Development of Mongolia in Mining Sector Essay Example | Topics and Well Written Essays - 1750 words

Development of Mongolia in Mining Sector - Essay Example pag.). This paper is intended to review the impact the booming mining industry makes on the overall economic performance of Mongolia, as well as the major opportunities and challenges faced by the sector, which inter alia would determine its future. The paper is organized in three main sections, the first of which provides accounts of the overall size, type and peculiar characteristics of Mongolian economy; the second provides a brief overview of the Mongolian mining sector; while the third section attempt an insight into the broadening horizons of Mongolia’s mining industry. Introduction to Mongolian Economy Following the dissolution of the USSR, Mongolia’s economy experienced both deep recession due to natural disasters and political inaction, and more or less noticeable growth, because of the economic reform, which included free-market orientation and extensive privatization of the dominant state sector (CIA, n. pag.). However, the massive livestock losses caused by severe winters and draughts, compounded by falling prices for the primary sector exports and widespread opposition to the privatization process, resulted in fairly anemic GDP (Gross Domestic Product) growth; between 2004 and 2008, the GDP growth was nearly 9 percent on average, mainly due to new gold production, as well as to high copper prices (CIA, n. pag.). As of 2008, the Mongolian economy suffered both a soaring inflation rate – actually the highest inflation rate in over a decade, reaching almost 30 percent – and an external shock caused by the global financial crisis, with a sharp drop in commodity prices, hence greatly slashed government revenues (CIA, n. pag.). A 236 million-dollar stand-by agreement was reached with the International Monetary Fund in 2009, which assisted the country to emerge from the crisis (CIA, n. pag.). Because of the harsh weather during the winter in 2009 – 2010, a massive loss of livestock occurred once again – this time over 20 % of the total number – doubling the meat prices and consequently shrinking the GDP by 1.9 percent. In 2010, the economy growth was 6.4 percent, while in 2011 – 17.3 percent; these results were mainly obtained by commodity exports in the neighboring countries, on which the Mongolian economy heavily relies (CIA, n. pag.). For example, Mongolia purchases 95 percent of the imported petroleum products and substantial portion of its electricity imports from Russia, while China receives over 90 percent of Mongolia’s total exports (CIA, n. pag.). Besides agriculture, which comprises production of wheat, barley, vegetables and forage crops, as well as horses-, sheep-, goats-, cattle-, and camels-breeding, the Mongolian economy’s main industries include construction, production of construction materials, mining (coal, copper, molybdenum, tin, gold, uranium, etc.), production of food and beverages, as well as processing of animal products; according to data of 2010, electricity production amounts to 4.313 billion kWh, whereas electricity imports are 262.9 million kWh (CIA, n. pag.). As of the same period, the overall industrial production growth rate is estimated at 37.3 % (CIA, n. pag.). According to 2011 data, Mongolia’s GDP is estimated at 13.28 billion dollars. Agriculture contributes 12.9 % of the total GDP, the