Development Bank of Mongolia Intern

DBM begins disbursing funds

2013-05-15T17:30:00.005+08:00

As of October 30, 2012, the Development Bank of Mongolia has disbursed the funds of MNT 354.4 billion to the following projects:

· MNT 74.4 billion for 20 auto road construction and 21 design and drawing projects,

· MNT 40 billion for 6% mortgage loan to the State Bank,

· MNT 8.2 billion to SME Development Fund,

· USD 100 million to Erdenes Tavan Tolgoi LLC for railroad project,

· USD 61.3 million for expansion work of Khutul Cement and Chalk LLC, and

· USD 5.3 million for the purchase of new airplanes to MIAT LLC.

The Bank is planning to disburse MNT 672.7 billion by the end of this year.

http://www.dbm.mn/en

DBM receives Bloomberg Award for Debut Bond

2013-05-15T17:28:00.003+08:00

Development Bank of Mongolia received Bloomberg Award at the closing reception ceremony of Mongolia Economic Forum 2013 for the issuance of first sovereign bond in the international market. DBM issued US$580,000,000 bond which is due 2017 on March 14, 2012 at a comparatively low interest of 5.75%. This landmark transaction opens international bond market to Mongolian borrowers and it was the cornerstone for the successful issuance of US$ 1.5 billion Chinggis Bond on December 29, 2012.

Coking Coal in Mongolia

2013-04-09T17:12:00.000+08:00

Devon Healy

1. Introduction

Mongolia is a developing country in central/eastern Asia. It is about three times the size of France with less than three million people and over 30 million heads of livestock. Mongols are a traditional nomadic people and their economy has been centered on herding and agriculture for hundreds of years (World Bank, 2012).

Mongolia is unique in that it is in the initial stages of completely transforming its economy from agricultural based to mining based. In 2011 Mongolia was the world’s fastest growing economy with 17.2% GDP growth, namely due to of investments in enormous mining projects and increasing exports of coal to China (World Bank, 2012). Though growing very quickly, Mongolia is still a very poor country with 29.8% of its population living in poverty (World Bank, 2012). It only recently graduated to ‘lower-middle-income’ status with real per-capita income at PPP around $3674 (OBG, 2012).

I chose to focus on Mongolia because economists have identified it as an economy that is ready for launch. In 2011, economists Willem Buiter and Ebrahim Rahbari projected that Mongolia would be the world’s fastest growing economy over the next two decades due to its extraordinary untapped mineral reserves, a relatively small population, high levels of foreign investment and proximity China. (OBG, 2012). Though the future looks very promising for Mongolia, its economy is still very vulnerable to negative commodity price shocks and overheating. Mongolia is completely landlocked between two geo-political giants, Russia and China. Mongolia’s geographic isolation makes it very difficult to access foreign markets, which means its economic growth is almost completely dependent on stable commodity prices and sustained growth in China, which currently imports 91.5% of Mongolia’s exports (NSOM, 2012).

This essay will focus on one of Mongolia’s most strategically significant resources, coking coal. Coking coal is a pure type of bitumous coal and is used as a fuel and reducing agent in the smelting of iron ore in a blast furnace. Mongolia has abundant and untapped reserves of coking coal that lie conveniently along its boarder with China, which is the world’s largest and fastest-growing market for coking coal. This essay will focus on the period starting in 2005, when China first became a net importer of coking coal, and up to the present (November 2012). The essay will start with a look at potential consumers in the Asian market and the nature of demand, followed by a look at supply shortages in the global coking coal market, then a look at competition and competitive advantage in transport and ending with a critique of government policy and practice.

Term:

Metallurgical coal: (or met coal) is another term for coking coal.

Mt: million tonnes

2. Nature of Demand

Mongolia currently has no domestic steel production, so all of its coking coal is produced for export to foreign consumers, mainly in China. There are 31 countries in the world that have domestic steel production that is reliant on coking coal (WSA, 2011). China is the world’s largest steel producer, the world’s largest metallurgical coal consumer and the world’s largest met coal producer. Japan is the largest met coal importer, followed by China, South Korea and India respectively.

Potential Asian Consumers: Top Steel Producers and Metallurgical Coal Importers

	Steel production 2011 (Mt)*	% of total 2011 world steel production	Coking coal imports 2011 (Mt)^
PR China	683.3	45.8	38
Japan	107.6	7.2	54
South Korea	68.5	4.6	32
India	72.2	4.8	19

*World Steel Association (2011)

^World Coal Association, (2012)

Coking coal consumption in Asia has been mainly driven by rising production of steel in China, which is being used to build infrastructure, railways, roads, skyscrapers, factories, cars and appliances (WSA, 2012). The production of steel represents an important basis for the rapid growth and urbanization seen in China over the past decade. China’s rising demand for coking coal imports even as prices rise suggests a low responsiveness of demand to changes in the coking coal price, especially in developing economies. This price inelasticity can be explained on a macro level because developing economies tend to spend more on large-scale infrastructure projects that are steel intensive and governments tend to subsidize these infrastructure projects in order to target infrastructure bottlenecks that restrict growth, as China began doing September 2012 to avoid an economic slow down (Business Standard, 2012).

Steel is 100% recyclable, which represents a substitute for metallurgical coal. Recycling steel is extremely cost effective, which is why recycled steel represents 50% of total steel production in the United States. But these levels of recycling are harder to attain in developing economies where growth in demand outpaces the steel scrap cycle, which is why China’s recycle rate was only 8% in 2009 (China Daily, 2010). Therefore, this option for substitution is much more limited in developing economies, further emphasizing the price inelasticity of demand.

Long and short term price elasticity of demand for metallurgical coal in Asia

	Price ($/ton) adjusted to 2005 prices *	Demand represented by import demand^	Price Elasticity (yoy)
2011	96.86	147 Mt	1.46
2010	105.95	168 Mt	0.83
2009	75.65	110 Mt	-0.26
2008	71.34	128 Mt	-0.73
2007	85.71	114 Mt	-0.13
2006	48.15	127 Mt	--
2005-2011			0.15

* Y Charts, (2012)

^ World Coal Association, (2012

The income elasticity of demand for metallurgical coal is derived from the income elasticity of demand for steel, which is very high. On a micro level, individual consumers tend to spend more on steel products like cars and appliances as their incomes rise above a certain level. For instance, the income elasticity of demand for automobiles is very high at 2.98 because consumers tend to spend a disproportionately high percentage of their income on a car once they have reached a certain income level (Xin Deng, 2006).

