Mining

The mining sector was a key growth driver of GDP in 2011, when the economy expanded 17.3%. Since 2012 there has been a moratorium on new licences, which is officially set to expire at the end of 2012. Although the major projects are not producing as yet, mining is already the country’s most important economic activity, contributing 20.2% of GDP in 2011, according to preliminary estimates. Coal production and exploration have risen annually since 2003, but new laws are allowing the government more influence over foreign investment. The tax burden on mining companies is also likely to rise. Over the long term the logic of establishing Mongolian mining operations is compelling: only about a quarter of the country is thoroughly explored, and most of what is known comes from outdated knowledge from the Soviet period. That means decades of work for mining service companies – just not in 2013 or perhaps in the short-term future, given the ongoing legal uncertainties in the sector. This chapter contains an interview with Cameron McRae, President and CEO, Oyu Tolgoi.