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Banking

Markets lag Mongolia’s mining rise

Mongolia’s mining industry is booming. Now the country’s stock exchange and banking sector must rapidly modernize to support it.

A stereotypical view of Mongolia is one of dirt tracks, barren land and scant opportunity. But driven by abundant reserves of coal, copper and iron ore, Mongolia has become one of the world’s fastest-growing economies, with investors keen to grab a slice of the action. China already accounts for 80% of Mongolia’s exports, and last June Mongolia overtook Australia as China’s biggest supplier of coking coal.

A potential slowdown in China’s growth will not cut exports from Mongolia as much as some might expect, explains Randolph Koppa, president of the Trade and Development Bank of Mongolia. "Even if China was to expect a hard landing, the development of low-income housing will continue," he says. "China will still need to import materials from Mongolia to complete 36 million housing units and the basic infrastructure to go with this."

China is the world’s biggest coal consumer. According to data from the China Coal Transport and Distribution Association, imports for power stations and steelmaking including lignite rose 90% to more than 25 million tonnes over the year to April.

An efficient mining industry in Mongolia will require a sophisticated banking and finance sector and because the country is starting from such a low level there is substantial investment potential.

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