The most interesting speech on the second day of “Discover
Mongolia-2010” on Thursday was that by the Executive Director of Golomt Bank,
John Finigan. Reviewing the present status in the mining sector and future prospects,
he said 2016 will be when Mongolia would really start collecting regular higher
revenue. The amount of copper mined would reach 36,000 tons a year and the GDP
would be USD27 billion. This translates as USD9,000 in per capita GDP. There are
very few examples of such great leaps in GDP growth, except in oil producing
countries following the price rise in the 1970s.

Finigan warned that this increase from the present 5% to
the anticipated 20% would be possible only with adequate support from the
Government. Even after a good start there can be missteps. Foreign investors,
he said, are yet to be convinced that policy making will be quicker in Mongolia
and the legal environment will be stable.

Mongolian Star Melchers Director Laurenz Melchers began
the Government Hour session by saying, “Mongolia is an attractive country to
invest in and I appeal to investors to hurry. There is a lot more to the mining
sector than the excavation, and all this awaits investment.” He mentioned the
need for many more properly equipped warehouses and to develop air cargo
services. With so many Chinese citizens and economic entities among exploring
and exploiting license holders, there is a preference for selling raw resources
instead of value added products. But this does not serve the country’s
interests, Melchers noted. His company has begun to build a chemical factory
which will help process the mined resources.

A major problem for foreign investors is local people’s
distrust of their goals and methods. They resent the perceived damage to the environment
that mining inevitably does and want better post-mining restoration, said Ms.
Rina Gondose. The number of complaints keeps rising and the Administrative
Court settled 28 cases in 2006, 44 in 2007 and 61 in 2008.

Participants
comment on organization of forum

There were some complaints among participants at Discover Mongolia. Foreign
visitors would not make any public comment but Barry Evans of Churchill Co. in
Ulaanbaatar said given the time they had, the organizers could have done a far
better job. For one, the space was too small and it would have been better to
hold the forum in the new building of National Trade and Industries or in
Misheel Center.

D.Bat-Erdene of Umniin Els noted that in the first years of the forum the
emphasis used to be on geological issues but this has now shifted to mining and
supply services.  The discussions also
often wander from day-to-day issues facing operations. He also said his company
used high-grade technology and employed few foreign workers, proving the
competence and capacity of Mongolians.