Review and outlook of Mongolias

investment environment
Bilguun Ankhbayar
MIBG SC

Current state

The cause for drop in FDI

2010 budget
announced
at $758
million
OT IA
signed
68% windfall
profit tax
canceled

$1.5 billion
was secured
from EBRD
and IFC

2011 budget
approved at
$2.1 billion

SEFIL passed

Rio
increases
stake to
48.5%

GOM says
Phase-2
funding will
need
approval

MRAM revokes
SouthGobi
licenses in
relation to Chalco
bid
GOM wants to
renegotiate OT IA

Parliament
reviews OT
IA draft
20 parliament
members petition
to change the OT
IA 34%-50%

Chalco bid
terminated

Parliament
election

OT begins
production

Cancellation
of SEFIL

Amended
Mineral Law

Domestic factors for the drop in FDI

Actions
1.

Moratorium banning the issuance of new

exploration licenses -2010

2.

20 parliamentarians petition on OT IA -2011

3.

Revocation of SouthGobi Resources license

-2012

4.

Passing of SEFIL -2012

5.

Draft Minerals Law -2012

6.

Governments request to renegotiate OT IA

-2012

7.

Delay in OT phase-2 funding-2013-2014

Cause
1.

Democratic nature: Arthur Schlesingers

cyclical theory

2.

Traditional and nomadic lifestyle

3.

Past experience under communist regime

Is Mongolia the only country slowing down?

Source: World Bank

External factors- Weak commodities price

Source: Index Mundi

External factors- Investors sentiment

Domestic outlook- Political barometer

Improve

Remain same
Worsen

What shareholding structure should be used to develop Strategic Mineral Deposits?

Source: Sant Maral Foundation

Domestic outlook- Political barometer

Where should mineral wealth be invested by the Government?

Source: Sant Maral Foundation

External outlook

Source: World Bank

Domestic outlook and expectations

Current investment environment

New Investment Law

Investment Fund Law
Securities Market Law
Mineral Law
Petroleum Law

POSITIVE LEGAL
ENVIRONMENT

Uncertainties

Oyu Tolgoi Phase-2 funding

Tax dispute involving Oyu Tolgoi LLC
Railway policy
Erdenes Tavan Tolgoi IPO

MIBGs expectations

Environment is ready
Catalyst event needed!

Smart Government initiative

Mineral policy
Accessible Mineral Licenses
Reduction in corruption
Improvement in infrastructure

STABILITY

Economic slowdown to continue

Public more friendly towards FDI but

future volatility is certain

Government policy to support private

sector

Mineral discoveries will take place

(Erdene Resource, Xanadu Mines)

Thank you for your attention

Any questions or comments regarding this document and the specifics of the transaction should be directed to
Bilguun Ankhbayar using the provided contact information below.

Please visit us at:

Please forward any questions or comments to:

www.mibg.mn

Bilguun Ankhbayar
Chief Executive Office
Office: +976 1136 2620
Email: bilguun@mibg.mn

Important Disclosures
The opinions and/or views expressed in this information package do not necessarily represent the official
position of MIBG (Mongolian Investment Banking Group) LLC. The products, projects, or private entities
discussed in this document are presented for informational purposes only and do not constitute an offer,
solicitation of an offer to purchase, hold, sell, invest or make any other financial decision. In making
decisions, investors may rely on their own examinations of the parties and risks involved.
The information contained in this report has been obtained from sources that are believed to be accurate
and reliable but are not guaranteed by us and may be incomplete and subject to change without advance
notice.
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