http://www.theaustralian.com.au/business
MONGOLIA — a landlocked country in central Asia — boomed as the resources cycle peaked but just as quickly as the investment flooded in, it flowed out as the government radically changed the rules.
MONGOLIA — a landlocked country in central Asia — boomed as the resources cycle peaked but just as quickly as the investment flooded in, it flowed out as the government radically changed the rules.
Now, after years of largely being ignored by foreign investors, the country is trying to win favour with the global resources sector with another change of its rules — but this time in a move to say it is open for business.
David Paull, who heads junior Aspire Mining, has witnessed the rise and fall of Mongolia’s appeal in the competitive global resources space. Having penned an exploration deal in the country in October 2009, just weeks before a government agreement for the massive Oyu Tolgoi project was signed, Paull has been front row for the roller-coaster ride.
“It was a very hot environment, then it got extremely cold from mid-2012 onwards and that coincided with the fading of the global commodities boom,” he says.“The outcome of that was a sharp drop in foreign direct investment in the country of about half. We worry in Australia about investment numbers coming off and what is going to fill the void, but it is nothing of the magnitude of a relatively small economy, which is what we have seen in the last couple of years in Mongolia.”
The dramatic change in investment came when the government changed the investment rules in mid-2012, a directive it is now trying to reverse in an attempt to compete with the limited global capital available to fund new developments.
In its efforts to capture the attention of foreign investors, Mongolia’s government has tasked senior ministers with spreading the message.
Foreign Minister Bold Luvsanvandan will visit Sydney on Thursday to explain the new laws and system, and sell the story to Australia’s miners and investment community.
“They (Mongolia) understand the global market is competitive. The response is a clear indication that as a country and new democracy Mongolia has definitely put its cap in the foreign direct investment basket,” Paull says.
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