1. Mongolia Investment Outlook
June 19, 2013
By Masa Igata,
Founder & CEO
Frontier LLC
1

2. 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
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3. 1. Cooler Investment outlook in the world
3
Coal price forecast

4. Chinese Economy
4

5. 5

6. 2. Mongolian Economic Outlook
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7. 7

8. 8

9. 9

10. Components in total export
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11. Weaker Coal Exports and Stocks
Coal Export Volume Stock Prices for Mining
Companies
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12. 12

13. 13

14. 14

15. 15

16. 16

17. 3. Mongolia’s Achilles Tendon
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18. 18

19. 19

20. 20

21. 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
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22. What will be the measures Government
should take?
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23. 23
4. Doing Business in Mongolia

24. 24

25. 25

26. 26

27. 27

28. 28

29. 29

30. 30

31. 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
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5. Mongolian Investment Outlook

32. Model Portfolio
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33. 33

34. $14.40
$16.75 $7.75
$9.40
Versus
Mongolia
Cost of ?
Mine to Chinese Port - Total Transport Cost
6. Railway

35. 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
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36. 7. What kind of economic impacts are expected in case
current situation continues?
Impact of OT and TT are huge
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37. 37