Speeches
Charge d’Affaires Keynote Address to Discover Mongolia 2009 Investors Conference
Your Excellency Minister Zorigt, President Ganbold, ladies and gentlemen — we are honored to address Discover Mongolia 2009.
I think it is safe to say that as the first decade of the new century ends, and Mongolia begins its twentieth year of democracy and open markets, Mongolia has been discovered.
Oyu Tolgoi and other key projects, especially Tavan Tolgoi and Shivee Ovoo, have certainly put Mongolia on the global map for the exploration, mining, and processing of minerals and metals.
And as recent developments attest, the OT Investment Agreement proves that Mongolia can say YES to development, yes to investment, and yes to investors.
So what is left to discover? Certainly, more remains to be found below ground, which we leave to you and your industry. But what remains for us, the representatives of Mongolia’s Third Neighbors, to discover about Mongolia?
Our first question for discovery: is Mongolia politically stable? The answer certainly seems to be a resounding yes. A look at the democratic and political systems over the past year highlight a deep and profound stability and desire to make the political system work. The recent, orderly transitions of governing responsibility, starting during the Presidential transition earlier this year and more recently the recent changes from a government led by Prime Minister Bayar to that led by Prime Minister Batbold reveals that Mongolia’s institutions are strong and sophisticated enough to endure traumas. We have certainly discovered a stable democratic state and a stable political system.
Our second question for discovery: What will the OT project impose on Mongolia?
We know that the OT investment agreement is a clear win-win for all parties to the deal, not the least for the Mongolian public. I could of course go on about the mine’s fascinating technical challenges, but diplomats like me really enjoy discovering the political challenges of implementation and how they might be met.
We all know the political process for reaching YES was bruising, but it created experience and wisdom that all of us will need to draw upon as we collectively implement this complex deal. Further, it highlighted all that is good about open, democratic systems -- all parties had the opportunity to raise their concerns, but in the end the debate led to a stronger deal with broad support.
From our perspective, the most serious challenge to your industry is public expectations -- reasonable or not. The Mongolian people expect that benefits from OT and other projects will be immense and will flow sooner rather than later. These expectations are consistent with the hefty promises made throughout the negotiating process.
In the long run, benefits will flow but perhaps not as fast or as much as the public expects in the near term, and the inevitable gap between expectations and reality could become the lens through which Mongolians perceive the value and quality of mining done in their country. If expectations are not met, then inevitable disappointment will poison public attitudes to mining and open up all manner of political mischief in the years ahead. We think that a frank discussion with the public by the parties involved, now, about what is and is not possible will go some way towards managing what may be unrealistic public expectations.
OT also presents the Mongolian regulatory system with serious challenges.
Frankly speaking, we are concerned that the massive increase in administrative responsibilities related to the development of OT has the potential to overwhelm the current institutional framework. The necessary burdens of OT may cause bottlenecks throughout the system affecting large, medium, and small projects alike. We know this challenge is coming. It has happened elsewhere; it will happen here; and it will take a collective response from the international community, the government and parliament of Mongolia, and your entire industry in Mongolia to deal with this key problem.
As we have probed the big-picture issues affecting Mongolia, some might think that we have reservations about the coming of mega projects. We don’t. Local employment from OT is increasing.
The project is actively seeking out local sourcing to supply the mine. Revenues have already come into Mongolia, and plans for construction are moving rapidly forward. From our perspective, the OT project is delivering what it has promised at a good pace.
But we will temper the celebratory mood that we all rightly feel today with a serious reflection upon where we need to go. We need to accept and deal with the fact that OT will have an impact on every aspect of mining in Mongolia. No mine or related activity can claim that it is too small or too big to avoid the effects of this mega project. And now is the moment, in the period between the signing of the OT deal and the start up of construction, to discover collective approaches to these challenges.