mongolia investments 2013

7/27/2019 Mongolia Investments 2013

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New Infrastructure Development Projects

Government of Mongolia

MINISTRY OF ROAD, TRANSPORTATI ON, CONSTRUCTION AND URBAN

DEVELOPMENT


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Government Policy Agenda for Growth and Development

2

The government has approved a series of infrastructural projects and

plans, aimed at supporting sustainable, long-term growth.

Ministry of Roads, Transportation, Construction and Urban Development

New Development Projects: a Snapshot

New Development

medium-term target program

Sainshand Industrial complex

Expansion of National Railway

Ulaanbaatar road re-generation

Improving national infrastructure

100,000 Housing Project

Boosting Job growth

Utilities reform

Rural regional development Easing internal migration

Strategic position near key mineral deposits

In prime location near China

Cost effective mineral processing

Cost effective expansion through sea ports

Strengthens international trade position

Boosts mining freight turnover

Fosters regional economic development


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Policy Agenda & Institutional Framework in Place

3

The government has passed an extensive institutionaland legislativeframeworkfor its infrastructural reform program, these include*:

Concession Law: the government has passed key concession law to facilitatePublic-Private Partnerships (PPP).

Mongolia Development Bank is to manage and oversee the financing of theJRYHUQPHQWVLQIUDVWUXFWXUDOSURMHFWDJHQGD

New Development Program (NDP). The Parliament of Mongolia has approvedWKH1HZ'HYHORSPHQWPHGLXP-term target program (on 25 June 2010).

Economic Standing Committee formed to oversee implementation of the NDPwith the passing of the program (on 25 June 2010).

Ministry of Roads, Transportation, Construction and Urban Development. * This is not an exhaustive list.


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Mongolia Outlook: Solid Economic Prospects

4

A Continued broadening in economic growth:

The Mongolian economy is expected to growsolidly (Figure 1).

The domesticeconomy has been growing, butQHHGVWRFDWFK-XSIXUWKHU)LJXUH

The industrial & manufacturing sectors are posedto expand with mining exploration (Figure 3).


Source: Worl d Bank

0

25

50

75

100

125150

2005 2006 2007 2008 2009 2010

Net Trade Investment (GFCF)

Consumption

% GDP

10

30

50

70

90

1995 1998 2001 2004 2007 2010

Agriculture Industry Manufacturing

% GDP, Value added

Figure 1. GDP growth

Figure 2. Components of GDP

Figure 3. Sector splits of GDP

-2

0

2

4

6

8

10

12

1995 1998 2001 2004 2007 2010

Estimate

% Year-on-Year


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5Ministry of Roads, Transportation, Construction and Urban Development. * The spread is the lending rate minus the deposit rate

-5

0

5

1015

20

25

30

35

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Interest Rate Spread Real Interest Rate%

Figure 6. Easing credit conditions*

0

10

20

30

40

50

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Domestic credit to private sector

Domestic credit from banking sector

% GDP

Source: Worl d Bank

Figure 7. Domestic Private Sector Credit

Mongolia Outlook: Moving to Private-Sector Led Growth

0

2

4

6

810

12

14

16

18

20

1995 1998 2001 2004 2007 2010

Market capitalization of listed companies (% of GDP)

% GDP

Figure 8. Market Capitalization Spikes

Favorable Financial Climate:

Credit conditions have eased following the financial

crisis, and will continue to do so (Figures 6 &7).

Although inflation remains a challenge, businessconditions are favorable. Listed companies continueto grow (Figure 8).

The Mongolian Stock Exchange (MSE) is set toexpand in cooperation with global partner exchanges.


