GOVERNMENT OF MONGOLIA MONGOLIA’S OVERVIEW OCTOBER 2013 GOVERNMENT OF MONGOLIA 1
MONGOLIA OVERVIEW MONGOLIA OVERVIEW Large land per capita, abundant natural resources, well positioned for rapid economic expansion Mongolia’s Key Advantages Mongolia’s Key Advantages Close Proximity to the Largest Global Resource Markets Close Proximity to the Largest Global Resource Markets Nominal GDP 2012 in USD billions Nominal GDP 2012 in USD billions 1 1 Population 2012 in millions Population 2012 in millions LEADING LAND / CAPITA LEADING LAND / CAPITA Relatively YOUNG POPULATION Relatively YOUNG POPULATION Territory: 1.6 million sq km Territory: 1.6 million sq km with a HIGH LITERACY rate with a HIGH LITERACY rate RUSSIA RUSSIA Population: 2.8 million Population: 2.8 million among emerging economies among emerging economies US$2,014 143 US$2,014 143 2 2 ABUNDANCE OF ABUNDANCE OF Located close to some of the Located close to some of the MONGOLIA MONGOLIA UNEXPLOITED NATURAL UNEXPLOITED NATURAL LARGEST global commodity LARGEST global commodity US$10 US$10 3 3 RESOURCES RESOURCES MARKETS MARKETS S.KOREA S.KOREA US$1,130 US$1,130 50 50 CHINA CHINA 3 3 Tested with 7 CONSECUTIVE Tested with 7 CONSECUTIVE FLOURISHING DEMOCRACY FLOURISHING DEMOCRACY US$8,227 1,351 US$8,227 1,351 SUCCESSFUL democratic SUCCESSFUL democratic JAPAN JAPAN IN THE REGION IN THE REGION ELECTIONS ELECTIONS US$5,960 128 US$5,960 128 $10.3b $3,160 12.2%(2012) 17.5%(2011) Real GDP Growth Nominal GDP GDP/Capita (2012) (2012) One of the fastest growing economies globally One of the fastest growing economies globally Nominal GDP $10.3b GDP/Capita $3,365 17.5% Real GDP Growth 12.4% Large mineral resource base that can be leveraged for Large mineral resource base that can be leveraged for (2012) (2012) (2012) (2011) industrialization industrialization Attractive environment for FDI and trade Attractive environment for FDI and trade “ Mongolia has a globally unparalleled young population and a Proven fiscal track record augmented by forward looking initiatives Proven fiscal track record augmented by forward looking initiatives wealth of resources, and has potential for unlimited growth. ” -Shinzo Abe, Prime Minister of Japan, March 2013 Strengthening financial sector Strengthening financial sector Source: World Bank Source: World Bank GOVERNMENT OF MONGOLIA 2
ONE OF THE FASTEST GROWING ECONOMIES GLOBALLY GDP Growth Comparison – Emerging Inflation Comparison – Emerging Real and Nominal GDP (US$ mm) Sovereigns Sovereigns 18.8% 32.3% 27.7% 22.3% 0.5% 31.8% YoY Real GDP Growth at 1H2013 YoY Inflation in September 2013 8.9% 6.4% 12.3% 11.3% (1.3%) 17.5% 14,223 11.3% 8.6% 8.3% 10,010 7.3% 6.5% 7.6% 7.6% 7,940 6,693 6.1% 4.9% 5,172 5,248 5,032 4,567 4.2% 3,943 3,503 2.7% 3,311 2.0% 2.5% 3,127 2,712 1,868 1.4% Mongolia China Indonesia Malaysia Philippines Vietnam Russia Mongolia China Indonesia Malaysia Philippines Vietnam Russia 2008 2009 2010 2011 2012 1H2013 2013E 1 YoY growth of Real GDP YoY growth of Nominal GDP Mongolia continues to perform well compared to its emerging market peers, demonstrating robust growth momentum while maintaining moderate levels of inflation Source: National Statistical Office of Mongolia, National Bureau of Statistics of China, Badan Pusat Statistik of Indonesia, Department of Statistics of Malaysia, National Statistics Office of Philippines, General Statistics Office of Vietnam, Federal State Statistics Service of Russia, Moody’s Country Reports, (1) The Ministry of Economic Development, Mongolia Note: Exchange rate (MNT/USD) uses corresponding year end rate, 1,267.51 (2008), 1,442.84 (2009), 1,257.18 (2010), 1,396.37 (2011), 1,392.10 (2012), 1,446.48 (1H2013), 1450 (Expectation of 2013) GOVERNMENT OF MONGOLIA 3
DIVERSIFIED EARNINGS DRIVERS AND REVENUE BASE 2012 Nominal GDP by Sectors 1H2013 Nominal GDP by Sectors Mining and quarrying Mining and quarrying Agriculture Agriculture 16% 18% Net taxes on products Net taxes on products 26% 26% Retail trade Retail trade Manufacturing Manufacturing 16% 14% 3% 2% Transportation Transportation 2% 2% Construction Construction 6% 6% 14% 13% Electricity & utitilities Electricity & utitilities 6% 6% 10% 10% Communication Communication Other Other 2012 YoY Nominal Growth Drivers 1H2013 YoY Nominal Growth Drivers Mining and quarrying Mining and quarrying Agriculture Agriculture 6% Net taxes on products Net taxes on products 23% 30% 21% Retail trade Retail trade 36% Manufacturing Manufacturing Transportation Transportation 12% 7% 1% Construction Construction 6% 3% Electricity & utilities 11% Electricity & utitilities 15% 7% 3% 6% 9% Communication Communication Other Other Source: National Statistical Office of Mongolia, Bank of Mongolia; Note: Exchange rate (MNT/USD) uses corresponding year end rate, 1,169.97 (2007), 1,267.51 (2008), 1,442.84 (2009), 1,257.18 (2010), 1,396.37 (2011), 1,393 ( 2012), 1446.17 (2013h) (1) CAGR is calculated by using nominal GDP and total revenue in MNT during the period respectively GOVERNMENT OF MONGOLIA 4
