Mongolian Mining Gets a Boost

Source:

"Mongolia has great potential for growth in mining output across all metals."

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Mongolia's mining sector output will grow to US$11.5B by 2015, marking a fourfold increase from 2010 levels of US$2.6B. Most of this rapid growth will occur in 2012 and 2013 as the Oyu Tolgoi mine comes online.

An annual average growth rate of 31.4% to 791 Koz. per year and 46.2% growth in copper production to 720K tons per year is expected between 2011 and 2015.

The annual production figures have yet to be released, but the mine is believed to contain 6B tons of reserves, making it one of the world's largest untapped coal deposits. Aside from these developments, Mongolia has great potential for further growth in mining output across all metals as very little of the country has been mapped. Therefore, it is likely that significant deposits of minerals are yet to be discovered.

Mongolia has made significant progress over the last decade to improve its business environment. Most importantly, the government recently rescinded the 68% windfall tax, which had been a great impediment to foreign investment into the country. The repeal of the tax led to a wave of investment including the completion of the Oyu Tolgoi agreement, which will bring billions of dollars of investment into the country.

Mongolia's mining sector will become more fragmented going forward with numerous companies tempted by the country's mineral potential.

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