Mongolia’s Mining Boom-Location Location Location

Emerson’s Juan Carlos Bravo, a member of the metals and mining industry team, shares his thoughts on the mining boom in Mongolia in today’s guest post.

As is often said in the real estate industry, the value of a house depends upon 3 factors: location, location, and location. This statement can truly apply to Mongolia and is one of the main reasons of its recent mining boom.

Mongolia
Mongolia, by geological standards, is a paradise. It contains several resources such as copper, coal, gold, silver, uranium, molybdenum, and more. And it has a lot of unknown potential. This amount of resources alone has created a mining boom—80% of its exports are minerals and it has already issued 3000 mining licenses. Cities that where desolated 20 years ago are bursting with activity and businesses.

Its abundance in resources is important, but more important is its location. As expressed in The Economist magazine article “Booming Mongolia“, this country is located right next to the biggest factory in the world—China. While other mining countries need to transport everything to China, Mongolia is just right next door, minimizing the cost of transportation and giving an economic advantage over anyone else. If Mongolia is able to pair its natural resource abundance with China’s demand for minerals, it has the potential to become a wealthy country. Some experts say that with a population just fewer than 3 million people that it can become the next Qatar or Brunei.

But it will not be an easy road. There are several challenges that need to be sorted out before this happens—logistics, infrastructure, water, a skilled workforce, local community support, environmental impact, and the ability to work with foreign investors to create equal benefits for the country’s population and the mining companies.

People have perceptions of Mongolia based on its history and conflicts with China. Now, Mongolia can become one of China’s biggest partners, and if they play it smart, they can become one of the wealthiest countries in the world.

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Posted Monday, March 5th, 2012 under Metals, Mining, Minerals.

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