Australians
in Ulaanbaatary now number close to 400, boosted by the influx of Rio Tinto
executives on secondment to the Oyutolgoi project. Rio is the largest global
mining company so far to commit to Mongolia, but it will not be the last, says
The Australian. Last month, almost 400 representatives from the world”s mining
and mining services companies descended on the 
Mongolian capital, in renewed confidence that the country”s
long-promised mining boom is now under way.

Alongside
the conference, Austrade hosted Australia”s biggest business delegation to
Mongolia, with representatives of 21 firms attending. “When we first
announced it we were expecting eight or 10 companies,” said Austrade trade
commissioner Rod Commerford. “We were amazed.”

Australia”s
ambassador to South Korea, Mongolia and North Korea, Sam Gerovich , said it had
been a great pleasure to witness, over the past 15 years, the steady growth in
Australia”s commercial engagement with Mongolia. Early exploration by
Australian mining companies, particularly BHP Billiton, helped identify some
major resource deposits in this country which, over the past five years, have
been finally been brought to an advanced stage of development.

“Rio
Tinto”s major investment and Leighton Holdings” growing contract mining and
construction operations here promise to help realize the great potential of
these and other discoveries, underpinning Mongolia”s future economic
development and prosperity, as well as supporting our future trade and
investment co-operation,” Gerovich said.

In
some ways, Mongolia can be seen as competitor to Australia, as it sells the
same metals and minerals, mostly to China. But the opportunities of Australian
business are enormous and Gerovich says that rather than being seen as
competitors, a greater influx of Australian businesses can contribute to, and
support, the overall Australian business presence in Mongolia. Yet for all its
potential, Mongolia has myriad problems headlined by a chronic lack of
infrastructure in the country and city — exemplified by constant traffic
snarls and weeks-long hot water droughts in a city that still relies on four
Soviet-era boilers.

The
World Bank, in a report by economist Graeme Hancock, said slow decisions were
hampering energy sector development, with new projects expected to require
substantial new generating capacity (initially 600-1,000MW). “Border
crossings are a major constraint to new exports of bulk commodities and rail
issues continue to be a real challenge,” he wrote.

But
the economy is now ticking up and up with GDP growth at 7 per cent and rising,
Ulaanbaatar”s Soviet-era road system bursting at the seams with SUVs, and a
fair smattering of German marques. Five-star hotel chains Shangri-la and Hilton
are building in the middle of town. PricewaterhouseCoopers, the world”s biggest
accounting firm, last week opened an office of 25 people, the first of the big
four to test the waters.

The
inexperience of the country”s lawmakers shone through this year when the
country”s Finance Ministry began exploring a version of Australia”s resources
tax. In 2006, the government slapped a much maligned tax on gold and copper,
which it repealed this year. Hancock said Mongolia was currently perceived by
some as having an unstable legal and fiscal framework.

“Many
in government recognize this issue and are working to stabilize the legal and
fiscal framework — however it”s important to stabilize a good framework, not a
bad one,” he wrote. But if the government can get it right, the rivers of
resources gold will start to gush.