China’s consumption of coking coal grew 158% from 2006 to 2011 rising from 210 Mt per year to 542 Mt, an average rate of 31.2% per year, and China now consumes well over 50% of the world’s coking coal (The Washington Post, 2012). China has its own domestic coking coal reserves, but these reserves only account for about 13% of the global total and are being depleted rapidly to meet growing domestic demand (CEFIP, 2012). China’s export demand for met coal was 38 Mt in 2011, down 20.8% on 2010 but up 322.2% over the past 5 years. Import demand in China is expected to remain relatively high even as the pace of economic growth slows, mainly due to the limitations of China’s domestic supply.

Other markets in Asia will buoy demand for coking coal. South Korean demand has risen over the last five years a rate of 10.5% per year, while Japan’s coking coal consumption has fallen 37.2% over the same period, a rate of -7.4% per year (WCA, 2012). The most significant new player is India, which is expected to follow China towards rapid industrialization over the next decade and is projected to become the world’s second biggest producer of steel and consumer of met coal by 2015 (Economic Times, 2012). India has substantial coal reserves but like China is a net importer of coal.

Japan, South Korea and India are currently excluded from the market for Mongolian coking coal, though all could potentially become consumers over the next five years. In 2011 and the first ten months of 2012, 99.7% of Mongolian metallurgical coal was exported to China because of the proximity to steel producers in northern and eastern China and inadequate railway infrastructure to export to other markets (NSOM, 2012).

3. Nature of Supply

Demand for coking coal is out pacing the rate of supply, which is restricted by scarcity of reserves and high transportation costs. Scarcity of supply was evident in late 2010 and early 2011 when floods in Australia’s Bowen Basin caused a shortage of supply and a dramatic spike in seaborne coking coal prices. The price of premium hard coking coal reached $378/Mt in January 2011, up from $145/Mt in the previous month. This supply breakdown led the Chinese government to categorize coking coal as a strategic resource that is now protected “through incentives to optimize production and industry consolidation” in China (Platts, 2011).

China is the largest coking coal producer in the world and produced 504 Mt in 2011, 52% of global production. The second largest producer is Australia at 146 Mt in 2011, 15.1% of global production. Australia is the world’s largest exporter of coking coal and currently is the most important supplier to Asia. The United States was the second largest exporter in 2011 (63 Mt) followed by Russia (1 Mt)

Mongolia has large reserves of high-quality coal, most of which are close to the Chinese border and largely untapped. Mongolia currently has eight operational coal mines, which are producing below full capacity because of infrastructure bottlenecks in the national and regional economy. Ovoot Tolgoi and Tavan Tolgoi (TT) are Mongolia’s largest deposits, TT being the largest untapped coking coal reserve in the world with an estimated 6.4 billion tonnes. When it comes online in 2014 it is expected to produce 20 Mt per year. Mongolia produced about 20 Mt of coking coal in 2011. The Mongolian Coal Association predicts that the country will export 50 Mt of coking coal by 2015 and 100 Mt by 2025 (MAD, 2012). These supply predictions are dependent on the development of adequate infrastructure to reduce transport bottlenecks.

Coal mining is very capital and labour intensive and usually requires infrastructure development to support export. Sources of supply usually take years to develop to full capacity, meaning that the short-term price elasticity of supply is very inelastic. Long-term elasticity of supply is much more elastic because long-term rises in price can make large scale mining projects more feasible and will attract high levels of investment. Similarly a fall in prices over time will deteriorate feasibility and deter investment. The Australian Bureau of Agricultural and Resource Economics calculated the short-term and long-term elasticities of supply for coking coal in Australia at 0.4 and 1.9 respectively in 1991 (ABARE, 1991).

Analysts see supply side issues relaxing over the end of 2012 and 2013 as Australia returns to normal levels of production, as mining in Mongolia, Russia and Mozambique ramp up and diversify the supply market and as China’s growth slows and demand stabilizes. They expect international coking coal prices to remain relatively constant at around $220/Mt over 2013 (BT Invest, 2012).

4. Competition and market power

Mongolia’s location has the potential to improve its market power but not necessarily its ability to affect international prices. Mongolia’s comparative advantage lies in its proximity to the world’s largest markets for coking coal; China, Japan, South Korea and India. But because Mongolia is landlocked and sandwiched between two political giants, its ability to access coal markets other than China is extremely limited.

Currently Mongolia is at the mercy of Chinese demand and has limited ability to maneuver. It has no rail infrastructure adequate to move large amounts of coal and currently trucks its 20 Mt of annual coal exports across the Gobi desert to Chinese border stations, where the coal is put on trains and shipped to steel producers in Inner Mongolia (a province of China). Mongolia’s rail infrastructure projects have secured financing and are currently in the planning stages, but the first rail lines are not expect to be operational until 2014. For now Mongolia is a price-taker with China, which is why China’s consumers purchased Mongolian coal at about 50% below market value in 2011 (The Gold Report, 2012).

Mongolia’s proximity to China greatly reduces transport costs for Chinese consumers. Mongolia’s greatest competitor for Asian markets is Australia, which has to ship all of its exports overseas. Seaborne transport costs usually exceed the value of the coal being delivered, which is why steel producers almost invariably favor consumption of domestic coking coal supplies above overseas ones. Mongolia enjoys a considerable transport and pricing advantage over its Australian rival when exporting coking coal to China. In the case of Australian coal being delivered to a consumer in Eastern China in November 2012, the price at the Australian port was $82.40/mt while the delivery price at the Chinese steel plant was $205.53/Mt. That equals $123.13/Mt in overseas transport costs, 149.9% of the value of coal. On the other hand, in November 2012 the average price of Mongolian coal upon delivery at the Chinese border station was $88.29/Mt, 56.4% less than the Australian price (CCR, 2012). In 2011, Mongolia overtook Australia as China’s number one supplier of coking coal. Because of Mongolia’s subordinate relationship to China, Chinese consumers reap most of the benefits from the difference in transport costs.

Lastly, Mongolia’s dependence on a handful of commodities makes for export to a single national market make the country extremely vulnerable to a drop in commodity prices or a considerable economic slowdown in China. This risk was most evident during the most recent global economic crisis, when Mongolia was hard hit by a dramatic plunge in copper prices. Government revenue, export earnings and foreign direct investment collapsed as a result and the country was only able to stay afloat thanks to a loan from the IMF (OBG, 2012).

