Investing in Mongolia
When Germany’s chancellor, Angela Merkel, met Mongolian president Tsakhia Elbegdorj in his yurt recently it might have had all the trappings of a purely ceremonial occasion. After all, western leaders have hardly been beating a track to Ulan Bator, the Mongolian capital; not since George Bush visited in 2005 has a G7 leader been there.But things are changing in Mongolia. For a start, rather than being on some windswept steppe, that tent was on the fifth floor of the presidential building.
Merkel was there to cement links with the resources-rich country, and specifically to ease the path to German manufacturers getting their hands on Mongolia’s rare earths, metals used in high-tech products.
The country is thought to have the world’s second-biggest reserves of copper and uranium, and the Tavan Tolgoi coal deposit in the Gobi desert is the world’s biggest, estimated to contain 7.5 billion tonnes. Mining companies Macmahon, from Australia, and Germany’s BBM Operta Group recently won the contract to work the mine, and say it will produce three million tonnes in 2012, rising to 15 million tonnes per year when it reaches full capacity. An initial public offering of the state-owned coal-producing company scheduled for 2012 is expected to raise £15 billion (€17.7 billion).
Canada’s Ivanhoe Mines and Rio Tinto are developing the Oyu Tolgoi copper and gold mine, which is expected to produce $30 billion to $50 billion of revenue over several decades. The key market is China, Mongolia’s neighbour to the south, which shows no signs of losing its thirst for natural resources any time soon.
Nobody doubts that Mongolia is a boom country. The only problem is how to get exposure. Central Asian Metals and Origo Partners, a Beijing-based private equity and venture capital house heavily involved in the country, are both London-listed, as is Rio Tinto. Macmahon, BBM Operta and US company Peabody Energy – said to be keen to get involved – are easy to invest in. There are various Mongolia-focused investment funds, and there is talk of a Mongolia exchange traded fund. Get in before the hordes do.
Merkel was there to cement links with the resources-rich country, and specifically to ease the path to German manufacturers getting their hands on Mongolia’s rare earths, metals used in high-tech products.
The country is thought to have the world’s second-biggest reserves of copper and uranium, and the Tavan Tolgoi coal deposit in the Gobi desert is the world’s biggest, estimated to contain 7.5 billion tonnes. Mining companies Macmahon, from Australia, and Germany’s BBM Operta Group recently won the contract to work the mine, and say it will produce three million tonnes in 2012, rising to 15 million tonnes per year when it reaches full capacity. An initial public offering of the state-owned coal-producing company scheduled for 2012 is expected to raise £15 billion (€17.7 billion).
Canada’s Ivanhoe Mines and Rio Tinto are developing the Oyu Tolgoi copper and gold mine, which is expected to produce $30 billion to $50 billion of revenue over several decades. The key market is China, Mongolia’s neighbour to the south, which shows no signs of losing its thirst for natural resources any time soon.
Nobody doubts that Mongolia is a boom country. The only problem is how to get exposure. Central Asian Metals and Origo Partners, a Beijing-based private equity and venture capital house heavily involved in the country, are both London-listed, as is Rio Tinto. Macmahon, BBM Operta and US company Peabody Energy – said to be keen to get involved – are easy to invest in. There are various Mongolia-focused investment funds, and there is talk of a Mongolia exchange traded fund. Get in before the hordes do.
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