Taking advantage of its minerals, Mongolia is trying to have new allies. The Minister of Foreign Affairs noted that it is aiming to conclude investment contracts with Canadian and Australian companies in this regard. In spite of maintaining regular relations with its two giant neighbors including Russia and China, Ulaanbaatar seeks opportunities to strengthen cooperation with Japan, USA, South Korea and Australia which are in desperate need of minerals. Efforts are being made to create opportunities for investing in mining sector.
S.Oyun, Minister of Foreign Affairs underlined, “It is important for us to maintain trade and economic relations with two neighbors; however we need to attract so-called third neighbor investment. We don’t specify any country, but we prefer amiable relations with these countries, considering them our partners.” In order to realize this policy, it is essential to finalize investment agreements with Australian Rio Tinto and Canadian Ivanhoe Mines on using Oyutolgoi copper deposit in the Great Gobi of Mongolia.
S.Oyun mentioned in her interview to Reuters, “We believe the issue will be solved mutually beneficially”. These two companies planned USD 3 billion for mining activities in copper deposit, Oyutolgoi. They think that such investment might grow Mongolia’s GDP by 34 percent.
A task group, appointed by the Parliament of Mongolia started to discuss the draft of agreement on April 2007 but the Government of Mongolia withdrew the draft on December of the same year. S.Oyun, Minister of Foreign Affairs said, “It is not clear whether the Government is amending the provision that Mongolian side should take 34 percent of the deposit.”
According to S.Oyun, Mongolia is in desperate need of such projects and one of the key foreign policy issues of the country would be Government decision on mining sector. With previous experience in mining, S.Oyun noted that it would not be easy to make a decision because Mongolia grasped a world-scale project for the first time. “It is time for choice. If this project is carried out, a lot of job opportunities would be created along with great deal of income”, says the Minister.
Mongolia, with population of only 2.6 million has become one of the key mining players, though it hasn’t used major deposits yet. With reference to increasing price of gold and copper in the world market, Mongolia legislated the Law on Windfall Tax. Reuters informed that previously legislation of the country created a favorable environment for foreign investors to attract them to the mining sector.