Mongolia back on map, says FMG

FMG, the frontier and emerging market specialist manager, has said that changes announced to the country’s mining industry through the second quarter of 2015 have teed up Mongolia for a recovery in foreign direct investment.

The changes announced apply to the Oyu Tolgoi (OT) mine, and an agreement put in place between the country’s government, Rio Tinto and Turquoise Hill.

The deal should spur the OT mine project, where Turquoise Hill is the developer, with a 66% stake. Foreign investors will take note of the deal and the development implications, FMG suggests, noting that a $5.4bn development phase is now in sight for the OT mine.

The country’s stock market could start a longer term upward trajectory as returns from the mine come on stream and foreign investment is encouraged.

According to FMG: “We anticipate that a second upward leg will begin with the announcement of an OT underground mine financing deal. It would be the largest of its kind in the mining industry and supported by over 15 institutions.”

Initial reaction to the deal announced in May saw the MSE Top 20 gain 15%, although this rally was pared back by the end of the quarter. FMG said that its own Mongolia fund did well over the short term from its exposure to Turquoise Hill.

The mine is one of the largest copper, gold and silver mines in the world, and went into production in early 2013.



Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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