First President of Mongolia Opens “Discover Mongolia” Forum

The First President of Mongolia and Chairman of the Organizing Committee, P.Ochirbat, opened the 10th annual Discover Mongolia Forum with a speech titled “From Discovering to Developing.”

P.Ochirbat stated, “When we first organised the Discover Mongolia forum in 2002, around 250 foreign and domestic delegates and visitors participated. In 2003, 300 representatives, in 2004, 500 [attendees], in 2005, 600 [attendees], in 2006, more than 700 delegates participated in the event so the number of visitors are increasing each year. By 2008, more than 850 delegates from 14 countries, representing more than 140 companies participated. Last year, in 2011, around 1200 delegates from more than 20 world countries representing around 500 organization and enterprises participated in the event. What this shows it the increasing interest in the Mongolian mining sectors from foreign investors. This forum is a great opportunity for delegates to form a network with fellow delegates and learn about Mongolian mining. In is also an opportunity for companies to demonstrate their skill, operations and expertise so as to attract investors. The investment level into mining sector has increased substantially in the last decade. In the last three years, 45 mining companies were established in Mongolia.”

He then talked about collaboration of foreign investors and the government and also about transitioning to the next level of the mining industry. Ochirbat stated, “We have to not only focus on exploration and exploitation but also on producing and processing the extracted minerals to achieve a higher price.” He noted in the past legislation and policies revolving around mineral resources were unfavourable for foreign investors, a situation that had been shifted in 1997 for a better alternative. This too proved faulty as it diluted the focus to exploring natural resources to attract foreign investors and made the acquisition of permits and licences a tool of exchange. For instance, some enterprises bought two hundred licences and traded them off. The former president stated that the public has been very critical of this law which is being discussed and will be put into order by the parliament. Potentially on the table is drafting a law to prohibit exploitation due to harmful repercussions, such as lack of regard for the environmental protection laws related to mining. He concluded his speech by stating that he trusts the new government and parliament to look into this issue extensively to come up with an efficient solution.

The President and CEO of Behre Dolbear Group, Mr. Karr McCurdy, discussed the Impacts Assessment Methodology of the Mining Sector on the Economy. Stating that the mining sector is one of the few sectors that actually create wealth, he noted the ripple effect the mining industry has on economic development. McCurdy thinks this is dependent on the type of mining activity and he expressed hope for the ministry to take responsible steps towards the development of the mining industry.

The President and CEO of Oyu Tolgoi LLC, Mr.Cameron McRae, emphasised the importance of the investment agreement and stated that the Oyu Tolgoi mine will benefit the Mongolian nation first and foremost.
He stated, “In 2009, the investment agreement was signed, giving investors security and stability, which gave them and their boards the confidence to invest the massive sums to develop the Oyu Tolgoi. I believe that those voices those voices who call for review of the investment agreement again, fail to realize the true benefit of this deal and the cost and risks carried by the offshore investors. At risk is a unique engine of prosperity. My final observation is that business and government work best in partnership, when each is focused on what they do best. This will lead to a brighter future for the Mongolia people. So, to sum up, when international investors make a big decision to deploy their scarce capital, cutting edge technology, management expertise and marketing cloud. They look for responsible partners. Companies like Rio Tinto, prefer to invest in countries where the host government takes the long view. Just as we do. We hope for investment returns that will not materialize for decades. And we look to cooperate with governments that look for long term. Rio Tinto, Oyu Tolgoi, our investors, management and staff and our suppliers, both international and domestic have almost delivered phase one of this unique project. And we look forward to the challenges of expansion and delivering the benefits of Oyu Tolgoi to the Mongolian people.”

The Deputy Governor of Mongol Bank, L.Zoljargal, gave a speech about how the mining industry is declining the competitiveness of the other sectors because we are too dependent on the mining sector, and stressed the importance of sustainable development for foreign investors as well as the Mongolian nation. He stated, “100 percent dependence on this very volatile sector creates inequality in the income through inflation.” He stressed that the poverty is still increasing yet the economy is developing stating “The benefits of mining development is not translating into the lives of the middle and lower classes.” L.Zoljargal commented that though the mining sector has created many jobs, it is not proportional to the revenue, meaning that the sector will not need further employment due to better technology. He concluded, “The current situation is that we have an economy that is over dependent on the mining sector, so we need to slowly shift the policy to develop the sector where the middle class can be strong and the economy is growing stable. At the end of the day that shift will benefit all of us, the Mongolian economy and foreign investors. It will provide a far more favourable long term investment environment. One thing that is sure is that if the local economy is not stable and if it is affected by certain sectors, it will be vulnerable for both parties. But if local economy is stable and translated into real terms such as strong middle class, then politics, regulations and legislations are far more stable which is a better environment for long term investment.”

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