5. Government policy

In 2005, Robert Friedland, Chairman of Ivanhoe Mines Ltd., said in a speech about Mongolia to investors, “And the nice thing about the Gobi is, there’s no railroad tracks in the way, there are no people in the way, there are no houses in the way…there’s no NGOs…You’ve got lots of room for waste dumps without disrupting populations…” (Mining Watch Canada, 2011). At the time Ivanhoe was on the verge of an agreement to develop Oyu Tolgoi, a copper and gold reserve in the Gobi desert. When the quote was translated in the Mongolian press it set off a firestorm and initiated an intense public debate about the growing mining industry.

The government responded to the public outcry by renegotiating almost all of its mining contracts and renationalizing many of the mining reserves that had been privatized. The new government policy pursued partnerships between government controlled mining firms and international firms, with the government holding a stake of just over 50%. In the case of Tavan Tolgoi, the government decided to create a new public company, Erdenes Tavan Tolgoi, which is licensed to manage the project. In 2010, the government decided to sell 30% of TT’s shares to its new subsidiary, it kept 40% stake and gave 10% to Mongolian citizens and 20% to Mongolian companies (Bloomberg, 2010). These moves are improving the image of mining amongst the population by giving people a stake in the industries development. On the other hand, investors see view the moves with skepticism and fear that the renegotiations are delaying projects, extending payback periods on investments and disrupting the Mongolia’s favorable FDI environment.

The government of Mongolia is also taking steps to address its dependence on China through its “Third Neighbor Policy.” In accordance with this policy the government has sought to create stronger ties with international partners in Japan, India, South Korea and the United States in order to promote trade cooperation and increase Mongolia’s access to foreign markets. As part of this policy Mongolia signed a cooperation agreement with India in 2012 to build the first steel plant in Mongolia and export the first shipment of Mongolian coal to India by 2014 (Business Mongolia, 2012). Mongolia also has planned railway infrastructure projects to extend railway lines from its mines in the South Gobi to connect with Russia’s trans-Siberian to Vladivostok and markets abroad, but funding for the projects has yet to be secured.

The last major concern is the Mongolian government’s budget deficit, which is particularly concerning given the near collapse in the balance of payments in 2008. The government is weighing risk between long-term Dutch Disease and short-term fluctuations in revenue. To combat Dutch disease the government is trying to expand its revenue base so that it can increase spending on infrastructure. In the process it is struggling to honour its Fiscal Responsibility Law, which will reign in spending when it goes into effect on 1 January 2013 (World Bank, 2012). Uncertainty became stronger still after the 2012 Parliamentary Elections in June which was the first time the opposition party won more seats that the Mongolian People’s Party (former communist party) since the transition from communism to democracy in 1990.

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[Accesssed on 6 December 2012]

Bloomberg, (2010), Mongolia Plans to Offer 30% of Tavan Tolgoi Company.

Business Times, Invest, (2012), Metallurgical coal – supply side issues abating: HSBC. Available from: http://www.btinvest.com.sg/markets/commodities/metallurgical-coal-supply-side-issues-abating-hsbc/

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Business Mongolia, (2012), India to set up steel plant in Mongolia. Available from: http://www.business-mongolia.com/mongolia/2012/05/15/india-to-set-up-a-steel-plant-in-mongolia/

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Business Standard, (2012), Coking coal prices to rise on China stimulus, BHP output cut. Available from: http://www.business-standard.com/india/news/coking-coal-prices-to-risechina-stimulus-bhp-output-cut/487691/

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Carnegie Endowment for International Peace, (2012), Policy Outlook: Understanding China’s Rising Coal Imports. Available at: http://www.carnegieendowment.org/files/china_coal.pdf

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China Daily, (2010), Metal recycling may make steel makers less dependent. Available from: http://www.china.org.cn/business/2010-05/05/content_19973961.htm

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Economic Times, (2012), India to become second largest steel producer soon, says Beni Prasad Verma. Available from: http://articles.economictimes.indiatimes.com/2012-09-18/news/33925898_1_india-s-steel-production-crude-steel-steel-authority

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The Washington Post, (2012), China turning to Mongolia for coking coal. Available from: http://www.washingtonpost.com/world/china-turning-to-mongolia-for-coking-coal/2011/07/16/gIQAhCHhII_graphic.html

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[Accessed on 25 November 2012]

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[Accessed on 2 December 2012]

Xin Deng, (2006), Private car ownership in China: How important is the effect of income? Available from: http://www.ecosoc.org.au/files/File/TAS/ACE07/presentations%20(pdf)/Deng.pdf

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Y Charts, (2012), Australian Coal Price. Available from: http://ycharts.com/indicators/australia_coal_price

[Accessed on 25 November 2012]

Desertification on the fringes of the Gobi.

2012-10-25T19:39:00.002+08:00

90% of Mongolia is vulnerable to desertification according to the United Nations. The delicate ecosystem that traditional herdering families rely on is being put at risk by the rapid economic development and lack of suitable infrastructure to support it. The lack of railway lines and paved roads forces large trucks to drive across the desert and grasslands, kicking up dirt that smothers plants and can lead to increased rates of desertification at the fridges of the Gobi desert. Herders are feeling the impact and say that it is becoming increasingly difficult to find suitable grazing land for their herds, something they couldn't have imagined a decade ago when good land was abundant. Development has winners and losers and these herders and their thousand year old traditions are losing out in a country where there are over ten times more heads of livestock than there are people. This issue highlights the need for responsible, equitable and sustainable development in the world's fastest growing economy.

Problems for Land-Locked Countries

2011-12-26T20:52:00.001+08:00

Mongolia is one of the 48 countries in the world that are land-locked. About one quarter of the world's 205 countries are land-locked and these countries tend to have lower human development statistics compared to the rest of the world. Being land-locked is regarded as a disadvantageous because it can severely limit a country's access to global markets and global trade. In general, coastal regions tended to be wealthier and more heavily populated than inland ones. Paul Collier in his book The Bottom Billion wrote, "If you are coastal, you serve the world; if you are landlocked, you serve your neighbors." Mongolia is no exception to these difficulties. The country has only two neighbors in China and Russia, and both countries have a very strong influence over Mongolia's economy. China for instance, controls the price of Mongolia's copper and coal exports and competitive pricing is restricted by Mongolia's limited access to international ports. China's recent growth has spilled across the border and is the main driver in Mongolia's mining driven development.

