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Mongolia investment outlook
 

Mongolia investment outlook

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    Mongolia investment outlook Mongolia investment outlook Presentation Transcript

    • Mongolia Investment Outlook June 19, 2013 By Masa Igata, Founder & CEO Frontier LLC 1
    • Agenda 1. Cooler investment outlook in the world 2. Mongolian economic outlook 3. Mongolia’s Achilles tendon 4. Doing business in Mongolia 5. Mongolia investment outlook 6. Railway 7. Oyu tolgoi / Tavan tolgoi 2
    • 1. Cooler Investment outlook in the world 3 Coal price forecast
    • Chinese Economy 4
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    • 2. Mongolian Economic Outlook 6
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    • Components in total export 10
    • Weaker Coal Exports and Stocks Coal Export Volume Stock Prices for Mining Companies 11
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    • 3. Mongolia’s Achilles Tendon 17
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    • Rating Agencies are starting to worry  Rating agencies’ concerns:  Heavily dependent on mineral exports  Pro-cyclical fiscal policy may lead to overheating in Mongolia  Fiscal discipline and external borrowing  Factors that could change the rating down:  High inflation  Weak fiscal policy framework  Uncertainty in Mongolia’s investment regime  Excess external borrowings Source: Khan Bank Presentation 21
    • What will be the measures Government should take? 22
    • 23 4. Doing Business in Mongolia
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    • Mining and quarrying 39% Real estate 6% Bonds 8% Construction Activities 4% Cash 26% Banking and Financial Services 6% Tourism 1% Manufacturing 9% Wholesale and Retail Trade 2% Sector Weight 31 5. Mongolian Investment Outlook
    • Model Portfolio 32
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    • $14.40 $16.75 $7.75 $9.40 Versus Mongolia Cost of ? Mine to Chinese Port - Total Transport Cost 6. Railway
    • Why so much cheaper than Mongolia Rail? • Super efficient Australia & Mozambique & Brazil • 0.5 cents to 1.5 cents per rail ton-km • Ultra low ocean ship rates @ ~ 0.02 cents per ocean mile • Versus planned UBTZ and MTZ rail rates at ~ 3 cents per ton-km plus rail gauge interchange costs per ton 35
    • 7. What kind of economic impacts are expected in case current situation continues? Impact of OT and TT are huge 36
    • 37