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Mongolia: Hidden “Klondike Gold” for Investors and Manufacturers

February 19, 2017

 

Over 80 discovered minerals are contained in Mongolian 6,000 known deposits of coal (163.2 billion tons), gold, copper (77.3 million tons), uranium, molybdenum, fluorspar, tungsten, zinc, silver, lead tin and iron. For instance, Oyu Tolgoi deposit of 37 million tons of copper and 1,431 tons of gold is worth US $350 billion, and Tavan Tolgoi reserve has over 6.4 billion tons of thermal coal and coking coal. Mongolia’s coal can be used, inter alia, for electricity generation and production of steel, cement, liquid fuel, paper, medications, soap, aspirins, solvents, dyes, plastics, water/ air purification filters, kidney dialysis machines, carbon fiber (for construction of airplanes, vehicles, mountain bikes and tennis rackets) and silicon metal (for making lubricants, water repellents, resins, cosmetics, hair shampoos and toothpastes).* The Asian country’s vantage of being an interstate trade and travel hub, plus established business and political connections with bordering Russia and China, may yield numerous benefits for U.S. and Western participants in the nation’s economic renaissance.

 

Despite huge resources, 27% of Mongolia’s urban and 50% of rural population live in poverty. The newly elected parliament and government officials are willing to do their best for spurring the nation’s economy not through China-offered financial means but via foreign direct investments and ameliorating the previous government’s and parliament’s erratic legal and legislative actions. Investors and exporters have now lucrative opportunities in this  “asset-rich, cash-poor” country desiring to: (1) set up and operate its own metal extraction, ore processing, industrial water recycling, underground water desalination (as surface water is practically used up) systems; (2) build its infrastructure including: solar / wind renewable energy grids, agricultural/ fish/ animal product plants, integrated and intermodal transportation infrastructure (freight carrying railways, trucks and airlines, highways, terminals for transshipment of standardized freight containers) for carrying coal and minerals to China’s and Russia’s ports (and then to Taiwan, Korea and Japan), pharmaceutical supply chains, medical centers, etc.; and (3) train and raise its own cadre of managers, technicians, engineers and scientists. 

 

The country’s economy will exponentially flourish by implementing its industrial stimulation programs and asset monetization with the acquired / absorbed U.S. state-of-the-art “know-how” and projects’ funding, preferably without attendant economic and political long-term indebtedness. U.S. project coordinators have knowledge, skills, and resources to apply for, access and obtain the required funding for bona fide causes per strict cross-border banking, tax, and securities laws. They also may, upon request, coordinate and centralize purchase, licensing and in-country assimilation of modern U.S. technologies through joint venture agreements, purchase or establishment of wholly owned or controlled subsidiaries, R&D centers, consulting experts, machinery and plant purchases, and patent licensing agreements.

 

Mongolia may become one of the richest Asian countries by attracting multinational corporations, foreign capital and large-scale investments. One of the capital attraction avenues is its financial system’s re-structuring steps, e.g., reduction of corporate, gift, personal and other taxes; expeditious corporation formation; shareholders’ and officers’ legal protection similar to the Delaware state’s or Swiss laws, etc. The government’s sources of revenue may be increased by carbon credit sales to nations and companies; customs duties (e.g., Bermuda has 25% charge) levied on imported equipment and goods brought by corporations and individuals into the country; real estate taxes; charges for business and vehicle registrations; banks’ licenses, and numerous government-provided services. The amended tax regime and legal system allowing corporate minimum-requirement domicile registration, exemptions on sale income from in-country developed inventions (intellectual property), immigrant-investor program, visa-free travel, and other government incentives would encourage foreign investment and capital influx to the state.

 

Multinational corporations may incorporate in Mongolia their subsidiary corporations, establish their principal place of business (domicile) for purchase of real estate or transnational business operations, red tape reduction for selling throughout Asia and Eurasia, and make other uses of Mongolian laws, resources and geographical advantages. U.S. investors, service and goods’ exporters, manufacturers, and other prospectors will benefit from favorable resource-exploitation license terms for venture partners, increased sales of equipment/ products, brand name promotion, and new markets for the goods and services attendant to the transferred technologies.

 

Mongolia is an unearthed treasure trove for investment-venturing bankers, miners, manufacturers, distributors, hedge funds, and insurance/ health care/ energy /transportation companies. These prospectors would create more jobs and increase profits by assisting this state to capitalize on its natural reserves for catapulting it to the levels exceeding those of Singapore, Hong Kong, or Japan lacking metal or mineral natural resources.

 

* http://www.worldcoal.org/coal/uses-coal

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