Mongolia Mining Report Q3 2016 - New Market Research Report

Mongolia's mining sector growth will accelerate on the back of foreign mining investment , a robust infrastructure framework and the country's strategic close proximity to major export markets suc h as China. Projects such as Rio Tinto's Oyu Tolgoi mine will significantly increase the country's mining output over the coming years.

Latest Developments & Trends

In May 2016, Rio Tinto and its subsidiary Turquoise Hill announced the final and formal approval for the expansion of the Oyu Tolgoi copper-gold mining project, which will cost a total of USD5.3bn- 400mn more than initially expected. In December 2015, Rio Tinto announced the company's procurement of a combined USD4.4 billion from 20 lenders to fund the expansion of Oyu Tolgoi.

On May 18 2015, an agreement was reached between Turquoise Hill and Mongolia's government to go ahead with the USD5.3bn underground expansion. The end of the deadlock between the Mongolian government and Turquoise Hill Resources over the Oyu Tolgoi mine in Mongolia's South Gobi region further supports our view of rapid long-term growth in Mongolia's gold and copper output. An increasingly favourable investment climate will allow overseas miners to take advantage of the country's considerable gold and copper reserves. The Oyu Tolgoi mine will be the sector's key growth driver and account for around one-third of Mongolia's economy once the mine reaches full production capacity in 2021.

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Despite calls for greater resource nationalism over the past quarters, we believe the Mongolian government will tone down its anti-foreign investment stance against miners. The government's policy priorities will shift away from the populist tones outlined during the 2013 election campaign, back to a more market-friendly platform. However, anti-foreign investor sentiment amongst the public remains a major issue, and is the key reason why the government took a more pronounced hard-line stance towards key foreign investors in the country, notably global mining major Rio Tinto. The split in the super coalition is a signal that political will power to push through deals is waning. We are not optimistic on the prospects for progress on the Tavan Tolgoi projects as the government is unlikely to want to tackle the issue with an election around the corner.

The Mongolia Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Mongolia Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Mongolia.

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