Railway plan will transport Mongolia into a 21st C economy

(China Daily)
Updated: 2010-09-13 09:39
Large Medium Small

A largely untapped, mineral-rich country with proven industrial potential, Mongolia is on the verge of huge economic growth.

The combination of a small population - just 2.9 million people - and high gross domestic product have led financial analysts to compare it with the thriving economies of Chile and Kuwait which, with a similar ratio, are now significant world economies.

With its proximity to China-the number one commodity consumer in the world-and a flood of foreign liquidity waiting to pour in, the Mongolian government is ready with new investor-friendly laws and policies in place for the country to become a 21st century nation.

GDP could grow eight-fold

Rich in coal, iron, copper and crude oil, industrialization could increase Mongolia's GDP eight-fold to a staggering $41 billion in 11 years.

The government's National Development Strategy, which is linked to the United Nations' Millennium Development Goals, has pinpointed growth of around 14 percent between 2007 and 2015, and a further 12 percent between 2016 and 2021.

As a landlocked country, it is vital that transport links are developed to fully capitalize on these advantages, which is where the Ministry of Roads, Transportation, Construction and Urban Development comes in.

Headed by former wrestler and businessman Khaltmaa Battulga, the Ministry has unveiled exciting plans for new infrastructure that will help the industrial sectors blossom and reach the Chinese market with ease.

As Minister Battulga explains, it is the start of a new era for Mongolia, but the growth depends on how the infrastructure is coordinated.

"Oyu Tolgoi and Tavan Tolgoi, respectively lucrative copper and coal mines, are located in the South Gobi desert, about 120 km from each other and are also both very close to the border with China, our biggest trade partner," he said.

"We are planning to have as much value-added processing done inside of Mongolia, at a new industrial park based in Sainshand, a town that already has urban infrastructure and is close to China."

Two-way partnership

Working on the outcome of an integrated mining and railway infrastructure development study done in partnership with global management consulting firm Boston Consulting Group, the ministry is planning important changes that will help create a thriving, sustainable economy for the future.

One aspect of the plan is to build a new railroad from the Tavan Tolgoi Mine to Sainshand, and from there, a 570 km railroad to Choybalsan in the east.

The industrial cluster at Sainshand will have all the facilities needed to process iron ore, copper, coal and crude oil, including a coke plant, a copper smelter and an oil refinery. From there, the goods can be exported to China, Germany, South Korea, Japan and other markets.

Chinese experience in this area will be most welcome, the Minister states.

"China is participating in, and financing, many infrastructural projects in continents such as Africa and the Latin America countries. As we are neighbors, it seems only right that we accept their experience.

"In the same way, we have to participate in China's growth. For instance, it might be a challenge for 1.4 billion people to have economic growth; everyone would like a house and everyone would like a car. So there will be greater demands on electricity and energy.

"If there is a power shortfall, we could manufacture and export electricity; if there is a petroleum shortfall, we could provide coal or gas.

"We would like more Chinese business people to talk to us."

The new railroads, which will be constructed on a build-operatetransfer basis, will complement the existing network, which is now slated for modernization.

Ports and aviation

Minister Battulga would also like to see rail connections to Kazakstan, Tuva and Kashante, although further feasibility studies will need to be done. He has also studied the potential seaport connections.

"The closest sea port to Mongolia is Tianjin, the Chinese mainland, some 1, 800 km away, so that link will obviously depend on the value of the product. We are also looking into reaching other ports in China that have less capacity or congestion, such as Qinhuangdao.

Air links will be another significant factor in the country's development. While privatization is not on the cards, MIAT Mongolian Airlines, the country's flagship airlines, is being scrutinized for further improvements and will undergo a restructuring to improve operations as part of the ministry's plan.

The airline, which has qualified 100 percent in the IATA operational safety audit, has successfully introduced an e-booking reservation system and begun code share flights with Aeroflot and Korean Air in the last year. It also operates daily flights to Beijing to meet the business demands of customers. The ministry is also looking into highway and housing projects that will create new jobs.

When asked about his wrestling career, which he insists was not especially significant, Minister Battulga had this to say.

"In the 1980s, only ministers and sportsmen went overseas. Back then, based on some of the places I visited, I used to think that I would like Mongolia to develop in the same way, and I think that might have made a difference. It might, for example, be that exposure that gave me the drive to be here today."

(China Daily 09/13/2010 page21)