Japan is making a concerted effort to
strengthen its relationship with Mongolia, one of the world”s richest stores of
minerals. However, China and other leading resource developers are also paying close
attention to Mongolia, threatening Japan”s hopes to take advantage of the
abundant reserves in the central Asian nation, says a report in the Yomiuri
Shimbun.

Mongolia is known to have vast
undeveloped resources. It is thought to possess the world”s largest unproven
uranium reserve, as well as high-quality coal and rare earths deposits, but
most remain untouched. Mongolia”s past communist regime not only delayed
development of its railway and road infrastructure, it did not allow foreign
companies to develop the country”s natural resources. The country was
democratized in the 1990s. As a result, there have not even been surveys of the
mineral resources in 70 percent of the nation”s land, according to a leading
Japanese trading company.

Four leading Japanese trading
companies–Itochu Corp., Sumitomo Corp., Marubeni Corp. and Sojitz Corp.–are
planning to jointly participate in international bidding for the Tavantolgoi
coalfield. With an estimated reserve of more than 6 billion tons, it is one of
the largest in the world. Several other large international companies are
expected to participate in the bidding planned to be held this year but the
group of Japanese trading firms believes President. Elbegdorj”s stance of
treating Japan as “the third-closest nation to Mongolia” will be a
tailwind for it.

Last year, Mitsubishi Corp. began
exploration of a uranium mine with the French nuclear power group Areva. Japan
Oil, Gas and Metals National Corporation (JOGMEC) reached an agreement in July
with the Mongolian government to jointly explore deposits of rare metals.

The Mongolian government”s affinity
for Japan comes from wariness of China”s military buildup, as Mongolia is
sandwiched by China and Russia. The country also appears to be grateful to
Japan for supporting Mongolia financially during the economic turmoil that
ensued after the fall of the former Soviet Union. At the same time, the
Mongolian government is seeking Japan”s cooperation to develop its railways,
roads and industrial complex. However, if Japan”s rival countries propose
better deals on infrastructure, it is “still possible the Japanese trading
firms will be tripped up”, according to a source close to the trading
companies.

China seems to be an especially strong
rival for Japan, as the country is cash-rich and has strong purchasing power.
Taking advantage of its geographical location next to Mongolia, China will also
be able to expand its profit margin by cutting the cost of transporting mined
resources.