March 2016
|
World Coal
|
15
THE
SLOW
AND
BUMPY
ROAD
country has never been entirely comfortable with foreign
ownership of its mineral wealth, originally falling out
with Turquoise Hill’s controlling stakeholder, Rio Tinto,
in 2013. Nor is OT the only instance where government
interference has complicated the development of
Mongolia’s mineral wealth: the same plot has been played
out at the country’s largest coal project at Tavan Tolgoi
(TT).
Ultimately, the prime minister survived the vote of no
confidence and looks likely to remain in power until the
June elections,
1
leaving the hard-fought deal (it
ultimately split the government and resulted in six
ministers losing their jobs) over OT in place. It is hardly
the resounding success that the government was aiming
for, however, a success that could have heralded a new
and welcoming environment for foreign investment,
which fell by 85% between 2012 and 2015.
2
Nor is the issue entirely settled. Resource nationalism
will be hot topic in the run up to the parliamentary
elections with the Mongolian People’s Party – the
country’s former communists who were ejected from the
ruling coalition last year over the OT deal – poling
strongly. Should they perform well enough to form at
least a coalition government in June, foreign investors
may again face a more hostile environment.
Beyond purely local issues, Mongolia’s mining sector
faces the same commodity headwinds that have buffeted the
global mining sector. The slowdown in Chinese growth – to
