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22 nd September 2010 The Nautilus Institute

The Mongolian Minerals Sector, Future Plan Regionial Cooperation BAYARBAT Sangajav , Deputy Director, Finance and Investment Department Head of International Cooperation Division Ministry for Mineral Resources and Energy. 22 nd September 2010 The Nautilus Institute. Content.

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22 nd September 2010 The Nautilus Institute

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  1. The Mongolian Minerals Sector, Future PlanRegionial CooperationBAYARBAT Sangajav, Deputy Director, Finance and Investment DepartmentHead of International Cooperation DivisionMinistry for Mineral Resources and Energy 22nd September 2010 The Nautilus Institute

  2. Content Ministry of Mineral Resources and Energy, Mongolia

  3. OVERVIEW OF THE ECONOMY • KEY NOTES • Nominal GDP down in 2008 due to fall in commodities price • Copper and gold price near record high in 2010, GPD expected to go up • Estimated GDP growth in 2010 is 7.5% • according to Med-term socio-economic guideline Ministry of Mineral Resources and Energy, Mongolia

  4. ECONOMIC PROJECTION • KEY NOTES • IN MEDIUM TERM, 2010-03: • Utilization of so-called “Strategic mining deposits” will fuel Mongolia economic growth • Inflation will be stable around 8.0% per year • Increased output of mining products will boost export and international reserves • Jobs created in the mining sector will reduce overall unemployment level Source: Bank of Mongolia, National Statistical Office, Ministry of Finance, IMF and World Bank staff estimates Ministry of Mineral Resources and Energy, Mongolia

  5. SOVEREIGN RATING Source: Bank of Mongolia, National Statistical Office, Ministry of Finance, IMF and World Bank staff estimates Ministry of Mineral Resources and Energy, Mongolia

  6. DOING BUSINESS 2010 Note:Doing Business 2009 rankings have been recalculated to reflect changes to the methodology and the addition of two new countries. Source: International Finance Corporation and World Bank, Ministry of Mineral Resources and Energy, Mongolia

  7. MINING PRODUCTION Ministry of Mineral Resources and Energy, Mongolia

  8. GEOLOGICAL OVERVIEW Area of Exploration License (3659), Mining License (1085) 38,5 mln.he 24,6% State Special Protected and Special Purpose area 69,6 mln.he 44,5% Area for tender bid on license granting 35,9 mln.he 23,0% Area of open for license grant 12,4 mln.he 7,9% Ministry of Mineral Resources and Energy, Mongolia

  9. FDI IN THE MINING SECTOR Mineral Sector Products bln. tugrigs Investment mln. USD Investment Amount of Industrial Production Source: Mineral Resources Authority of Mongolia and National Statistical Office Ministry of Mineral Resources and Energy, Mongolia

  10. MINERALS SECTOR IN THE ECONOMY Gross Domestic Product Total Industrial Production Export Source: Mineral Resources Authority of Mongolia and National Statistical Office Ministry of Mineral Resources and Energy, Mongolia

  11. MINERALS TAXATION REGIME Source: Mineral Resources Authority of Mongolia and National Statistical Office Ministry of Mineral Resources and Energy, Mongolia

  12. Content Ministry of Mineral Resources and Energy, Mongolia

  13. THE MONGOLIAN GOVERNMENT POLICY ON MINING SECTOR (Action Plan of the Mongolian Government for 2008-2012) Speed up the development of the mining sector, renew its legal environment, turn strategic and large mining deposits into economic circulation and develop and implement Mongolia’s industrial program. Research into geological formations, spread up and location of mineral resources, prepare general assessment, develop geological mapping and intensify other research and survey works. Increase the proven reserve of uranium and select the strategically important investors who are interested in investing into uranium mining. Develop the legislations of geology and mining sector and adhere to the policy where the state ownership percent would be more than 51% in the strategic deposits where the geological prospecting was conducted at the expenses of state budget fund and the reserve was proven. Ministry of Mineral Resources and Energy, Mongolia

  14. FUTURE TRENDS AND PROSPECTS • To adapt the advanced technology to build a mineral processing, refinery, melting, and value-added factories through conducting studies. • To provide assistance in commercializing strategic and large deposits into economic circulation. • To develop a policy of infrastructures depends on the regions in order to involve strategic deposits into economic circulation. • To conduct research and make recommendations to improve and update the legal environment. Ministry of Mineral Resources and Energy, Mongolia

  15. INVESTMENT AGREEMENT • Investment agreement can be concluded if an investment of more than 50.0 mln. USD is made within the first 5 years. • 50,0 - 100,0 million USD 10 years • 100,0 - 300,0 million USD 15 years • 300,0 million or more USD 30 years • The agreement with an investor will be made jointly by cabinet members responsible for financial, geological, mining and environmental issues. Ministry of Mineral Resources and Energy, Mongolia

  16. PUBLIC – PRIVATE PARTNERSHIP • The Parliament of Mongolia passed law on Public-private partnership to define principles and scope of cooperation of the Government and private sector partnership. • The law concept defines: • The main sectors of PPP (big infrastructure and mining projects) • The main form of PPP (show service by contract, management contract, renting contract, consensus, establishing joint legal entity) • The action proposal for creating favorable environment of PPP • The issue of risk sharing etc. Ministry of Mineral Resources and Energy, Mongolia

  17. Ministry of Mineral Resources and Energy, Mongolia

  18. EVERY DOLLAR SPENT IN MINING CREATES ADDITIONAL DEMAND OF 1.84 DOLLARS IN OTHER SECTORS Ministry of Mineral Resources and Energy, Mongolia

  19. Content Ministry of Mineral Resources and Energy, Mongolia

  20. Major Deposits Ministry of Mineral Resources and Energy, Mongolia

  21. Background informationStrategically important mineral deposits Ministry of Mineral Resources and Energy, Mongolia

  22. Strategic deposit: Major final products Energy coal Domestic consumption Power Plant Coal gasification Coal Coking coal Export 150 bln ton Oyu Tolgoi Erdenet Tsagaan suvarga Copper Copper product Copper 40 bln ton Steel casting production Tumurtei Tumur Tolgoi Bargilt Iron 1.0 bln ton Export Mardai Dornod Gurvan bulag Ulaan Kharaat Yellow Cake Uranium Nuclear Power Plant 1.4 mln ton Ministry of Mineral Resources and Energy, Mongolia

  23. INFRASTRUCTURE PROJECTS • In order to deploy strategic mining deposits at the highest efficiency, the infrastructure must be developed • The Government of Mongolia declared 26 infrastructure and development projects to implement with the highest priority • -Refer to the Government decree #320 issued on October 14, 2009 THE MINISTRY OF FINANCE, MONGOLIA

  24. INFRASTRUCTURE PROJECTS

  25. EXPECTED RESULTS Source: National Development and Innovation Commission Ministry of Mineral Resources and Energy, Mongolia

  26. EXPECTED RESULTS Source: National Development and Innovation Commission Ministry of Mineral Resources and Energy, Mongolia

  27. EXPECTED RESULTS Source: National Development and Innovation Commission Ministry of Mineral Resources and Energy, Mongolia

  28. Ministry of Mineral Resources and Energy • Mongolia • United Nations str. 5/2 • Government bldg. 2 • Ulaanbaatar 210646 • Mongolia • Tel: +976-11-263296 • Fax: +976-11-330627 • E-mail: cooperation@mmre.energy.mn

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