Yes we Khan! Opportunities for Australia in Mongolian visit

The visit of Mongolian Prime Minister Sanjaagiin Bayar to Australia next month is unlikely to be headlined in any newspaper or news broadcast. Nevertheless, business leaders would be foolish to ignore the message he carries.

Mr Sanjaagiin’s vast landlocked country is sitting on some of the largest undeveloped mineral resources in the world with extensive deposits of coal, copper, gold and uranium as well as lesser quantities of silver, tungsten, tin and precious stones.

One mine alone, the giant Oyu Tolgoi Project 80 kilometres north of the China border, is expected to yield about 30 million tonnes of high-quality copper and 1,200 tonnes of gold. As Mongolia’s Ambassador to Australia, Tserendorj Kambaldorj says with typically diplomatic understatement: “We see great potential and opportunity in these areas.”

Opportunity is what Mr Sanjaagiin will have on offer during his visit. Australia’s experience in mining and the provision of the accompanying infrastructure is attractive to Mongolia, one of the most sparsely populated nations on earth, which simply does not have the expertise to exploit its wealth without substantial foreign investment.

Rio Tinto already has a foothold in the country after signing an agreement with the Mongolian Government and Canada’s Ivanhoe Mines this month to exploit Oyu Tolgoi. This deal is expected to be the first of many now that the government has laws in place that ensures the country is an automatic partner in all future resource projects.

Another advantage is Mongolia’s geographic position. Sandwiched between Russia and China, it is ideally placed to supply these two resource-hungry giants, but this situation should also be a warning that the time when countries like Australia can play a major role may be running out.

Australia is only one in a crowd of nations likely to be knocking on Ministry doors in Ulan Bator over the next few years. China and Russia themselves would like to be players as well as customers in the exploitation of Mongolia’s riches. Interest is also being shown from North America, Europe, Japan and possibly India.

Russia is especially well placed. The two countries share a 3,500-kilometre border and for decades during the communist era Mongolia allied itself with the Soviet Union as insurance against absorption from the south by Maoist China. The two nations transformed themselves into parliamentary democracies at roughly the same time in the early 1990s, and relations with the Russian Federation remain strong.

However, Mr Sanjaagiin’s visit is a sign his country is prepared to look outside its traditional relationships to find economic partners. While he is the first Mongolian Prime Minister to come to Australia, past presidents have been here on two occasions, Governor General Bill Hayden was in Ulan Bator in 1995 and there have been several reciprocal visits by Parliamentary delegations.

Former Minister for Foreign Affairs Alexander Downer visited Ulan Bator in 2007, announcing a number of initiatives, including the establishment of an Honorary Consulate in the Mongolian capital, increasing the number of development scholarships for Mongolian students, and some minor adjustments to the aid program.

Mongolia set up its embassy in Canberra late last year, but to date there has been no reciprocal move by Australia and at a time of enforced cutbacks at the Department of Foreign Affairs and Trade a new diplomatic mission is highly unlikely. However, in a move that could be seen as recognition of the strengthening ties, responsibility for Mongolia was shifted from the Australian Embassy in Beijing to South Korea, where it is likely to carry more weight.

Ambassador Tserendorj sees many parallels between the two nations. “Both are large countries with small populations,” he says. “In the past both relied on agriculture as their major industries. Now they are generating great wealth from mineral resources.