When people look at a map of Central Asia, it’s hard to ignore the fact that almost all the countries are land-locked. Mongolia is not an exception to this. The President of Mongolia, Tsakhia Elbegdorj, has described his country as “a little pony between two elephants,” those two elephants being Russia and China. Despite being just a little pony, it is a pony with an abundance of natural resources, and those resources should make any foreign investors seriously consider putting some funds into the Mongolian economy.
Due to its plethora of resource deposits, it should not come as a surprise that 30 per cent of Mongolia’s entire industry is devoted to mining. Some of the natural resources imbedded in Mongolian soil include copper, iron, gold, uranium, and zinc.
A CNN report also stated that many experts believe rare earth elements and even oil exist in the resource-rich nation. There is one element that reigns supreme in Mongolia however, and that is coal.
The Tavan Tolgoi mine holds one of the largest deposits of coal in the entire world. It is so big that the New York Times reported that there is enough coal in the mine to fuel the elephant to the south – China – for the next 50 years. The Mongolian government has also decided to privatise ownership of the mine, in order to improve productivity. It is safe to say that whoever has ownership of the mine will also have incredible political power in the nation as well.
In the 1980s, Singapore, Taiwan and South Korea were called the ‘wolf economies.’ In the Mongolian capital city of Ulan Bator, they are describing themselves as ‘the wolf on the move’ and are branding themselves as the wolf economy of the 21st century.
By taking advantage of its vast natural resources, Mongolia is looking to increase economic and socio-economic growth. Mining mania truly has struck Mongolia and, as a western economist who has lived in the country for two decades explained, the future is bright.
“Under any scenario, even if and when commodity prices fall substantially from their current levels, Mongolia’s per capita GDP is heading for advanced economy levels in the coming 20 years,” said the expert – who asked not to be named – in the previously mentioned CNN report.
Mining companies are coming in from all over looking to invest in the nation and Mongolia is looking to raise US$25 billion in investment over the next five years. All these things point to a growing economy and money-making machine coming out of Mongolia in the coming decades.
As important as mining is to Mongolia, a single market economy is not a plan for success. In order to stay successful, they must have a diverse economy and must avoid corruption.
Thankfully, Mongolia is taking part in both these things. It has a growing agricultural industry and produces the second most cashmere in the world. In terms of avoiding corruption, it seems the government knows just how important that is.
President Elbegdorj said to CNN, “If we put the money in our own pockets, we will end badly.” He seems to understand that corrupt leaders tend to lose their power quickly.