Perhaps most notably known as the birth place of Genghis Khan and the Mongol Empire, Mongolia is quickly gaining strategic importance not seen since its 13th century heyday.
Land locked between Russia and China, Mongolia is roughly equivalent to the size of Western Europe. It is the least densely populated country in the world with a population of just under 2.7 million, of which approximately 60 per cent live in the capital Ulaanbaatar.
Mongolia embraced political and economic reforms in 1990 after abandoning its 70-year-old Soviet-style one-party state. Democracy and privatisation were enshrined in a new constitution, but the collapse of the economy after the withdrawal of Soviet support triggered widespread poverty and unemployment. Recently however, the small economy has begun to surge following discoveries of significant mineral and energy resources and rising commodity prices.
Mongolia has expanded political and financial ties with the US, Japan and the European Union, but its main trading partners are neighbouring Russia and China. The latter is the biggest market for Mongolian exports, and Beijing is keen to exploit Mongolia’s mineral and energy resources.
Substantial deposits of gold, copper, and above all coal have been discovered in recent years. Oyu Tolgoi, the world’s largest undeveloped gold-copper mine is scheduled to begin production in 2012, and Tavan Tolgoi, one of the world’s largest coal deposits, is in the early stages of development. There are also immense deposits of uranium and rare earths, as well as molybdenum, tin, tungsten, lead, iron ore and zinc. It should be noted however that it is difficult to estimate the actual size of Mongolia’s total commodity reserves at present, as only a small part of them have been explored in this enormous country.
Despite vast quantities of untapped mineral and energy resources, and numerous mining projects already underway, Mongolia currently remains significantly underdeveloped.
Development of the mining sector will lead to a substantial growth in mineral GDP and will have significant knock-on effects on other sectors through a reallocation of resources and changes in relative prices.
The Mongolian economy has a bright economic future and is still in the early stages of its 2010-2020 period of world beating economic growth.