With regards to the cross-boarder transit, there are international regulations that have been established in order to protect the rights of land-locked countries' to access global markets. In 1965 there was a 'UN Convention on Transit Trade of Land-locked States,' which granted special protections to land-locked countries with regards to access to sea ports and world trade. In 1982, there was a United Nations Convention on the Laws of the Sea, which protects the freedom of transit for land-locked states. Unfortunately both conventions are subject to bilateral, sub-regional or regional agreements. In other words, the rights of transit must be agreed upon with the transit neighbor in a formal trade agreement. In practice the protections granted in the UN conventions are not always honored by the transit country. The rights of transit of land-locked developing countries (LLDCs) remains an unresolved issue in international economic policy. Mongolia held a conference for LLDCs to discuss these trade issues in 2007.

Mongolia is currently looking for ways to gain access to Korea and Japanese markets to sell its coal exports. The most direct route to these markets is through China and the port city of Tianjin, which has a free trade area. There is also the possibility of going through Russia, through Vladivostok, but it is not certain that Russia's rail network can support the quantity of coal that Mongolia is expected to export from its Tavan Tolgoi mine. Also, going through Russia will have significantly higher transit costs given the distance that needs to be traveled. Vladivostok can be reached from Mongolia by either going directly north to Russia and then circling around Manchuria, or by going Northeast and cutting through Northern Manchuria. Either way the distance that needs to be traveled by rail is significantly higher than the route through China to Tianjin.

Mongolia will need to negotiate with China or Russia to set up some kind of transit agreement. China has no incentive to grant free transit because it already enjoys control over Mongolia's coal exports. However, if Russia is approached first, it might be possible to pressure China into a more favorable agreement (Plan A). If China does not budge then plan B would be to secure a deal with Russia and accept the higher transit fees. The UN conventions will most likely help Mongolia's case at the bargaining table, but once again they hold little clout because they are not often followed and have no history of enforcement. Mongolia might also be helped by the World Trade Organization, of which Russia, China and Mongolia are members. However, it would be important to isolate Russia and China in negotiations in order to reduce the chance that they might collaborate to restrict Mongolia's export markets.

DBM is currently raising funds for a railroad project that will run directly from Tavan Tolgoi to a Chinese border station. A later phase in the National Rail Project will connect TT with to the Russian boarder station.

Mongolia's Exploration Potential

2011-12-13T18:25:00.003+08:00

Mongolia's discovered mineral wealth is greater than USD 1.5 trillion with less than 20% of the country explored. Mongolia's potential for future discoveries and its close proximity to China makes it one of the most attractive exploration frontiers in the world. The exploration market is currently red hot with many significant discoveries being made in the last month. The following are examples of some of the most recent discoveries:

The Mongolian Resource Corporation explores for gold at its Blue Eyes and Sujigtei sites in Northern Mongolia. Proactive Investors reports that the MRC discovered high-grade gold in its first nine holes drilled at the Sujigtei gold mine. This mine first opened in 1980 and had mined 180 meters before shutting down abruptly in 1991 after the Russians left the Mongolia. After reopening the mine, MRC discovered 5.6 grams of gold per ton. This winter a second underground drill rig capable of 500 meters of diamond drilling will be used, while surface contact drilling will be suspended due to weather conditions and water constraints.

Proactive investors also reports this month that Modun Resources has established a coal resource of 489 million tons at its Nuurst Project site. The quantity exceeds initial expectations and offers the potential for a large scale thermal mine. Modun is the sole owner of the Nuurst Project and now has one of the largest supplies of coal resources at the Australian-Securities-Exchange (ASX) of listed companies operating in Mongolia. The company plans to implement a scoping study and apply for a mining license as soon as possible. Its 2012 exploration program will target more coal resources, with 84 percent of its license still left unexplored. Nuurst is is a 34.5 square-kilometer license area located 120 kilometers south of Ulaanbaatar and only 6 kilometers from an existing railway line. Modun reports a significant coal seam thickness and a low stripping ratio for the project, which suggests a well positioned large scale, low cost operation.

Xanadu Mines reported a 51% increase in its JORC coal resource, bringing its total coal resource inventory to 497 million tons. They also made a discovery of over 327 million tons of sub-bituminous coal resources at their Khar Tarvaga site. They have identified three coal streams there that are well situated for supply to the domestic coal market.

Haranga Resources recently reported a high grade iron discovery, finding high grade iron mineralization in 29 of its 33 drill holes at the Bayantsogt site. They have identified five major iron lodes in the Bayantsogt hill and are now beginning metallurgical tests. Haranga has also made a new discovery near Dun Bulag, uncovering magnetite iron mineralization. Haranga is an Australian-listed company focused on developing high quality iron ore projects in Mongolia.

(information gathered from BCM Newswire 197)

Mongolia's two largest mining sites, Tavan Tolgoi and Oyu Tolgoi, are expected to make IPOs next year on the Mongolian Stock Exchange (MSE), which will be the largest offerings in MSE history. Currently Mongolian mining companies Ivanhoe, Mongolian Mining and Hannu Coal are listed on the US, Hong Kong and Australian stock exchanges respectively. Investments in these companies can offer investors access to Mongolia as it emerges on the world market.

Shuren Hydro-Electric Station

2011-12-06T16:45:00.001+08:00

Development Project

Mongolia is expected to enjoy high levels of sustained economic growth over the coming decade due to its rapidly developing mining sector. The rising demand for new sources of energy heavily outweighs current supply, creating the need for a reliable and sustainable domestic energy supply. Mongolia has a hydropower potential of 56000 GWh per year but has only harnessed one percent (75 GWh) of this potential. This obvious void has created the possibility for a high impact investment with considerable growth potential.

After the recent success of a hydroelectric pilot project, the Mongolian Government has given highest priority status to the development of a large-scale hydropower facility on Mongolia's largest river, the Selenge. The proposed project will provide solutions to a long list of socioeconomic and environmental issues by satisfying long-term peak load demand, reducing hazardous pollution levels, reducing dependence on high cost Russian energy imports and creating energy security and independence.

