Investing in Mongolia

Economic activity in Mongolia has traditionally been based on herding and agriculture - Mongolia's extensive mineral deposits, however, have attracted foreign investors. The country holds copper, gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten deposits, which account for a large part of foreign direct investment and government revenues. Soviet assistance, at its height one-third of GDP, disappeared almost overnight in 1990 and 1991 at the time of the dismantlement of the USSR. The following decade saw Mongolia endure both deep recession, because of political inaction and natural disasters, as well as economic growth, because of reform-embracing, free-market economics and extensive privatization of the formerly state-run economy. Severe winters and summer droughts in 2000-02 resulted in massive livestock die-off and zero or negative GDP growth. This was compounded by falling prices for Mongolia's primary sector exports and widespread opposition to privatization. Growth averaged nearly 9% per year in 2004-08 largely because of high copper prices and new gold production. In 2008 Mongolia experienced a soaring inflation rate with year-to-year inflation reaching nearly 30% - the highest inflation rate in over a decade. By late 2008, as the country began to feel the effects of the global financial crisis, falling commodity prices helped lower inflation, but also reduced government revenues and forced cuts in spending. In early 2009, the International Monetary Fund reached a $236 million Stand-by Arrangement with Mongolia and the country has started to move out of the crisis. Although the banking sector remains unstable, the government is now enforcing stricter supervision regulations. In October 2009, the government passed long-awaited legislation on an investment agreement to develop Mongolia's Oyu Tolgoi mine, considered to be one of the world's largest untapped copper deposits. The economy grew 6.1% in 2010, largely on the strength of exports to nearby countries, and international reserves reached $1.6 billion in September, an all time high for Mongolia. Mongolia's economy continues to be heavily influenced by its neighbors. Mongolia purchases 95% of its petroleum products and a substantial amount of electric power from Russia, leaving it vulnerable to price increases. Trade with China represents more than half of Mongolia's total external trade - China receives more than three-fourths of Mongolia's exports. Remittances from Mongolians working abroad are sizable, but have fallen due to the economic crisis; money laundering is a growing concern. Mongolia joined the World Trade Organization in 1997 and seeks to expand its participation in regional economic and trade regimes.

Ar Erkhes
Bank of Mongolia -
East Asia Minerals Corporation (CVE: EAS) - uranium
Entree Gold (AMEX: EGI)
Erdenet Mining Corporation -
Erdene Resource Development Corp (TSE: ERD) - Nomin Copper-Gold Prospect and Khuvyn Khar Copper-Silver Prospect
Green Technology Solutions (OTC: GTSO)
Ivanhoe Mines (NYSE: IVN)
Khan Resources (TSE: KRI)
Mongolia Growth Group (PINK: MNGGF)
Mongolian Mining Corporation (HKG: 0975)
Petro Matad (LON: MATD)
Prophecy Coal (PINK: PRPCF)
Rio Tinto (NYSE: RIO)
SouthGobi Energy Resources (HKG: 1878)
SouthGobi Resources (CVE: SGQ)
Van Eck - Mongolia ETF
Xstrata (LON: XTA)

Mongolia Investing News
2011-07-21 - (bl) - Mongolia prepares for flood of money as copper, coal 'supercharge' economy
2011-06-29 - (sa) - Mongolia: An economic boom investment guide
2011-06-27 - (mw) - GTSO begins collecting Mongolian rare earth samples
2011-06-20 - (mw) - GTSO continues Mongolian export preparations as rare earth prices double
2011-06-17 - (wsj) - Mongolia's mining two-step with U.S., China
2011-06-16 - (mw) - Erdene commences drilling on Mongolian copper-gold-silver projects
2011-06-14 - (wsj) - Mongolian Premier looks to advance deals with China
2011-06-13 - (wsj) - Massive coal-mine project moves ahead in Mongolia
2011-04-28 - (sa) - Mongolia: Boots on the ground report
2011-04-06 - (bl) - Oyu Tolgoi may start earlier than planned, executive says
2011-03-06 - (sa) - Mongolia: Are we at the investment tipping point?
2009-09-17 - (sa) - CLSA conference highlights: Sri Lanka, Mongolia, and copper
2009-09-09 - (sa) - The next big Asian play is in Mongolia
2009-09-01 - (sa) - Mongolia: Mining's next big thing?

Countries that border Mongolia: Russia | China

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