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Mongolia Mining Report Q3 2010 - New Market Report Published
One of the most important developments in recent months for the mining industry was a moratorium on the issuance of new licences which could limit foreign direct investment inflows this year.
One of the most important developments in recent months for the mining industry was a moratorium on the issuance of new licences which could limit foreign direct investment inflows this year. As a result, we forecast a 9.64percents contraction in the country"s mining industry in 2010. This will take the sector"s value down to MNT3,276bn (USdollar2.4bn) in 2010 and will end an eight-year run of volatile, double-digit growth as investor sentiment towards the country is damaged in the short-term. We hold to its core view that 2010 could be tough for Mongolia, as it also seeks to deal with the fiscal and social impact of a particularly harsh winter. That said, we still forecast the economy to grow 9.0percents this year and believe that our medium-term bullish outlook remains in play.
For example, the developments related to the Oyu Tolgoi the largest undeveloped gold and copper mine in the world, will significantly boost the growth of the mining sector throughout the following years. Canada"s Ivanhoe Mines, which is co-developing the deposit with Anglo-Australian firm Rio Tinto, revealed radically higher copper and gold estimates for Oyu Tolgoi shortly after the agreement became legally binding in March 2010. On the back the development of deposits such as Oyu Tolgoi, we expect the mining industry to resume growth beyond 2010 with the sector strengthening by 5.8percents in 2011 to MNT3,744bn (USdollar3bn). The growth of Mongolia"s mining sector in the long-term will of course partly depend on the rate of its infrastructure development. The country will require between USdollar31bn and USdollar41bn for the purpose, according to Trade and Development Bank of Mongolia president Randolph Koppa.
In general, we believe that Mongolia"s growth story remains firmly on track. Indeed, the freeze on mineral licenses is unlikely to affect existing permits, meaning that the development of key deposits by international heavyweights, such as Ivanhoe, are unlikely to be impacted substantially. Although the mineral license freeze highlights political risks, we believe that Mongolia"s relatively favourable political and business environment by regional standards will keep investors interested. We see growth accelerating to 9.32percents and 13.7percents in 2012 and 2013 respectively. At the end of our forecast period in 2014, the sector will grow by 15.49percents to MNT6,472bn (USdollar6.27bn). We expect the mining industry to make up some 50percents of Mongolia"s GDP over the forecast period.
Mongolia Mining Report Q3 2010: http://www.companiesandmarkets.com/r.ashx?id=COK3O825J317525andprk=f84e6eeb2e69aa440035d99addd9efe9
For example, the developments related to the Oyu Tolgoi the largest undeveloped gold and copper mine in the world, will significantly boost the growth of the mining sector throughout the following years. Canada"s Ivanhoe Mines, which is co-developing the deposit with Anglo-Australian firm Rio Tinto, revealed radically higher copper and gold estimates for Oyu Tolgoi shortly after the agreement became legally binding in March 2010. On the back the development of deposits such as Oyu Tolgoi, we expect the mining industry to resume growth beyond 2010 with the sector strengthening by 5.8percents in 2011 to MNT3,744bn (USdollar3bn). The growth of Mongolia"s mining sector in the long-term will of course partly depend on the rate of its infrastructure development. The country will require between USdollar31bn and USdollar41bn for the purpose, according to Trade and Development Bank of Mongolia president Randolph Koppa.
In general, we believe that Mongolia"s growth story remains firmly on track. Indeed, the freeze on mineral licenses is unlikely to affect existing permits, meaning that the development of key deposits by international heavyweights, such as Ivanhoe, are unlikely to be impacted substantially. Although the mineral license freeze highlights political risks, we believe that Mongolia"s relatively favourable political and business environment by regional standards will keep investors interested. We see growth accelerating to 9.32percents and 13.7percents in 2012 and 2013 respectively. At the end of our forecast period in 2014, the sector will grow by 15.49percents to MNT6,472bn (USdollar6.27bn). We expect the mining industry to make up some 50percents of Mongolia"s GDP over the forecast period.
Mongolia Mining Report Q3 2010: http://www.companiesandmarkets.com/r.ashx?id=COK3O825J317525andprk=f84e6eeb2e69aa440035d99addd9efe9
