ULAN BATOR, Mongolia, June 22 (UPI) -- Tsakhia Elbegdorj was elected president of Mongolia by a people looking for help out of economic doldrums. Tapping into the country's vast mineral resources could be a start.
Elbegdorj won just more than 51 percent in the May 24 vote, ousting incumbent Nambariin Enkhbayar. Elbegdorj will need to work with a legislature, called the Hural, controlled by Enkhbayar's Mongolian People's Revolutionary Party and Prime Minister Sanjaa Bayar, to advance any agenda.
One of Bayar's first speeches as prime minister in November 2007 was to announce the government seizure of the Tavan Tolgoi coal mine. The government soon after tabled a draft agreement with Canada's Ivanhoe Mines regarding copper and gold rights at Oyu Tolgoi in the Gobi Desert.
Ivanhoe, which has worked to close the deal for five years, said its exploitation of the mineral field would result in a 34-percent increase for Mongolia's gross domestic product.
That is growth Ulan Bator would seem to be excited to tap into since Mongolia is seeing economic pressure as commodity price falls have hurt its exports of gold, copper and coal, which had fueled growth of 9 percent a year from 2004-08, and its deficit has grown forcing unpopular budget cuts. Mongolia recently turned to the International Monetary Fund for help in the form of a $224 million package of loans.
Now that he's president, one of Elbegdorj's first points of business will be to assure foreign investors that his plans will involve them.
The day before Thursday's inauguration Elbegdorj told Bloomberg News, "I would like to say to the foreign investors: 'Do not close the door, there are still opportunities.'"
Mongolia has extensive gold and copper deposits, among other minerals. There have been predictions that, should the copper fields be fully developed, Mongolia would be one of the top 10 producers of the metal in the world.
There have been successful mining deals before, notably for the country's coal reserves. There were nine bids in February for rights to win the Tavan Tolgoi mine, which is said to contain 6 billion metric tons of coal, suggesting that many people believe business can be done with Mongolia.
In 2008 Ivanhoe said Oyu Tolgoi contained 45.2 million ounces of gold and 78.9 billion pounds of copper. That estimate came after an investment of $450 million from 2000-07 by Ivanhoe. The company said the project would create nearly 8,000 Mongolian jobs.
Those statistics haven't meant enough to convince Ulan Bator to finalize the project. There have been signs of frustration among possible foreign investors, but Ivanhoe continues to express interest in working in Mongolia. However, there is a desire that a deadline be set for a deal to be completed.
Elbegdorj told Bloomberg he wanted to tweak legislation so that Mongolia would receive 50 percent of profits rather than a half equity stake and also said he would seek a change in the country's windfall tax law.
Any such changes will go through Bayar and the Hural, and that will take more time. Some analysts said the additional delay may be as long as three years.