Mining boom can take off only with proper Government support, Discover Mongolia told

The most interesting speech on the second day of “Discover Mongolia-2010” on Thursday was that by the Executive Director of Golomt Bank, John Finigan. Reviewing the present status in the mining sector and future prospects, he said 2016 will be when Mongolia would really start collecting regular higher revenue. The amount of copper mined would reach 36,000 tons a year and the GDP would be USD27 billion. This translates as USD9,000 in per capita GDP. There are very few examples of such great leaps in GDP growth, except in oil producing countries following the price rise in the 1970s.

Finigan warned that this increase from the present 5% to the anticipated 20% would be possible only with adequate support from the Government. Even after a good start there can be missteps. Foreign investors, he said, are yet to be convinced that policy making will be quicker in Mongolia and the legal environment will be stable.

Mongolian Star Melchers Director Laurenz Melchers began the Government Hour session by saying, “Mongolia is an attractive country to invest in and I appeal to investors to hurry. There is a lot more to the mining sector than the excavation, and all this awaits investment.” He mentioned the need for many more properly equipped warehouses and to develop air cargo services. With so many Chinese citizens and economic entities among exploring and exploiting license holders, there is a preference for selling raw resources instead of value added products. But this does not serve the country’s interests, Melchers noted. His company has begun to build a chemical factory which will help process the mined resources.

A major problem for foreign investors is local people’s distrust of their goals and methods. They resent the perceived damage to the environment that mining inevitably does and want better post-mining restoration, said Ms. Rina Gondose. The number of complaints keeps rising and the Administrative Court settled 28 cases in 2006, 44 in 2007 and 61 in 2008.

Participants comment on organization of forum

There were some complaints among participants at Discover Mongolia. Foreign visitors would not make any public comment but Barry Evans of Churchill Co. in Ulaanbaatar said given the time they had, the organizers could have done a far better job. For one, the space was too small and it would have been better to hold the forum in the new building of National Trade and Industries or in Misheel Center.

D.Bat-Erdene of Umniin Els noted that in the first years of the forum the emphasis used to be on geological issues but this has now shifted to mining and supply services. The discussions also often wander from day-to-day issues facing operations. He also said his company used high-grade technology and employed few foreign workers, proving the competence and capacity of Mongolians.