is coming up. Once they have prepared a comprehensive mining plan, Siemens would like to provide products and solutions before it goes into operation, thus supporting increased coal production in Baganuur. Our expertise is not limited to technological support; rather, as solution providers, we act as a bridge between technology and electrical application.
We are keeping a close watch on how talks on the new phase of construction at Oyu Tolgoi progress. Siemens has already supplied the mine with equipment such as mills with a remote and gearless drive which is a top stage of the size in the world. Since the project has started production, our “baby sitting” days are over and now we are at the after-sales services stage, supplying spare parts. And, of course, we are looking forward to be involved in the next phase of the project.
Mining is certainly important but the picture in Mongolia is much bigger for us at Siemens. There are four non-mining projects coming up which we are following. And we shall have a chance to participate in railway automation when that is taken up. The CTL project is of strategic importance to Mongolia but it is a new thing for us. With your experience, what do you think is important for us to understand about CTL?
We have discussed this with the Prime Minister. Both CTL and CTC are opportunities for Mongolia to add value to its raw resource. This will help in increasing the competitiveness of the country and will surely boost the country’s business potential. That larger scope opens up new opportunities. That makes such projects very important for Mongolia, not just for its industry or the economy, but also for the entire society. You were talking about the conveyor system at Erdenet. How can that factory optimally utilise your equipment such as conveyors and trucks?
There are driven trucks and there are conveyors. Conveyors have much higher productivity in general, with much lower cost per ton transported than when diesel trucks are used. And they are also better for the environment. We also have to consider likely increase in fuel prices. All this makes it more and more important to opt for electrically run transportation and excavation systems, as electrical energy can be produced not only at power plants but also from renewable sources like water or the sun. Their operational costs are also lower because you need less manpower, and more and more these systems will be operated automatically. So the benefits are threefold: these are environment-friendly, have higher productivity, and cost less. Why did you choose Belaz as your partner from among so many other truck producers?
Belaz is one of our truck partners. We have worked with different producers including Hitachi, Komatsu, and we also have business relations with NHL. Belaz came up in the last few years as Russians preferred western technology. Belaz has almost 70 per cent of the market share in Russia. They also want to export their products and feel it will increase their chances in foreign markets if they can say their trucks have electrical driving systems from a company like Siemens on board. Belaz was already here in Mongolia and our business ties with Belaz will certainly make us more attractive to the Mongolian mining industry. It will also help that Belaz is more familiar with the business environment here. In that context, do you face any difficulties in importing your products? If you do, what are your suggestions to ease them? And speaking generally, is it difficult to do business here?
Mongolia is developing very fast and, of course, we want to be part of it. A stabler environment for investment and for bringing in foreign supplies would of course help, as would easier handling systems, but it is a new experience for everybody and all of us are learning as we go on. We, as suppliers from another country, need to become more familiar with local practices and, similarly, the Mongolian Government maybe also needs more experience on how to meet expectations of suppliers used to a different business culture. I’m sure everything will get better.
We don’t have too much to complain about. Everything is going smoothly at the moment. We had some difficulty when we brought in some equipment from China for Oyu Tolgoi, but that project took care of everything.
The tax regime is the same for all of us and the rates etc. are for the Mongolian Government to decide. We can offer help in streamlining the process. For example, there are problems when we import from China transformers for electronic equipment but we know the Mongolian side is addressing the issue.
We would like to see some long-term strategy. When you explore our role in a mining project, we would like to know what the company’s future plans are and how likely it is that they will stick to it. Do they have a reliable investment plan? Our job as deliverer and supplier is easier when we can negotiate with an eye on the future. But this is true of many other countries, and I just mention this as something we have observed here. Could you tell us about your CTL project in China?
China is the global leader in coal gasification projects, just as Myanmar is in coal-to-chemical. Siemens is a major provider of several gasification technologies to China, including providing 24 500-megabyte gasifiers for the world’s largest coal to liquid project.