As being one of the few sources to provide Mongolian business related news to international audiences in English we strive to be independent and unbiased.
We understand that news can affect analyses of analysts around the world, public opinions, thus, result a correlated effect on the capital markets. However, at Business-Mongolia.com, our integrity and our duties to our readers come first. Therefore, we will keep publishing our unbiased and independent news from the closest sources of an event or a case.
Despite our effort, some international news agencies are giving wrong signals about the country’s mining and investment sector. We regret that some of the companies in the country also pouring oil on the fire.
There was never an official statement or government stance to nationalize or expropriate the foreign or domestic owned mines and properties. Mongolia is an example democracy, and a developing nation with a free market. It needs all the help it could get to become a well governed and prosperous state being sandwiched between two giant powers.
It is embedded in the Constitution of Mongolia that all the reserve and resources /underground wealth/ belong to the people of the country. License is merely a tool or a permission to develop and extract these if the government believes it is economically profitable to the country. Economic profitability is the base of all the investment and commercial transactions. International investors and know it, we understand it.
The Strategic Investment Law is under review after receiving enormous amount of scrutiny and criticism from both international and local investors and business people. The message from the government is clear – we want to support SMEs, and limit foreign state-owned enterprises to dominate Mongolian market. It is an strategic decision, and it should not be underestimated or misunderstood.
The BBC, as one of the most global news agencies in the world reports on many issues and events of the country. The last news titled “Dividing up Mongolia’s mining riches from Oyu Tolgoi” mentioned the comment regarding resource nationalism by Cameron Mcrae, CEO of Oyu Tolgoi LLC. Then it asks the opinion of Gee, a Mongolian rapper. Gee, probably one of the most patriotic rappers in the country had an easy answer “We will not gain” – referring to the ordinary citizens of the country.
The international media ignores the fact that 34% of Oyu Tolgoi which belongs to the Mongolian shareholder – Erdenes Oyu Tolgoi LLC, a state-owned company does not come as a free-carry. Yet accepted that, the cost overruns, lack of proper explanation, and 4 time-champion Feasibility study that has been delayed for another year is what puts pressure on the Mongolian government from the people. It seems like a debt-trap, after it involves international financial and development institutions and commercial banks to get 4 billion USD to spread the risk on phase-II development
Oyu Tolgoi LLC that sometimes referred as a copper unit of Rio Tinto PLC by international media has been consequently failing to win the hearts of the general public. Then, it blames it on the government for spreading wrong message about the company and demands for an apology letter on the Oyu Tolgoi LLC shareholders meeting last month from the government ministers.
The 2013 Technical Report released this week was a proof that there had been hidden costs after it stated a 5.1 billion for second phase of the mine’s development excluding the power plant and concentrate expansion. Some analysts from international companies had released similar opinions.
Mongolia needs foreign investment to prosper in partnership. Also, it needs international agencies and institutions such as World Bank to strengthen their knowledge on governing and managing its’ forthcoming wealth. Both of the parties have to work hard to resolve the outstanding issues and get on with the business.