The ongoing development of large scale mining projects over the next decade will create enormous demand for electricity, which cannot be met by existing supply. Mongolia currently imports high cost energy from Russia to cover its peak capacity consumption, a dependence that will only increase with the growth in mining. Currently, Mongolia's energy sector consists almost exclusively of coal-fired thermal power plants, which have contributed to high levels of air pollution in the capital city of Ulaanbaatar and created a potential health risk for over 1 million people, effectively one third of Mongolia's population. Desertification due to climate change poses another considerable risk, with local warming reaching 2.0 degrees, 3 times the global average. It is therefore imperative that Mongolia develop a secure and sustainable mix of domestic energy sources to cover rising demand, reduce air pollution and carbon emissions and reduce dependence on Russia.

The Shuren Hydropower project represents a near perfect solution to Mongolia's energy needs and will be a major step towards sustainable socieconomic development. The project will reduce greenhouse gas emissions by 700,000 tons per year and generate energy that is infinitely renewable, clean and domestically supplied. In addition, the the facility will provide water storage, energy storage and flood and drought mitigation. DBM has been entrusted with the responsibility of financing the project and is currently reaching out to investors.

devonalec@gmail.com

USD 600 million Euro Medium Term Note Program

2011-12-05T09:50:00.001+08:00

Press Release

Development Bank of Mongolia has successfully issued its bonds and on good terms

The Development Bank of Mongolia has opened a new page of history in Mongolia’s banking and financial sector with its US$ 600 million Euro Medium Term Note Program, in coordination with its internationally recognized partners in ING, Deutsche Bank and HSBC.

International rating agencies, Moody’s and Standard&Poor’s have rated the Development Bank of Mongolia’s bonds similarly to the Government of Mongolia, Moody’s - (B1), S&P - (BB-).

The Development Bank of Mongolia’s bonds are the first sovereign bonds issued with the guarantee of the Government of Mongolia. Although the world capital market situation is not favorable at present, the Development Bank of Mongolia managed to issue the bonds in the best terms and at a low interest compared with countries in a similar situation.

The five-party agreement to establish this program will be signed by S. Bayartogt, Finance Minister on behalf of the Government of Mongolia as the Guarantor and Kim, Jang Jin, CEO of the Development Bank of Mongolia. At this moment the representatives of the investment banks are also signing the agreement in their respective countries.

DBM aims to provide financing for large scale projects in priority and strategically important sectors to support economic growth and the production of value-added goods. It shall provide the funds to the following priority sector projects and programs, approved by the Parliament:

· New Development medium term target program;

· State policy on Railway transport program;

· Sainshand Industrial Park; and

· Projects and Programs included in the List of auto roads and energy facilities to be built using DBM’s own funds with a condition of to be paid later.

The EMTN Program established by the Development Bank of Mongolia provides an opportunity to start financing these strategically important projects and programs and within this program the bonds worth US$ 600 billion are planned to be sold in several stages through the Singapore Stock Exchange this December and into 2012.

We are pleased to inform you that the initial takedown of US$ 20 million will be transacted shortly. The program which we have established today represents the foundation upon which DBM will expedite the construction work that is so eagerly anticipated and through which DBM will make its valuable contribution to Mongolia’s successful development.

We are cooperating with ING, Deutsche bank and HSBC, all of which are internationally reputable and experienced investment banks, to implement the Euro Medium Term Note Program.

Global investment bank ING, headquartered in the Netherlands, has been carrying out investment activities in Mongolia for the last three years. It cooperates with domestic banks, such as Khan bank and Trade and Development Bank and has profound experience and knowledge about the economy and business sector of Mongolia.

Deutsche bank, a global investment bank with a history of 141 years, provides its services in over 70 countries worldwide. In the third quarter of 2011 it was named the top bank in the Euro bond markets according to Bloomberg reports.

HSBC, with its history of 146 years, is considered a reputable and leading bank in international stock markets. It is headquartered in London and operates in 87 countries around the world. According to Bloomberg reports it is ranked closely behind Deutsche bank in the Euro bond markets.

DEVELOPMENT BANK OF MONGOLIA

Occupy Movement, Why Wall Street is Good for Mongolia

2011-11-18T11:01:00.001+08:00

What does occupy wall street stand for? Thats what everyone keeps asking. We know they are against income inequality, but how exactly do they plan on fixing it. Well sitting around in downtown NYC is certainly not solving their problems. If they want to reduce income inequality it would be helpful to get jobs and start working long hours like the people that they resent.

In essence the OWS movement is a backlash against a financial system that most US citizens are not educated about. These protesters simply do not understand the complexity of our financial system, why it is fundamentally important to our way of life and our economy and why it was necessary to bail it out. The brightest and most capable people on Wall Street help keep our country successful and help power growth and prosperity around the world.

You have to place some blame on Barack Obama's speech to Congress laying out his revision plan for the tax system. I don't blame the policy of taxing the rich, but instead his delivery. To pit successful Americans against the masses as if they were a consolidated group that intentionally outmaneuvers the tax system to hurt America was divisive and ill advised. I think Obama is wishing he could get that speech back and try it again., because he unleashed an outpouring of misinformed sentiment against a group of Americans who keep our country going. Yes I believe that income inequality is a major problem in America, but traditionally it is the government's job to solve these issues through a graduated income tax system that taxes high income individuals at a higher rate. In sum, I am trying to say that these protesters should voice their opinions to Washington. They should not seek to disrupt our financial sector by surrounding office buildings and trying to prevent people from getting to work.

So how does this have anything to do with Mongolia. Mongolia would benefit greatly from securing investments from Wall Street's top investment banks. Investments from these banks into Mongolian railway projects, road projects and renewable energy projects would dramatically improve the standard of living and the quality of life here. Projects to build a hydroelectric station and windmill farm could reduce heavy air pollution in the capital city and help eliminate a considerable health risk to over a million people. A subway project in Ulaanbaatar could dramatically reduce traffic congestion and eventually bring down inflated rent prices by allowing urban sprawl and the development of suburban commuter areas. Railway projects to build a national railway network would dramatically increase the profitability of mining projects and generate jobs for thousands of Mongolians.

My point is that Mongolia needs investment banks to fund these projects and generate sustainable growth. So the argument that Wall Street never did anything for anyone is simply wrong. Investments from Wall Street power growth all over the world, creating jobs and improving lives.

Diversification, Entrepreneurship and Wealth Creation

2011-11-17T09:06:00.001+08:00

Because of its communist past, the Mongolian government has a predisposition for large scale economic projects. This is very useful for things like mining and infrastructure, but it doesn't help small businesses and little entrepreneurs who are finding it increasingly difficult to get started because of high inflation and the high cost of borrowing.

