Mongolian Economy and Finance

I recently had the opportunity to speak at length with one of Mongolia’s greatest historians, Professor Shagdaryn Bira, an academic scholar recognized as a State Hero for his lifetime achievement in the preservation of knowledge.

Ever since gasoline prices began rising last Friday, government officials and petroleum importers have offered different explanations for the increase.

The story of Mongolia's resurgence is mouthwatering for investors for a very simple reason. Mongolia is rich in natural resources… and it sits next to the world's most voracious consumer of those resources, China.

Ulaanbaatar, Mongolia - 'Our leaders are getting richer and richer. But for us, everything is getting more expensive,' says Altangerel, who works in a beauty salon in the Mongolian capital Ulaanbaatar.

In an interview with CNBC on 26 March 2010, Alisher Ali Djumanov, chief executive officer of Eurasia Capital, highlighted the fascinating parallels between Mongolia and Western Australia – a vast dimension of landscape, a small population and a substantial endowment of commodities. The key difference, according to Djumanov, is that Mongolia is lagging behind Western Australia by perhaps 30 to 35 years. That implies huge opportunities for investors who can tolerate the risk associated with frontier markets.

Mongolia’s conflict of interest dilemma This of course presents an interesting dilemma in the form of the most profound of conflicts of interest; why would the very people who benefit from the system be inclined to change it?

James J. Schaeffer Jr., Executive Director of Mongolia Energy Corporation, which holds mining concessions of coal, ferrous and non-ferrous metals in Mongolia, has told The Mongolian Mining Journal that “Mongolia is the right place to be”. He is sure development of its energy and mineral resources by various companies will bring robust economic opportunities to Mongolia. The company’s own Khushuut coal project in the west of the country is not very big by international standards, but it will create significant employment opportunities, and also encourage a lot of other industries to grow around the mine, meaning there will be more jobs and income for the local people.

The Global Times, a daily Chinese newspaper focusing on international issues and produced by the official Chinese Communist Party newspaper, the People"s Daily, has published in some detail the views of Michael Aldrich, an American lawyer who divides his time between Beijing and Ulaanbaatar, on the development of Mongolia"s mining-dependent economy. The lawyer feels that the Mongolian Government has realized that the country cannot properly develop without the flow of considerable capital northwards from China. It also wants to diversify the sources of foreign capital so no one country becomes the "key" investor.

If there was a competition to find the ugliest city on Earth, then the Mongolian capital of Ulan Bator would be the leading contender for the title. The combination of grim, Soviet-style concrete high-rises, rambling slum-shanties and towering coal-fired power plants belching out smoke over the city reeks of the depression and decay that was a legacy of decades of communist rule.