Source: BCM NewsWire                           Date: 10 September, 2010

Mongolia ranks 7th in the list of safest countries to invest in after Australia, Canada, Chile, US, Mexico and Brazil,  according to latest risk assessment study carried out by Behre Dolbear, a globally recognized mineral industry advisory firm. The figure was presented by Mr. Bernard Guarnera, President of the firm and guest of honor at the two-day Discover Mongolia 2010, the 8th Annual International Mining Investors Forum that kicked off on September 8. The ranking was based on criteria such as existing economic and political systems, social issues affecting the mining sector, permitting process and delays, corruption, stability of currency and tax regime.

Mr. Guanera presented a very favorable mining investment environment for Mongolia and pointed out that foreign direct investment had increased five-fold between 2004 and 2008. Proximity to power hungry China which “needs to expand its power grid by an amount equivalent to the UK’s total consumption each year for the next 15 years”, spells huge potential for Mongolia coal exports, he said.

Talking about challenges investors face, Mr. Guanera put bureaucracy and corruption at the top. Citing the latest Transparency International survey where Mongolia drops its global rank from 102 to 120, Mr. Guanera announced that Mongolia “will be downgraded for corruption in the next ranking”.  He, however, spoke favorably of the tax structure. “Income tax is at 10% while corporate tax is at 25%; these are relatively low figures and we like it,” he said.

However, investment attractiveness could be derailed by government action, he said, reminding participants of the enactment of the windfall profits tax which resulted in a sharp drop in investments before it was decided to rescind it with effect from January 1, 2011. “The government’s take and takings will be decisive in maintaining mining investor interest,” Mr. Guanera said, ending his keynote address with a pithy pronouncement, “When you get too greedy the goose goes.”

Taking stage as the next guest of honor, Mr. Tim Goldsmith, Partner and Global Mining Leader of PricewaterhouseCoopers (PwC), reiterated China’s role as a ‘hungry dragon’ for Mongolia’s mineral resources. This spells out positive investment opportunities for resource-rich Mongolia. ”Demand is in great shape and will outweigh supply,” he said before announcing the official opening of a PwC country office in Mongolia.

China’s importance as an export market for Mongolia’s coal was brought up again by Mr. Alexander Molyneux, CEO of SouthGobi Resources. “Coal in Mongolia is principally an export commodity for China,” he said, pointing out the Chinese Government’s North West development program, which is much more closely linked to Mongolia than to coal mines along China’s Eastern regions . Referring to the Government’s recent decision to link Tavan Tolgoi with the Russian rail link, Mr. Molyneux reminded the audience of Russia’s self sufficiency in coal and the cash costs required. “Transporting coal though Russia to the northern ports spells a negative margin despite possible robust prices,” he said.

In its 10th year, Discover Mongolia is the country’s biggest International Mining Investor’s Forum that attracts world leading mining companies, geologists, mineral consultants, mining equipment suppliers, financial institutes, investment consultants, investors, academia and media.