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Mongolia on track to grow 20% this year

|Includes: RIO, Turquoise Hill Resources Ltd. (TRQ)

From Businessweek:

Mongolia delayed plans to sell its first U.S. dollar-denominated bonds until 2012 as surging coal exports puts the economy on target to grow 20 percent this year.


Mongolia, the world’s most sparsely populated nation, has set its sights on becoming Asia’s biggest commodity supplier, offering coal, copper, iron and uranium to fuel the industrial growth of China, as well as manufacturers in Japan and South Korea. Rising exports of coal and other products means the economy may grow 20 percent this year, according to Otgonbat Sedbazar, an adviser to the nation’s Resource Ministry.


Nineteen new mines began operating in the country in 2011, the most starts for at least three years, Otgonbat told a Mongolia investment forum in Hong Kong yesterday. India, Japan and Germany have expressed interest this year in helping Mongolia start mining rare-earth metals, he said.



Gross domestic product per capita may climb to $5,000 by the end of next year, from about $3,000 now, Yadmaa Ariunbold, the country’s consul-general in Hong Kong, said at the conference yesterday. Unemployment has dropped to 8.7 percent, he said without giving a comparative figure.

With new laws in the works to allow Mongolian companies listed abroad also to trade shares in Ulan Bator and the state’s plans to privatize more of its assets, the country’s stock market value could jump to $45 billion within five years from $2 billion today, Mongolia Stock Exchange Chairman Bold Baatar said at the forum.

This is the kind of news that demonstrates why I have been so excited about investing in Mongolia. Yes inflation is becoming a problem, mostly because the government insists on making cash disbursements to citizens. However the central bank raised rates again yesterday by 50 basis points. Nevertheless I expect that over time if you invest US dollars in Mongolia tugrik based investments you will benefit from a stronger tugrik and a weaker dollar. The other exciting point is that when I traveled to Mongolia earlier this year I talked with some mining people and one of things that they kept reiterating to me is that the country still has not even had the surface scratched with respect to modern mineral exploration. This story has a lot of running room in front of it.