Mongolia seeks help sharing wealth of its mining boom

Feb 21 • Government, Mining • 688 Views • 1 Comment on Mongolia seeks help sharing wealth of its mining boom

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THE Mongolian Prime Minister wants Australia to be a ”third neighbour” that can help develop his country’s massive resource deposits and balance its strategic and economic vulnerability to China.

The China-driven resources boom is hoisting Mongolia’s traditionally nomadic people from subsistence living towards what some say could be a material standard of living equivalent to oil-rich Arab states.

While many nations have revealed anxieties about China’s political and economic power, few are as close and economically dependent as Mongolia and none has taken such drastic steps to hedge their interests.

Last year the parliament of the fledgling democracy legislated to approve construction of a Russian-gauge railway line that will haul coal nearly 7000 kilometres to Russia’s Pacific coast, rather than a wider Chinese-gauge line less than 200 kilometres to the Chinese border.

Mongolian sources said the announcement had led China’s Minister for Railways, Liu Zhijun, to unofficially threaten to cut off all infrastructure co-operation, before Mr Liu was detained for corruption a week ago.

Mongolia’s Prime Minister, Sukhbaataryn Batbold, formerly a successful businessman, will make new overtures to the Prime Minister, Julia Gillard, and Australian corporate leaders today. ”We have a concept of a ‘third neighbour’ and we’d like to see a balance,” he told the Herald in an interview in Ulan Bator.

”We regard China as an important partner but equally importantly we’d like to have other countries represented in Mongolia in a more expansive way.”

Several senior Mongolian officials told the Herald of the public pressure they face to resist Chinese influence. ”When you are a small country and they are a giant, even when they try to stroke you it can hurt,” said one.

The International Monetary Fund expects Mongolia’s economy to grow 10 per cent this year. Its main sharemarket index has more than doubled in the past six weeks. But corruption is a challenge and democratic and free market institutions have had only two decades to develop after its former patron, the Soviet Union, collapsed.

Mongolia’s young and internationally educated leaders say they are in a race to consolidate democracy, redistribute wealth and nurture other sectors of the economy before billions of dollars in resource revenue begin to flow. ”Now it’s time to raise the sophistication of the institutions of democracy and civil society and basic economic institutions,” Mr Batbold said.

Today he will visit the Australian Stock Exchange which, he says, should play a larger role in raising capital for junior Mongolian companies. He wants to adapt Australia’s experience in privatising Telstra to issue resource company shares to every citizen. He would also like to see Australia establish an embassy in Mongolia, extend co-operation on agriculture and deepen a scholarship program that has educated several ”Mozzies” – Mongolian alumni from Australian universities – who have gone on to leadership roles.

Companies that stand to benefit include Rio Tinto, Leightons and possibly Fortescue, whose embattled chief executive Andrew Forrest is scheduled to meet Mr Batbold in Sydney today.

Source: Sydney Morning Herald

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