Mongolia is currently in need of diversification in its economy. It dependence on large-scale mining and agriculture (herding) make the economy extremely vulnerable to price shocks. It is important that Mongolia diversify vertically and horizontally, meaning that they encourage new businesses across many industries and at different scales. This kind of scaled diversification can be built from the bottom up, by encouraging the development of small businesses through micro-lending and by creating and educating entrepreneurs. If a small start up business is successful, then it can be scaled.

The U.S. Agency for International Development (USAID) has already initiated this process to some extent through its recent introduction of a Business Plan Initiative, meant to enhance the role of the private sector in Mongolia, to coincide with the observance of World Quality Day. Their program attempts to inspire and support government strategies to advance policies that benefit private sector businesses by increasing competitiveness and creating a favorable financial environment for borrowing.

Here is just one idea for a successful small-scale private industry and why it would work:

Textiles: Mongolia is well positioned to have a successful textile industry, but the country currently imports almost all its non-traditional clothing. Mongolia has domestic sources of wool and cashmere and there is already small scale cashmere and wool production. A Mongolian textile industry would benefit from its close proximity to northeaster China, which is the highest producing cotton region in the world. A close supply network for wool, cotton and cashmere would make raw materials cheap and easy to access. In the ger districts surrounding Ulaanbaatar, most people do not participate in the national economy. These districts are a good supply of affordable untrained labor and they have pockets of undeveloped land suitable for small textile factories. A factory would have to be located on the perimeter of a ger district and adjacent to a developed part of the city in order to get access to the city's electricity and water infrastructure. A Mongolian clothing company could easily access the retail market through one Ulaanbaatar's department stores, most likely the State Department Store, where a great number of the city's 1 million inhabitants buy their clothing. The business strategy can be scaled to produce for a larger national or international market. (If you want more information about this business plan, leave a comment with your contact information)

European instability could bog down Mongolia

2011-11-08T12:59:00.000+08:00

These days the entire world economy depends on those lazy and incompetent European PIGS (Portugal, Italy/Ireland, Greece and Spain)... I'm just kidding, they're not all lazy...but I don't think we can count on these European "siesta" countries to tighten their boot straps and get to work rebuilding competitive economies. Fortunately for them, the hard working and disciplined Germans shackled themselves to the Eurozone in 1999, meaning the Germans will likely pick up the tab and keep the bad eggs afloat.

On the other size of Euroasia, Mongolia is feeling the aftershocks from Europe. The crisis is making it more expensive for everyone to borrow money. Mongolia is on the verge of issuing its first ever government-guaranteed bond through the newly created Development Bank of Mongolia. Unfortunately, the European crisis has created a heightened level of anxiety when it comes to sovereign debt and and the risk of default. Thus, the interest rate on the new bond will be very high until the European debt crisis is settled. So now DBM is sitting on its hands waiting for Europe to sort out its sh**.

The bond is not the only problem. Europe happens to be China's largest export market. If Europe defaults and enters a severe economic recession then China's economy will certainly shrink as well. China's economic growth is already showing signs of a slow down. Home prices are dropping and auto sales are retracting. Reports today suggest that the special administrative region of Hong Kong entered a recession in the third quarter. China is Mongolia's biggest trading partner. If China experiences an economic slow down then the high projected growth that Mongolia is expected to enjoy over the next decade will be jeopardized.

China might also take matters into its own hands. With a large stake in Europe and enormous reserves of foreign currency, China might be tempted to join in on the European bailout. And for some reason European leaders are excited by the prospect. They apparently feel no shame in showing the world that Europe's decadent societies can no longer stand on their own two feet without assistance from global superpowers. But lets not get ahead of ourselves...the bailout from China might not even come. There is political pressure on the Chinese government to make good investments and the Communist Party would risk losing legitimacy if it is seen to be making a poor financial decision by investing in Europe. China might go for a bailout if other bargaining chips are brought to the table. For instance, if China was offered more influence in the IMF, something it has sought for a while now, then it might take the bait and assist Europe. But the long term solution for the global economy still rests on Europe's lap. In order to regain confidence, Europe must reign in government spending and reform its "siesta" economies so that they can become competitive again. Then China and the rest of the world might see twenty-first century Europe as a sound investment.

Mongolian Sandwich

2011-11-08T10:54:00.000+08:00

Being a landlocked country between Russia and China is a huge disadvantage for Mongolia. Chinese and Russian influences are growing, sparking concerns among investors and the Mongolian people. The Chinese already dominate Mongolia's exports, having bought 90 percent of Mongolia's exports in the first half of 2012. According to Mine Web, Mongolia needs to expand its trade with China in order to ease its long-term dependence.

Dependence on Russia and China also poses a risk to the mining sector. Mongolian mines rely on Russian and Chinese fuel, power and transportation to operate. If a major disruption occurs in Russia or China, then Mongolian mines could shut down. Furthermore, if Mongolia wants to export to other countries like South Korea or Japan it must rely on Chinese and Russian transportation. In theory, Russia and China could coordinate their policies by limiting Mongolia's access to their railway networks in order to keep the Mongolian extraction economy under Russian and Chinese control.

Corruption is also a major issue. Chinese and Russian businesses are viewed as some of the most corrupt in the world. With their increasingly overbearing influence in Mongolia, it is not unlikely that corruption could spill across the boarder and into the Mongolian economy.

For these reasons, the Mongolian government has pursued a third neighbor policy, trying to build strong relationships with Japan, South Korea and the US. In July, the government rejected a proposal that gave the development rights of the Tavan Tolgoi coal project over to Shenhua of China, Peabody of the United States and a Russian-Mongolian consortium. The government is now trying to devise new deal that would include Japanese and South Korean partners. This move, though disruptive to the launch schedule of TT, will probably pay off in the long term by promoting economic relationships with fellow democratic market economies in the region.

Dutch Disease in Mongolia?

2011-11-04T13:59:00.000+08:00

How does a country like Mongolia convert its natural resource wealth into sustainable economic growth and prosperity? In economics, Dutch Disease refers to the decline in manufacturing that tends to occur when natural resource extraction increases. The increase in revenue from natural resources will make a nation's currency appreciate in value relative to foreign currencies, thus making it more expensive for other countries to buy the nation's exports. This makes the manufacturing sector less competitive in the global market. This phenomenon was first documented in the Netherlands after a large natural gas field was discovered there in 1959, thus the name Dutch Disease.

