Mongolia joined the World Bank and Asian Development Bank (ADB) in 1991 and the European Bank for Reconstruction and Development (EBRD) as a country of operation in 2006. The international financial institutions (IFIs) have already disbursed more than $1.2 billion combined to projects in Mongolia. As IFI interest in Mongolia’s mining sector grows, so do concerns about resulting negative social and environmental impacts.
China and Russia are major export and import partners, respectively, and economic activity is focused on the mining sector, which has provided 17% to 25% of Gross Domestic Product (GDP) in recent years. There are more than 300 mining companies operating in Mongolia. Coal, gold, and copper account for a large percentage of their mining activities. In April 2007, Mongolia’s government signed a Memorandum of Understanding (MOU) with the World Bank, EBRD, and ADB on the development of the country’s mining sector. The MOU signals growing interest on the part of the IFIs in expanding activities in this sector. It is available on the Mongolia Resources page but has yet to be made public on the IFI websites.
In many ways, Mongolia has been a model for democratic development and anti-corruption in Central Asia. Major mining deals in the pipeline, such as the Oyu Tolgoi copper and gold and Tavan Tolgoi coal projects, have raised prospects for resource revenues. The 2008 elections were to be instrumental in Mongolia’s future development with the new government deciding wealth sharing agreements and natural resource management. With so much wealth at stake, it should not be surprising that Mongolia’s elections were contested, leading to violence and riots in the streets on July 1, 2008. As a result, the extractive sector is a key issue to monitor. The IFIs have a responsibility to consider political, social, and environmental consequences of lending and technical assistance related to extractive industries.