LARGE MINERAL RESOURCE BASE THAT CAN BE LEVERAGED FOR INDUSTRIALIZATION Minerals – Main Composition of Total Exports (1H2013) A High-Growth Mineral Sector driving the Exports (US$ mm) Coal Copper 16% 27% 100.0% 6,000 Iron ores& Scrap 91.0% 7% 89.2% 90.0% 4% Crude oil 81.0% 4,686 5,000 80.0% 10% 4,385 Zinc 80.7% 4,818 20% 70.0% 63.8% Gold 4,000 17% 60.0% Other 2,909 50.0% 3,000 54.9% Mongolia’s World Class Mineral Reserves 40.0% 2,024 1,885 42.6% 2,000 39.0% Approved Reserves 30.0% Main Mineral Resources 31.1% (2012) 20.0% 26.9% 1,000 Copper (thousand tons) 83,807 10.0% Coal (mln tons) 18,473 0.0% - 2009 2010 2011 2012 1H2013 Gold (tons) 2,402 Total Export Mineral Export % of Total Exports Mineral Export % of Nominal GDP Zinc (thousand tons) 1,740 Total coal exports are estimated to exceed 30 million tons at the end of 2015 once Iron ore (mln tons) 1,047 railway infrastructure is in place and is expected to further increase to 50 million tons by Uranium (thousand tons) 47.9 2017 Operations at the Oyu Tolgoi deposit have commenced in 2013 and exports of its Rare Earth (thousand tons) 3,768 products began in July of 2013. These exports are expected to play a crucial role in total exports of Mongolia. Conventional crude oil (mln barrel) 2,438 Exports of key commodities continue to grow, demonstrating robust growth momentum in the coming years Source: National Statistical Office of Mongolia, Erdenes MGL (1) Using annualized total exports, which equals the total exports as at June 30, 2012 multiplied by two GOVERNMENT OF MONGOLIA 5
LARGE MINERAL RESOURCE BASE THAT CAN BE LEVERAGED FOR INDUSTRIALIZATION (CONT’D) Silver Copper / molybdenum Gold ore Iron ore Uranium ore – 12 mln tons 6.4 mln tons 25 tons 229.3 mln tons 16 thousand tons Uranium Phosphorite 2.9 thousand tons Asgat 300 mln tons Gurvanbulag Uranium Burenkhaan Erdenet Tumurtoi Lignite coal Mardai 29 thousand tons 600.0 mln tons Khalzan Dornot Boroo ULAANBAATAR burgedei Zinc Rare-earth elements 7.7 mln tons Tumurtein 3,429.5 thousand tons Baganuur Ovoo Lignite coal Rare-earth elements 646.2 mln tons 339.0 thousand tons Shivee Ovoo Rare-earth elements Rare-earth elements Lugiin gol 47.2 thousand tons Mushgia khudag 13.5 thousand tons Khotgor Tsagaan Suvarga Coal Tavan Tolgoi Copper/ 7,4 bln tons Oyu Tolgoi Nariin Sukhait molybdenum ore Metallurgical coal Copper – 37 mln tons 10.6 mln tons of oxides; 125.5 mln tons 240.1 mln tons sulphides Gold – 1,300 tons Mongolia has vast and diverse under developed mineral deposits, providing the economy with significant long-term upside potential This slide outlines the 15 strategic deposits that have been identified by the Mongolian government. The deposits cover a broad basket of minerals, ranging from coal, copper, gold, iron ore, molybdenum, phosphorite, rare earth oxides, silver, uranium, and zinc GOVERNMENT OF MONGOLIA 6
LARGE MINERAL RESOURCE BASE THAT CAN BE LEVERAGED FOR INDUSTRIALIZATION (CONT’D) Oyu Tolgoi Overview Tavan Tolgoi Overview Exports of gold-copper-silver concentrate from Oyu Tolgoi have Australasian Joint Ore Reserves Committee reserve estimate of 7.4 officially commenced on 9 July 2013 with planned volumes of billion tons of coking and thermal coal resources; 300,000 tons within this year; Expected to produce 30 millions tons per year at full capacity, counting The deposit is ranked as the third largest in the world by its for majority of the 50 million tons of targeted exports by 2017; reserves, content of copper, gold and silver contained in Infrastructure: 1) Paved road constructed and operational; 2) Railway concentrates; construction underway with 12% completion as of now, to be finished Additional investments are planned for the significantly higher value within 2015; 3) A 450MWt power plant project commenced at the site. underground part of the deposit; One of 3 largest deposits of metallurgical coal in the world; premium The Government of Mongolia owns 34% of the project. quality, highly desired coking and thermal coal. Source: Tavan Tolgoi website, Turquoise Hill website; (1) Erdenes TT is the company that holds GoM’s interests in Tavan Tolgoi GOVERNMENT OF MONGOLIA 7
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