So how can Mongolia develop its manufacturing sector while its mining sector grows exponentially? I don't think it should be difficult to manipulate the value of Mongolia's currency because Mongolia has only a few major export markets, namely China and Russia. The Mongolian central bank could control the value of the Mongolian currency by deploying the same method that China uses to manipulate its own currency with its major trading partners.

Mongolian example: China pays a Mongolian mining company 1m RMB (Chinese currency) for some amount of coal. The mining company will go to the Bank of Mongolia and exchange the 1m RMB for however many Mongolian Tughriks. The Bank of Mongolia could then use a healthy portion of that 1m RMB to purchase Chinese bonds, essentially injecting the RMB back into the Chinese economy. This way the Bank of Mongolia will not accumulate an excess reserve of Chinese y, keeping the exchange rate between the Chinese and Mongolian currencies relatively stable. This will keep Mongolian manufacturing competitive relative to Chinese competitors. With Chinese consumption growing, Mongolian manufacturing should seek to export its finished goods to China. This would allow Mongolia to develop a modern industrial economy as opposed to a undiversified extraction economy.

Mongolia's coal and copper resources are highly desired by Chinese companies. This gives Mongolia a considerable amount of leverage when dealing with China. For this reason, I think it is not unreasonable to think that this monetary policy would be tolerated by China. Currently, Mongolian people are very weary of Chinese influence in their country. In fact, in a poll asking who is the best partner for Mongolia, Mongolians put China last behind the United States, Russia, Japan and Korea. But still, I think China remains the most promising partner for Mongolia, namely because of its proximity, its hunger for Mongolian exports and its increasing influence in World affairs. What Mongolia needs is a trade agreement with China that acknowledges Mongolia's desire to develop its own domestic manufacturing, intended for sale in China. Only then will both sides be equally served by the relationship and Mongolians can sleep soundly at night knowing that the big brother of Asia is not taking advantage of them.

Cash handouts and why they don't work

2011-11-04T09:13:00.001+08:00

The Mongolian government has acquired the nasty habit of giving universal cash handouts to its citizens in accordance with a pledge that said that the country's mineral wealth would be shared with all the Mongolian people. But the cash handouts don't help anyone, they just creates inflation. They increase the money supply without adding any real value to the economy. Yesterday I met a young Mongolian guy who recently graduated in economics from Hunter College in NYC. When I asked him if he got his cash hand-out he laughed and said, "No but it was worth 66 US dollars, so I don't care, it wouldn't have made a difference. It just made everything more expensive." We were sitting in a restaurant in Ulaanbaatar, a city where rent prices are comparable to New York City. Here prices are rising continuously while fifty percent of people continue to live in overcrowded ger districts and do not participate in the national economy.

Cash handouts pose the greatest threat to the government's pledge to honor its Fiscal Responsibility Law. Moody's Investors Service: "Election promises by the ruling coalition have compelled the government to distribute cash payments in its Human Development Fund amounting to 250,000 tughriks (about $210) per citizen this year. Such transfers may account for almost two-thirds of the projected budget deficit in 2011." With an election coming up next year, there is increased pressure on the government to honor its revenue-sharing commitment. Economists are expecting more cash handouts and for this reason they predict inflation will reach a crippling 18%. President Ts.Elbegdorj has acknowledged that the practice is harmful and must stop, but few believe he will be able to stand up to public pressure.

Instead of cash handouts, the Mongolian government should expand their foreign currency reserves to demonstrate to investors that Mongolia is a safe place to invest because it has the ability to withstand shocks to commodity prices without foreign aid (not even Europe can say that). They should also invest in transportation, health-care and education, rather that diminish the Mongolian people's purchasing power with ill-advised cash handouts.

Gold digger

2011-11-04T05:59:00.000+08:00

Found this linked to Chinee's facebook today:

"A Reply From CEO of J.P. Morgan To A Pretty Girl Seeking A Rich Husband".. !

A young 'n pretty lady posted this on a popular forum:

... ----------------------------------------------------
Title: What Should I do to Marry A Rich Guy?
----------------------------------------------------

I'm going to be honest of what I'm going to say here. I'm 25 this year. I'm very pretty, have style 'n good taste. I wish to marry a guy with $500k annual salary or above.

You might say that I'm greedy, but an annual salary of $1M is considered only as middle class in New York.

My requirement is not high. Is there anyone in this forum who has an income of $500k annual salary? Are you all married?

I wanted to ask: what should I do to marry rich persons like you?

Among those I've dated, the richest is $250k annual income,'n it seems that this is my upper limit.

If someone is going to move into high cost residential area on the west of New York City Garden(?), $250k annual income is not enough.

I'm here humbly to ask a few questions:
1) Where do most rich bachelors hang out? (Please list down the names 'n addresses of bars, restaurant, gym)
2) Which age group should I target?
3) Why most wives of the riches are only average-looking? I've met a few girls who don't have looks 'n are not interesting, but they are able to marry rich guys.
4) How do you decide who can be your wife, 'n who can only be your girlfriend? (my target now is to get married)

Ms. Pretty

A Philosophical reply from CEO of J.P. Morgan:

Dear Ms. Pretty,
I have read your post with great interest. Guess there are lots of girls out there who have similar questions like yours. Please allow me to analyse your situation as a professional investor.

My annual income is more than $500k, which meets your requirement, so I hope
everyone believes that I'm not wasting time here.

From the standpoint of a business person, it is a bad decision to marry you. The answer is very simple, so let me explain.

Put the details aside, what you're trying to do is an exchange of "beauty" 'n "money" : Person A provides beauty,'n Person B pays for it, fair 'n square.

However, there's a deadly problem here, your beauty will fade, but my money will not be gone without any good reason. The fact is, my income might increase from year to year, but you can't be prettier year after year.

Hence from the viewpoint of economics, I am an appreciation asset, 'n you are a depreciation asset. It's not just normal depreciation, but exponential depreciation. If that is your only asset, your value will be much worse 10 years later.

By the terms we use in Wall Street, every trading has a position, dating with you is also a "trading position".
If the trade value dropped we will sell it 'n it is not a good idea to keep it for long term - same goes with the marriage that you wanted. It might be cruel to say this, but in order to make a wiser decision any assets with great depreciation value will be sold or "leased".

Anyone with over $500k annual income is not a fool; we would only date you, but will not marry you. I would advice that you forget looking for any clues to marry a rich guy. 'n by the way, you could make yourself to become a rich person with $500k annual income.This has better chance than finding a rich fool.

