"What is the next investment focus?"

From 1990 to the third quarter of 2023, Mongolia attracted a total of USD 42.4 billion in foreign direct investment (FDI), with a predominant 73 percent directed towards the mining and extraction sector. The concentration of FDI in this sector became particularly pronounced after 2011, driven by the Oyu Tolgoi mega project. Since 2011, foreign investment flowing into Mongolia has experienced a substantial surge in connection with the mining and development of the Oyutolgoi project. Over the past decade, Oyutolgoi LLC has consistently represented 42 percent of total foreign direct investment, as per the revised framework outlined in the Investment Law. 

However, with the imminent completion of the underground production for the Oyu Tolgoi project, Mongolia is entering a phase where relying solely on investment from a single project is no longer viable. This prompts the crucial question: What future investment projects in the mining sector can potentially fill this void? Which projects have the potential to attract new investment, providing Mongolia with the next opportunity to stimulate FDI, reactivate investments, and augment capital flow? Mining Insight delves into these inquiries, presenting the key article for this issue in an attempt to uncover answers. The article titled “FDI: Engaging in the Retail Market” by journalist Misheel. E is anticipated to shed light on this exploration. Additionally, the head of the Investment Policy Department at the Ministry of Economy and Development Anar. B clarifies the changes and reforms in the foreign investment policy and regulatory environment in a bid to provide a comprehensive understanding of the current landscape. There may not be a mega project poised to directly replace the foreign direct investment attracted by the Oyu Tolgoi project in the past, however, this issue of Mining Insight highlights that the space is not entirely vacant. Numerous mining and extraction projects are in advanced stages of readiness, with some having undergone preparations for nearly a decade. 

Among these, Mining Insight spotlights projects that are well-positioned to commence soon, possibly within this year. The anticipated annual investment for some of these projects is estimated in the billions of US dollars. The critical question, however, is whether these projects can be initiated. To address impediments to economic development, expand the investment environment, and attract new foreign investments, the government has drafted a revision to the Investment Law. This proposal has been presented to Parliament twice, in June 2023 and January 2024. Additionally, efforts have been made to revise the Minerals Law, the foundational legislation for the mining industry, with some projects eagerly awaiting advanced regulation resulting from the mineral law reform. 

The looming question remains: Can these laws undergo revision and receive approval in an election year, marked by heightened politicization? Furthermore, will the legal reforms genuinely satisfy the policy factors conducive to attracting investment? Lastly, what novel geological and mining resources can Mongolia offer to investors, a pivotal factor in expanding the investment environment and drawing in new investments? While there are uncertainties and unanswered questions, particularly regarding critical mineral metals driven by the green transition, other countries’ approaches to attract investment in this sector provide insightful and abundant information. Odjargal. E presents comprehensive information in this regard. The latest edition of Mining Insight magazine features a CEO who spearheaded the 15-year history of the Mongolian coking coal importer Energy Resources LLC as the first guest of 2024. The interview with the Executive Director of Mongolian Mining Corporation Battsengel. G delves into issues related to mining investment. His insights serve as a stark reminder of the unpredictability and unfavorable changes in legal regulations that have rendered mining investment in Mongolia unattractive and less profitable, leading foreign investors to lose confidence in the country.