R.Bold: Some tell us that if you can’t work with the single biggest investor in the country what can we do.
The board’s non-responsiveness is a sign of refusal, but this is a very rare case.
We interviewed the Mongolian Ambassador Extraordinary and Plenipotentiary to Australia Mr. R. Bold.
What are the main relations and sectors developing between the two countries? What is your opinion on how the trend will change in the future, and likely to deepen?
During our Prime Minister’s official visit to Australia back in 2011, two countries agreed to cooperate mainly in education, science, mining, agriculture, and tourism sectors. The peacekeeping operations will be added on these. If the geographical distance didn’t exist, it is a rare bilateral relation between countries that could be very successful and mutually beneficial. Thus, the future looks as a sunny day.
Do the two countries have similarities?
We could name a number of commonalities in forms. Australia is surrounded by ocean, whereas Mongolia is surrounded by land, Australia is a country of agriculture and livestock husbandry, thus, there are some similarities in the mentality, and also, Australia has a beautiful wild nature and so on. Also, there seem to be some similar behaviors in political and ordinary Australians life.
Australia is an industrialized country. In Mongolia we talk about Australian model. What are the main lessons and experience of Australia in mining sector for Mongolia?
It is a good thing that people in Mongolia talk about Australian model. Mining and extractive sector accounts for 10 percent of Australia’s GDP, the trend is also likely to remain the same with a rapid development in the sector until 2020. Mining projects in Australia is operated by private companies, whereas the government is only a benefactor of the taxes, and responsible for stable legal environment to promote more jobs. The approach how Australians solved the infrastructure in this vast country is a good lesson for us. For a country that has a small population, the utilization of modern technology is important. If we are keen to follow other’s examples, there are already proven standards and methods on training and specialization in mining sector.
How would you describe the Australian mining policy?
Australia has a federal governance system. The country has six states, and each state has a power to decide on its own on many matters, such as issuing a mining license. Mining sector accounts for majority of the jobs in the country. Taxes from mining sector is being spent on mega-infrastructures, people’s health, education, pension, and welfares. The policy can be described as mining projects strive to be environmentally friendly, relies on technology, and takes into account that the mining boom is temporary. However, the sector has taken its course, clear and understood, and recognized by everyone. The main point is that its economical power is sufficient enough to transfer itself from mining sector dependency.
Coal market will not be exhausted soon
Australia doesn’t support the processing of raw materials. It prefers to export its vast coal resources unprocessed due to environmental reasons. What is your opinion on this?
Coal fired power sources account for 75 percent of its electricity demand. Thus, the government created a carbon tax from 2012 to minimize the effect on climate change. Therefore, the miners are forced to export raw coal. The coal to liquids industry is developing very slowly. However, the government supports the renewable energy industry. The goal is to account the renewable energy supply 20 percent in 2020, and 40 percent on 2035 from wind, solar, and other renewable sources. Australia is a member of non-nuclear zone of the south. It is the leading country that has uranium deposits. However, it will not build nuclear power plants, and exports only yellowcakes. I think it is a suitable policy for us to follow as we are keen to talk about uranium.
What is Australians approach on the new competitor on coal market, particularly on Chinese supply?
Indeed, a competition is a basis of success. However, I do not agree that Mongolia and Australia are competitors. On top of that, looking at us nobody will consider us as a competition. Australia exported 170+ million tons of coal. 60 percent of this export is for two main established markets, particular Japan and South Korea. The remaining 20 percent went to China. It’s 16 percent of the China’s overall coal imports. Australia and Mongolia accounts for only one fourth of the China’s coal imports. Thus, maybe there is a perception that the two countries will compete for China’s coal market. China is expected to grow further, and the electricity production will increase, it is not permanent, but there will be a midterm stable growth. In other words, the market will not be exhausted soon. Thus, the two countries can work collaboratively on Chinese coal market by coordinating its operations.
Do you agree on that Australian experience on managing foreign investment is needed for Mongolia? Also, it is interesting to hear about the Foreign Investment Review Board, and their decision making process.
Australia’s engine of development is foreign investment. The foreign investment reached over 500 billion USD in 2011. The 32 percent of this was invested in mining. The Foreign Investment Review Board is operated under the Finance Minister. The board is composed of only 5 members, and the members are not directors and chiefs like in our country. If the state-owned enterprises are buying real estate, land or certain part of Australian companies, an approval is needed from this board. The second economic driver is agriculture, thus the land purchase is always under control. Foreigners can own a land, but a permit is required. If the privately owned enterprises are investing an excess amount of 244 million AUD, an approval is also needed from the board. We are told that the Board responds to over four thousand requests. The board is responsible to respond in 30 days after the request. Non-responsiveness is a sign of refusal, but it is a very rare case.
Half of 200 companies are Oyu Tolgoi suppliers
There are many Australian exploration companies in Mongolia that owns a license. By the effect of law that limits foreign investment, many of them are leaving the country. Do you have intelligible information on that? How the Australian investors evaluate us? Are there any change of evaluation due to the recent drafts on Foreign Investment and Minerals Law?
There are over 200 hundred small and mid-size companies doing business in Mongolia directly and indirectly. I think half of them are Oyu Tolgoi suppliers. 45 Australian companies have representatives in our country. It means they have established operation in the country which is a very promising result. It is promising in terms of third neighbor policy perspective.
After approving the “Law on Regulation of Foreign Investment in Business Entities Operating in Sectors of Strategic Importance” Australian government officially expressed their discontent in 2012 and again in 2013. Generally it can be viewed that the foreign investment activity is trailed out. Some tell us that if you can’t work with the only biggest investor what can we do. Some expresses their opinion by saying what have we done. It is hard to hear such things from the investors. Mongolia is not well known in Australia. There isn’t much information on Mongolia. It is our big mistake to think that we have vast resources and world knows us. Thus, we are concentrating on promoting to introduce ourselves. It is hard to explain the mentality differences between the foreign investors and ourselves, thus, our democracy, market economy, free competition, and APEC membership goals do seem as an empty slogan.
There is a planned meeting between the Australian Minister of Resources and Energy and Mongolian Mining Minister. Can the meeting be seen as it is seeking to solve the dispute between Rio Tinto and the government of Mongolia in a friendly manner?
Former Australian Minister of Resources and Energy Mr. Ferguson had planned two trips to Mongolia which both were unsuccessful. One was delayed because of MIAT, and the other was from the Australian side. Australian Minister of Resources and Energy is also responsible for tourism. It is not very pleasant to hear that we came to Incheon Airport and waited for the Mongolian plane for hours, then it didn’t come, so we decided to fly back. Australian Minister of Resources and Energy Mr. G. Grey will met our Minister Mr. D. Gankhuyag in Sydney. Also, the two cooperation working group of two ministries’ will meet for the second time.
Window: After approving the “Law on Regulation of Foreign Investment in Business Entities Operating in Sectors of Strategic Importance” Australian government officially expressed their discontent in 2012 and again in 2013.
Window: It is not very pleasant to hear: we came to Incheon Airport and waited for the Mongolian plane for hours, then it didn’t come, so we decided to fly back.
Window: Some tell us that if you can’t work with the only biggest investor what can we do. Some expresses their opinion by saying what “have we done”. It is hard to hear such things from the investors.
Source: Mining Journal Mongolia