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6

Mongolia Outlook: Natural Commodity Resources

Coal Deposits

Copper Deposits

Precious Metals Deposits

Oil Deposits



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Expansion of National Railway: Phases of Development

7

Phase I : Expansion of 1100km Dalanzadgad-Tavantolgoi -Tsagaan suvraga - Zuunbayan: 400 km

Sainshand -Baruun -Urt: 350 km

Baruun-Urt - Khuut : 140 km

Khuut - Choibalsan :150 km

Phase I I : Expansion of 900km

Nariinsukhait - Shiveekhuren : 45.5 km

Ukhaa hudag - Gashuunsukhait : 267 km

Khuut -Tamsagbulag- Numrug : 380 km

Khuut - Bichigt : 200 km

Phase I I I : Expansion of 3600km

Approximately 5,684 km of new railway is to be built between 2010-2014:an unprecedented increase. Development is already underway:

Eastward expansion 50/50 joint venture with Russian for Eastward

expansion Strategic and cost effective collaboration with

discount on transport tariff & in the process of re-

negotiating 65% for 30+ years.


A Westward expansion is planned alongside furtherexploration of mineral deposits.

This will progress in tandem with the JRYHUQPHQWV

regional development policy.


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9

RAI LWAY: Access to International Markets & Seaports



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Expansion of National Railway: Economic Benefits

10

Strategic support for the mining sector

Strengthens linkages with strategically key mineral deposits (Tavan Tolgoi & Oyu Tolgoi), Boosts freight turnover of mining products, transit cargos and exported goods.

Mineral goods to top an average 60mn ton per year due to plans.

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Stands to boosts structural capacity of the economy and the level of GDP significantly:

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Improves national transit capacity

Total volume of cargo transported is expected to increase by a factor of 3.5*

Eliminates significant bottlenecks

Sets solid foundation for future passenger travel across the country


*See Resolution No 32, June 24 2010, Resolution of the State Great Hural of Mongolia


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Sainshand Industrial Park: Prime Location

Ministry of Roads, Transportation, Construction and Urban Development 11

Cost Effective Processing & Transit:

Facilitates cost-effective ore transportationfrom Tomortev, Tavan Tolgoi & Oyu Tolgoi &

Tomortev mines

Near key mineral deposits: On the Trans-Mongolian railway (TMR) and strategically

close to key mineral deposits

Prime Strategic Location:

Close to China: Sainshand is the capital ofDornogobi, the aimag closest to China, a key

export market

On the 1,100 km railway between Tavan

Tolgoi & Choibalsan and will join onto

5XVVLDV7UDQV-Siberian Railway to accesssea ports


12/25

Sainshand Industrial Park: Key Facilities

12Ministry of Roads, Transportation, Construction and Urban Development

The Industrial complex will include

facilities for the following:

Oil Refining

Cement Plant facilities

Coke Plants Iron Pellet Plants

HBI / DRI Plants

Coal Gasification

Copper Smelting

Power Plant

Tavan Tolgoi (Coal)

Darkhan (Iron Ore) Oyu Tolgoi (Copper concentrate)

Tsagaan Suvarga (Copper concentrate)

Timurtein Ovoo

Tsagaan Tsav

Minerals will be transported to Sainshand to be

processed and smelted and prepared for export tointernational markets.

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1HZ'HYHORSPHQW0HGLXP-Term Target Program

13

Urban development & planning

Improving infrastructure

Expanding housing supply

Boosting job growth & education

Tackling pollution

Supporting rural development

Incentivizing enterprise & business

Easing internal migration

8 key policy areas aimed to ensure sustainable, broad-based and equitable growth


Overcrowding in Ulaanbaatar

Bottlenecks in transportation

Unemployment

Severe pollution

Ecological deterioration

Persistent poverty

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Disproportionate urban migration

Policy areas:Policy Challenges


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Key Policies: Urban Development & Infrastructure


Ulaanbaatar (UB) roads: re-build and

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National Roads & Trans-M ongolian

highway system: upgrade and build new roads

connecting UB with all aimags (5,572 km) .

Water & waste management: Establish new

sources of underground & pure water supplyand revamp national sanitation facilities

Efficient National Power Supply: An

independent & centralized power source in

Ulaanbaatar, in regional pillars and aimags.

Centralized Power Grid: A new centralpower grid, introducing renewable energy

technology. Aimags to be connected to a

centralized national power grid.


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Build 212 km worth of new roads

Construct 7 double-level intersections

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roads will be reduced significantly.

