MONGOLIA’S POLITICIANS UNITE OVER ECONOMIC DOWNTURN

MONGOLIA’S POLITICIANS UNITE OVER ECONOMIC DOWNTURN
December 10 02:33 2014 Print This Article

Mongolia’s perpetually conflicted parties have cast aside their differences to form a “super coalition” in the face of numerous economic problems, such as falling commodity prices in the mining sector, the country’s most important industry. The ruling Democratic Party and its main opposition, the Mongolian People’s Party, have joined hands to tackle the problems, together with members of the Justice Coalition and Civil-Green Party. These developments transpired after roughly a month since Mongolia’s parliament ousted Norov Altankhuyag as prime minister, who was replaced by Saikhanbileg Chimed on 21 November.

Mongolia possesses some of the world’s most expansive rare earth and other mineral deposits. However, thus far the country has struggled to convert its vast underground wealth into tangible economic gains, due to disputes with foreign investors and delays to big projects in mining and infrastructure. Saikhanbileg’s top priority is therefore to restore confidence in the mining sector to get the economy back on track. According to Bontoi Munkhdul, head of market intelligence firm Cover Mongolia, the new prime minister is well-liked in the business community. Nevertheless, independent mining analyst Dale Choi warned that Saikhanbileg’s appointment is unlikely to trigger substantial changes and could in fact drive away even more foreign investment after it already fell 59 per cent in the first three quarters of this year.

Saikhanbileg pledged to remove barriers to mining and improve access to credit in a speech last week, which was followed by the cabinet permitting to establish an Investment Fund in Mongolia on 2 December. Following negotiations with foreign and local financial institutions, the Fund is going to be run by JP Morgan Chase & Co. and the Board of the Mongolian Development Bank was entrusted to issue a financial commitment of USD 100 million to implement the first stage of the Fund’s establishment. Furthermore, Mongolia revived the bidding for the development of its Tavan Tolgoi coal project. With more than 1 billion metric tones of high-grade coking coal, Tavan Tolgoi is the largest deposit of this mineral in the world, making it one of the most sought-after mining destinations Mongolia counts on for foreign capital investment.

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