““I’d strongly recommend that I’d strongly recommend that really adventurous investors really adventurous investors

keep a beady eye on Mongolia keep a beady eye on Mongolia this year.”this year.”

David Stevenson, FT, February 2011David Stevenson, FT, February 2011

MONGOLIAMONGOLIA

Mongolia

MongoliaMongolia

OverviewOverview

• 5th Largest country in Asia• 6 times land area of UK• Population 2.9 m, 1 m in Ulaanbaatar

HistoryHistory

• Mongolia established 8oo yrs ago – Genghis Khan

• 1921-1990: Communist state

• 1992-present: Democracy. 1st Multi-party elections

Economic GrowthEconomic Growth

• Mongolia is on the verge of extraordinary economic growth that will make it the richest country per person in Asia by the end of the decade.

GDP forecast to grow 10x to GDP forecast to grow 10x to $60 billion by 2025$60 billion by 2025

GrowthGrowth

Stock ExchangeStock Exchange

• 2006. MSE was the smallest exchange by market capitalisation

• 2008-2010. Market capitalisation doubled

• 2010 Impressive year – best performing equity market globally. Increased by 138%

• Still retains the title this year (March 2010)

Stock ExchangeStock Exchange

Official Currency – TugrikOfficial Currency – Tugrik

• Worlds best performing currency in 2010 after the Australian dollar

3 Major Sectors of the 3 Major Sectors of the Mongolian EconomyMongolian Economy

MiningMining

Agro IndustryAgro Industry

TourismTourism

Mining RegionsMining Regions

MiningMining• Mongolia is a ‘MAJOR’ mining frontier• Mineral assets and reserves estimated at

$1.3 trillion• Exports include:

– Coal– Copper– Gold– Potash– Iron ore– Uranium– Rare earths

Tavan TolgoiTavan Tolgoi

• One of the worlds largest untapped reserves of Coking Coal

• Estimated at 6.5 billion tonnes

• 2nd largest coalfield in the world

• State company

CoalCoal

Oyu Tolgoi Copper/Gold MineOyu Tolgoi Copper/Gold Mine

http://www.youtube.com/watch?v=zFCFRMjt5Xg&feature=youtu.be

5-minute video – leads to further Mongolia mining videos

Petro MatadPetro Matad

Forecast OutputForecast Output

Rare Earth Elements – Rare Earth Elements – Not so Rare in MongoliaNot so Rare in Mongolia

• Japanese and Mongolian Governments plan to jointly explore Mongolia’s large deposits of REEs

• Mongolia has 16.7% of world total Scandium

Infrastructure DevelopmentInfrastructure Development

• Less than 4% of roads are paved

• Sovereign Bonds to be issued by autumn to develop roads/railway

• Population density makes road development expensive

Agro IndustryAgro Industry

• Mainly a Livestock raising country with extensive grassland.

• Very little scope for vegetable food production

• Mongolia has 40 million livestock, comprising sheep, goats, horses, cattle and camels.

Mongolia produces a third Mongolia produces a third of the world’s Cashmereof the world’s Cashmere

CashmereCashmere

• Worlds finest cashmere comes from Mongolia

• The higher the altitude the finer the raw material

• Each goat produces an average of 141 grams of wool

TourismTourism• Tourism accounted for 18% of GDP in 2006

• Hot Springs and Spa developments

• Approximately 500 Expatriates live in Mongolia

• Within a decade, this is expected to increase to over 5000

• International brands are now opening up operations in Ulaanbaatar

ConclusionConclusion

• Long term economic prospects are bright• Near term clouded by spending pressure• Vulnerable to global commodity prices• Gross debt currently 43% of GDP –

expected to fall to 20% by 2015• Severe winter (“zud”) of 2010/11 killed a

large number of livestock

AcknowledgementsAcknowledgements

• Some of the information in this presentation is borrowed from Eurasia Capital LLC (www.eurasiac.com)

• You are recommended to visit their web site to update and pursue your research

Susan Burton, Oxford SIGnet Group