Capacity of main roads will beimproved dramatically

Standard of living and ease oftransit will improve dramatically


54% of UB roads > 25 years old;

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ULAANBAATAR

Improving Infrastructure: National Road Network



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Improving Infrastructure: Trans-M ongolian Highway

17



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18

Key Policies: The 100,000 Housing Units Project

Ministry of Roads, Transportation, Construction and Urban Development.


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19

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75,000 housing units are to be built in UBand a further 25,000 units in local areas.

Housing program to be implementednationally in UB city, Aimags and Soumcenters:

Mongolia has 21 Aimags, or provinces. EachAimag comprises administrative Soumdistricts, which total 330.

1HZSoum &HQWHUproject:Hospitals, schools, kindergartens, vocational

training and business centers will be built toservice local areas alongside new housingsupply.

Ministry of Roads, Transportation, Construction and Urban Development.

41,200(55%)

24,800(33%)

9, 000(12%)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

New homes in new districts

Re-generated homes in Ger district

New homes in downtown UB

75,000 New Housing Units inUlaanbaatar (UB):


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20Ministry of Roads, Transportation, Construction and Urban Development.

Re-generation of Ger districtaround UB city:

Demolish houses and apartment blocks

that are not earth-quake resistant &

replace with new housing districts

Increase housing supply & support

financing needs

Issue low interest loans with long

maturity to low & medium income

households


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Key Policies: Supporting Enterprise and Manufacturing

21

Targeted development and investment in factories to produce construction

materials, intermediate and high value added goods for domestic and international markets.

Introduction of new heat-saving technology in the construction process to induce a cost

efficient and environmentally sustainable production process.

Creation of technological parks to support small and medium-sized enterprise and

employment, targeting the specific needs of Aimags and Soums.


Continued cost reduction for business

start-ups, to support private-sector led

economic growth. Costs have been declining

(Figure 14). 0

5

10

15

20

2003 2004 2005 2006 2007 2008 2009 2010 2011

% of GNI per capita Incentivize new companies in strategic

commodity and mining sectors:

oil, gas, bioethanol, biodesel, dimethylephir

and synthetic diesel production

Figure 14. Cost of business start-up procedures:

Source: World Bank


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Key Policies: Tackling Pollution

22

Upgrade basic public servicesin8%V*HUGLVWULFWVUH-vamping

electricity, water and gas supply for60,000 households.

Replace wood and coal burningstovesin Ger district with low-pressure steam furnaces and energyefficient systems.

Create green areas(trees and grass)equivalent to 20 square meters percapita in Ulaanbaatar

Improve public transport andreduce exhaust fumes by introducingenergy efficient technology in UB city

and suburbs.

Comprehensive waste managementto transport, sort, recycle and disposeof waste in an environmentallyfriendly manner.


Nearly 85% of Ger residents use

wood or coal burning stoves for

heating. Upgrade would

ultimately reduce smoke exhaust

by 60% by 2013.

Semi-coked coal supply for Ger

district is to produce smokeless

fuel and will have 100% private

sector financing.


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Projected Social Benefits of the New Development Program

23

Present Situation Post-Project I mplementation

Employment:

Household Income:

SmokePollution, Poverty & Crimelevels:


Source: Boston Consulting Group


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Financing New Development projects


Investment

ProjectBillion(USD)

Projected TimeFrame

New Railway Project 4.5 2010-2014

Sainshand Industrial Complex1 13.9 2010-2016

National Road Network 4.8 2010-2016

Ulaanbaatar Road Network 0.8 2010-2016

Trans-Mongolian Highway 1.9 2010-2014

Domestic Road Network 2.1 2010-2016

100,000 Housing Project 6.2 2010-2016

96 Soum Centers 0.7 2010-2016

TOTAL 35.0/approx/

1. Estimate includes 6 processing and manufacturing plants, 2. Estimate is in millions of US dollars


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Contact Details:

Ministry of Road, Transportation, Construction and Urban Development of Mongolia

Government Building XII

Barilgachdyn Talbai

Ulaanbaatar, Mongolia

Telephone: 976-51-263319Fax: 976-11-329190

mongolia investments 2013

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