Mongolia's Energy Sector Booming

Mongolia’s rising mineral and fuel production is transforming the nation’s economy. The European Bank for Reconstruction and Development (EBRD) predicted last month that the economy will grow by 9 percent in 2011, with this rate accelerating to 12 percent in 2012 due to increasing foreign direct investment (FDI) in the country’s mining sector, which the EBRD says made up 26 percent of Mongolia’s GDP in 2010.

Mongolian governmental policy has not made all foreign investors happy, however. Earlier this year the U.S. Department of State wrote in a review of Mongolia’s investment climate, “Specific governmental acts regarding foreign involvement in Mongolia’s nascent uranium sector, as well as preferential treatment for state-owned mining ventures, have spurred criticism that the government is curtailing the rights of foreign and domestic private investors in favor of the Mongolian state,” Business Mongolia website reported.

According to the National Statistics Committee, in the first six months of 2011 Mongolia’s exports rose 52.3 percent to a total value of $2 billion, of which nearly 75 percent was due to coal and other mineral exports, with 90 percent going to China, Mongolia’s top trading partner.

China Coal Information Institute president Huang Shengchu said, “Mongolia has rich untapped reserves and the location is very attractive for Chinese companies.”

By. Charles Kennedy, Deputy Editor OilPrice.com