Foreign Investment in Mongolia

In 1990, following the dissolution of communist regimes in Eastern Europe, Mongolia underwent a peaceful democratic revolution which led to its adoption of a new Constitution in 1992 and a transition to a market-based economy.  Since opening itself up to foreign investment, Mongolia has seen a dramatic influx of international capital with some of the largest firms in the world engaging in commerce and project development. 

In 2011, direct foreign investment tripled from the previous year, hitting a record of $5.3bn. As further noted in the Financial Times, “the north Asian country’s vast deposits of coal, copper and gold have sparked a boom in mining investments, driving economic growth to a record 17.3 per cent last year [2011].”Industry research analysis firm Eurasia Capital agrees, noting “Blue Sky’s the Limit” in a 2011 report.  Recognizing the incredible riches in the Mongolian geography, leading mining companies from around the world have established a presence.

Among the most well-known of these entities are: Rio Tinto, Ivanhoe Mines (led by CEO Robert Friedland), SouthGobi Resources Lucky Strike Resources, Nova Resources, Terra Energy, Erdenes, Peabody and Mongolia Mining Corp.  Development of large-scale projects like Oyu Tolgoi, Shivee Ovoo,  Tavan Tolgoi and others bring in a great deal of foreign investment but also add to the already severe strain the Mongolia Central Energy System (CES) and increase the existing Mongolia power deficit.

Recognizing this, General Electric has also moved in to establish Mongolia wind farms for electricity generation.  Due to open in 2012, that project will supply 50MW to the Mongolia CES.  As the chart below shows, this is insufficient to offset the Mongolia power deficits projected for the near term.

Prophecy Coal has been in constant consultations with the Mongolian government and the Mongolia Energy Regulatory Authority with respect to both its 600MW (Phase 1) Chandgana power plant project and its Ulaan Ovoo thermal coal mine.  Prophecy is proud to be part of Mongolia’s future and to join such elite company as those firms named above.  It is our goal to be a key player in Mongolia’s energy future and to help power those projects that will propel that nation’s economy forward for decades to come.

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