Hope this reply helps. If you are interested in "leasing" services, do contact me.

signed,
J.P. Morgan CEO...

(Thanks Chinee)

Deposits and liability

2011-11-03T18:01:00.000+08:00

Today I came across this sentence:

"A deposit which has been pledged with (some bank) for securing a loan granted to a non-bank costumer should also be excluded from the calculation of qualifying liabilities to the extent of the outstanding balance of the loan."

When the bank calculates its liabilities it excludes the deposit in its calculation until the deposit becomes more than the outstanding balance of the loan. As long as the outstanding balance exceeds the value of the deposit then the bank is not obligated to return the deposit, so it shouldn't be considered a liability.

Action Planning

2011-11-03T16:48:00.000+08:00

Today I am brainstorming an action plan format for DBM. Action plans are important because they relate the daily activities of employees to the organizations strategic goals. The design and implementation of the action planning depends on the nature and needs of the organization. Action plans are developed from the top down. They start by defining each of the company’s strategic goals. Then they generate a plan that depicts how each strategic goal will be reached. Each strategic goal has a list of objectives. An objective is a statement of what must be achieved in order to meet a strategic goal. Sometimes action plans are developed for each major function of the organization, e.g. marketing, development, finance, etc. In this case, it is important the action plan relate to an overall, top-level action plan. Action plans can also be written at different scales, e.g. for the entire organization, a specific department or even a single employee. In each case it is important that the strategy, objectives and responsibilities of each unit relate directly to the organizations strategic goals.

A good action plan would relate each strategic goal of the organization to a list of objectives, delegation of tasks, department or departments responsible for implementing specific tasks, employees responsible within each department, a timeline for when each task will be carried out, and a list of resources required for each task. Furthermore, a general top-level action plan can be reformated for each major function, each department manager and each employee of an organization. Each employee could be given a personal action plan, the action plan of his or her department or an action plan for their department's function within the bank. This will ensure that employees activities are consistent with the organization's strategic goals.

Possible Action Plan formatting:

Strategic Goal 1 > Objective 1 > Task 1 > Timeline
Responsibility
Resources
Task 2 > Timeline
Responsibility
Resources
Objective 2 > Task 3 > Timeline
Responsibility
Resources

Strategic Goal 2 > Objective 3 > Task 4 > Timeline

Responsibility

Resources

Economic vulnerability of Mongolia

2011-11-03T11:55:00.000+08:00

Mongolia's economy is vulnerable to a considerable amount of risk. Moody's investors service writes:

"Mongolia's rating has been constrained by susceptibility to destabilizing boom-bust cycles stemming from (1) an undiversified, dual mining/agricultural economy subject to mineral price vulnerability on one front and occasional extrememely severe winters on the other, and (2) pro-cyclical monetary and fiscal policies."

Although Mongolia's mineral resource sector is growing rapidly, livestock and agriculture still comprise 20 percent of the economy and is the key driver of economic growth. The recent dzud (exceptionally severe winter) destroyed 20 percent of the countries livestock and forced thousands of rural herders to the ger districts of Ulaanbaatar where they still reside. The severe winter weather conditions will continue to pose a considerable risk to development as long as the economy remains undiversified and infrastructure remains underdeveloped. However, once the countries infrastructure is transformed to that of a modern economy then growth and diversification should come naturally.

The mining sector is vulnerable to commodity price shocks. In 2008 the price of copper collapsed and growth was severely impeded as a result. According to Moody the price shock on copper would likely have resulted in a balance of payments crisis had not the IMF provided external liquidity support. But the government has enacted a fiscal stability law that includes a balanced budget law, a cap on government debt and a Fiscal Stability Fund. Once the FSF grows to a considerable amount Mongolia will be able to withstand commodity price shocks without outside assistance. Also, if the government honors its fiscal responsibility pledge then the country's finances will be strengthened considerably. Risk will be lowered for investors, which will allow DBM to issue securities with lower interest rates, making it easier for us to fund new development projects.

Leverage and risk

2011-11-02T12:13:00.000+08:00

Someone in the office asked me about leverage in reference to the global financial crisis and how governments can induce commercial banks to lend money. So I did a little bit of research about it.

Leverage is a general financial term that refers to a variety of ways to multiply profits. For most cases this means borrowing. Leverage also means multiplying risk. So say you have enough money to buy one cow for 400,000 tugriks. Instead of buying one, you decide to borrow 3,600,000 tugriks from your bank and buy ten. Now you can make ten times more milk from your cows. At the same time, you become vulnerable to ten times more risk... if the winter is very cold, which is very possible in Mongolia, then you could lose all ten cows. You could be left with no cows, no money and you owe the bank 3,600,000 tugriks.

Now consider the financial crisis. During the boom years banks used mortgage backed securities to leverage their profits. But they undervalued risk and did not maintain enough equity capital to act as a buffer in the event of a crisis in the market. In fact, instead of keeping significant amounts of capital they bought insurance to cover the possibility of large scale defaults. When the housing crisis hit, insurance companies like AIG were not able to cover the large volume of filings from the banks. Many banks did not have enough capital to survive and either failed or needed large scale bailouts to stay afloat. Now that the crisis is over banks are choosing to grow their capital reserves instead of lend out money. They now have to factor in the possibility of a financial crisis in their spread sheets. The government has tried to induce lending using quantitative easing (this is the process of lowing interest rates in order to allow banks to barrow cheaply from the government) but banks continue to be reluctant to take advantage of the low interest rates and leverage their profits.

Day one on the job

2011-11-02T11:10:00.000+08:00

Just got to the office for my first day about two hours ago... So far its very quiet. I have been researching about Mongolia's economy, reading a lot documents about Mongolia's equity market, economic growth, political system, currency performance, IPOs (initial public offerings), FDI (foreign direct investment), M&A, (mergers and acquisitions), exports and geopolitical relations. Did you know that Mongolia has the second best performing currency in the world? Last year Mongolia's tugrik outperformed all the world's currencies for most of the year until the Australian dollar (AUD) surpassed it with only a few weeks left before year's end. When I say it was the best performing I mean that it appreciated in value relative to other currencies. That would mean that Mongolian purchasing power in the global market increases, but it became more expensive for other countries to trade with Mongolia...right?

Mongolia is also the second fastest growing economy globally and it is expected to be the fastest growing economy in 2013 with a projected growth rate of 20% when the Oyu Tolgoi copper and gold mine comes into operation. If I had a lot of money I would definitely invest in Mongolia.