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Opportunities and Concerns during the Mining Exploitation in Mongolia
1.Introduction
Mineral resources are great wealth for a nation, which can be regarded http://www.ukassignment.org/jndzydx/ as a gift of the god. Making good use of the gift can bring unexpected outcomes. The proper exploitation of the mineral resources can bring many opportunities to the residents nearby and even the whole nation. However, many problems should be concerned about at the same time. This essay will firstly give a brief introduction of the mineral resources in Mongolia. Following this, it will list the opportunities the optimal exploitation of the mineral resources, such as attracting foreign investment, pushing the growth of the economy and promoting the process of industrialization. Finally, it will put forward some concerns for the minister in the government of Mongolia. The problems such as the technique input, environmental pollution and dependence on the mineral resource export should not be ignored during the exploitation.
2. Brief Information of the Mineral Resources in Mongolia
Mongolia has a territory of 1.56 million square kilometers and a population of 2.5 million. It is a vast territory with a sparse population and rich mineral resources. In the 1960s, experts of Mongolia and the Soviet Union have found 80 kinds of minerals and more than 800 deposits cooperatively. But until now, only 16.4% of the land have been explored and investigated.The reserves of copper are very rich in Mongolia. It has the largest copper mine, Erdenet copper mine. Besides that, its gold reserves are also abundant, as the proven gold reserves are 3,400 tons.
Mining industry productions have accounted for more than 28% of Mongolia’s GDP and born a ratio of more than 80% of the total trade.Besides, 64.3% of domestic industrial production in Mongolia depends on the mineral resources. Therefore, the mineral resources have been the economic lifeline of Mongolia (Julia et al., 2011). In the recent years, as the price of the international raw material prices has rocketed, Mongolia’s living standards have improved leaps and bounds in the past two or three years.
In recent years, the Mongolian government attracts the foreign investment for mineral resource exploration and development. Currently, the countries engaging in the exploration and development of mineral resources are Australia, Canada, the United States, Brazil, Russia, South Korea and China.For countries such as the United States and Japan, mineral resources have been regarded as the primary subject. Minerals in Mongolia are much more essential.Resources in Mongolia have been the main competition for the target countries.
3. Opportunities for Mongolia
The exploitation of the mineral resources can bring enormous opportunities for Mongolia. Ministers in government should see them promptly.
Firstly, it would attract foreign investment. As the demand for mineral resources is increasing rapidly, Mongolia has become a place contested by all strategists in the whole world. If the government of Mongolia adopts a more open policy towards the foreign countries, not only funds but also advanced technology in the world and new equipment. The government has the right to choose the optimal or a much more environment-friendly investor. New investment will inject a new part of life into Mongolia.Not only the mining industry, but the whole industries would be benefitted from the investment.
Secondly, it would be the catalyst for the social economic growth.Mineral resource export is one of its domesticeconomydriving forces. The development of mineral resources will promote economic growth directly. The exploited mineral resources have to go through a process of reconnaissance, development, production and consumption. All these steps will spend many human, material and financial resources. It can be regarded as stimulation to the social economy. The exploitation and utilization of the mineral resources would guarantee that the social economy of this country continues to grow (Bogatyrev, 2009).
Thirdly, it would promote its industrial division. As a country with so many mineral resources, the mining industry is its major industry after animal husbandry.According to the factor endowment theory advanced by Eli Heckscher and Betil Ohiln, countries would naturally export the products which use their relatively abundant and cheap factors and import those which use the countries’ scarce factors (Luis et al., 2004). Abundant mineral resources will give Mongolia a chance to be a resource-intensive country. The development of the mining industry will stimulate the division of many industries, such as chemical industry, smelting, and transportation industry and so on.
Finally, it would quicken the construction of domestic infrastructure in Mongolia. The most beneficial industry would be the transportation industry. As an inland country, the most common vehicle is train. If Mongolia wants to export its mineral resources to foreign countries, it should set up a strong web of railroads. As China and Russia are the largest export objects and the nearest countries for Mongolia, the railroads towards these countries are much more convenient.
4. Concerns during the Exploitation
During the exploitation, many problems would be brought at the same time. When grasping the opportunities, these concerns should also be taken into account.
First of all, environmental problems are the acute ones. The policies should include the environmental issues when exploiting the mineral resources, as during the exploitation, the miner may not pay attention to the protection of vegetation around the mines and public facilities such as the local bridges and roads. This behavior would also give the local residents and government a feeling of dissatisfaction and then become an obstacle to the exploration and development.Protection of theenvironment is essential to get sustainable development. The optimal outcome is to get wins of both economy and environment (Stephen Kesler, 1994).
Secondly, the exploitation should be guided by demand.It is demand that determines supply (Gregory Mankiw, 2003). The mineral exploitation should also be commercialized. Though there are many rich mineral resources in Mongolia, the produced quantity of each mineral resource is not equal. As larger demand means higher price, exploiting the resources which are more demanded can bring more economic benefits.Ministers can firstly command the international price of each resource, and invest the most economical ones.
Secondly, governments should pay more attention to the technique input. The rich mineral resources are advantages to Mongolia, however, if the technique is not improved, the efficiency of the produced quantity is sharply reduced. This technique does not only mean the production technique, but techniques of all sides. As the railroad capacity is very limited in Mongolia, it would be a bottleneck which may restrict the mining development of Mongolia. Besides, Mongolia is a country lack of water and electricity. Many companies have to generate their own electricity. All these backwards infrastructures add the mining cost.
Finally, it would be very dangerous if the economy depends much on resource export. Although Mongolia is a country with extensive resources, it should no long toil along a single path of relying on resource export to develop economy. Mongolia should create a road of “innovation driven” or “endogenous growth” to keep the economy growing. If not, it has a large possibility to be threatened by the so-called “Dutch disease”. Only in this way can Mongolia stimulate the country’s innovative potential and ensure sustainable economic and social development.
5. Conclusion
In conclusion, the mineral resource exploitation is a big opportunity for Mongolia. Ministers in government should give enough attention to its exploitation. It would not only bring a sharp and prodigious increase to its export and the whole economy, the domestic infrastructure construction can also be improved under the situation. However, many issues should be concerned at the same time. Not only the environmental problems, but also the backwards technique level and the international demands may have an effect on the exploitation of the mineral resources.
References
B. A. Bogatyrev, 2009. Mineral Economics. Criticism and Bibliography, 51(1), pp.74-77.
Julia Bersch and Tara Sinclair, 2011. Mongolia: Measuring the Output Gap. International Monetary Fund.
Luis A. Rivera-Batiz and Maria A. Oliva, 2004. International http://www.ukassignment.org/jndzydx/ Trade: Theory, Strategies, and Evidence. USA: Oxford University Press.
N. Gregory Mankiw, 2003. Principles of Economics. 3rd ed. Cincinnati: South-Western College Pub.
Stephen E. Kesler, 1994. Mineral Resources, Economics, and the Environment. New York: Macmillan College Publishing Company, Inc.
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