January 2011
The year has started well. Copper price has increased to USD9,700 and gold, iron ore and coal prices, too, are high. These are all products that Mongolia exports and their high demand bodes well for the economy. Foreign exchange reserves have reached USD2 billion, and in 2010 the MNT rose the most among all national currencies. The Mongolian economy grew by 6%, a creditable pace by any reckoning.
The USD342.3 million investment in the mining sector was eight times more than in 2009 andwill certainly be even more in 2011, most of which would be part ofthe year of the rabbit. Technical and economic feasibility studies of some major projects have been taken up. The route of the new 1,100-km railway has been announced and its technical and economic feasibility study will be ready in March.
Erdenes Tavan Tolgoi has now been registered as a company at the State Registration Office, and the State Property Committee has begun preparing for its IPO at a foreign stock exchange. Indeed, every day of the new year has revealed some positive news. The country is all set to begin a new decade of development before going to the polls in 2012.
Civil organizations and citizens have been following the process through which the 39th Resolution of Parliament, on using the Tavan Tolgoi deposit is being implemented. B.Enebish, CEO of Erdenes MGL, gave the first detailed information on this in an interview with MMJ in December. Events have since hotted up and a bid for international investors had to be cancelled under pressure from national companies and there is a vigorous demand that the Erdenes Tavan Tolgoi IPO should be at the Mongolian Stock Exchange. National companies which are clamouring for a piece of the action include junior and middle-size companies.
Political interests and the desire to weaken the Government are behind the demand for the resignation of the Mineral Resources and Energy Minister D.Zorigt and the attack on Finance Minister S.Bayartsogt, both of whom are among the hardest workers in the Cabinet. It seems that Prime Minister S.Batbold has lost some of the enterprise and energy that he showed early in 2010. He seems afraid of getting into any controversy over Tavan Tolgoi and could sacrifice D.Zorigt to placate his opponents. Maybe the 2012 election is more important to the Prime Minister than protecting his Ministers.
Doubts about developing Oyu Tolgoi were dissipated with the direct participation of Rio Tinto in it just before the new year, and the Prime Minister is now trying to avoid any trouble over Tavan Tolgoi by using cash distribution as a PR ploy. MNT812 billion will be spent on this while every citizen will have an account in the Mongolian Stock Exchange to record his shareholding in the deposit. He is also to explain a number of Government decision that mining companies see as impinging on their rights. Somecompanies are finding it difficult to operate normally because of these decisions but the Government does not want to sit with them to resolve the differences and confusions.
All in all, the new year looks extremely positive for the Mongolian economy, specially in terms of the price of mining products, but the same cannot unfortunately be said about the political situation. Our two neighbours and other countries keen to influence our policy in the mining sector are eager to fish in troubled waters and the Prime Minister, who is also leader of the ruling Party, seems unable to foil their designs. His preferred choice is to play Santa Claus which may very well end up weakening the economy. The economy cannot perform without political goodwill and determination to back it.