Interview with R. Bold, the Mongolian Ambassador to Australia
In this interview, the Mongolian Ambassador to Australia, R. Bold, addresses a wide range of issues related to Australia and of great importance to Mongolia. Among the topics he discusses are whether Mongolia can learn from the Australian model of development and whether the Australian government is attempting to improve communication between Rio Tinto and the Mongolian government.
What kinds of cooperation currently exist between Mongolia and Australia? What is your opinion on how the relationship will change in the future?
During our Prime Minister’s official visit to Australia back in 2011, the two countries agreed to cooperate mainly in the education, science, mining, agriculture, and tourism sectors. Peacekeeping operations will be added to these. If the geographical distance didn’t exist, it would be a rare bilateral relationship between countries that could be very successful and mutually beneficial. Thus, the future looks as bright as a sunny day.
Do the two countries have similarities?
We could name a number of commonalities. Australia is surrounded by ocean, whereas Mongolia is surrounded by land. Australia is a country of agriculture and livestock husbandry. Thus, there are some similarities in mentality. Also, Australia has a beautiful wild nature and so on. There seem to be some similar behaviors in political and ordinary Australian life.
Australia is an industrialized country. In Mongolia, we talk about the Australian model. What can Mongolia learn from the Australian experience in the mining sector?
It is a good thing that people in Mongolia talk about the Australian model. Mining and the extractive sector account for 10 percent of Australia’s GDP. Mining is likely to remain important with the rapid development in the sector at least until 2020. Mining projects in Australia are operated by private companies, whereas the government is only a benefactor of the taxes and is responsible for providing a stable legal environment to promote more jobs. The story of how Australians solved the infrastructure issue in this vast country is a good lesson for us. For a country that has a small population and shortage of labor, the utilization of modern technology is important. If we are keen to follow the example of others, there are already proven standards and methods on vocational training in the mining sector.
How would you describe the Australian mining policy?
Australia has a federal system of government. The country has six states, and each state has the power to decide many matters on its own, such as issuing a mining license. The mining sector accounts for the majority of jobs in the country. Taxes from the mining sector are being spent on mega-infrastructure projects, healthcare, education, pensions, and welfare. The policy can be described as mining projects striving to be environmentally friendly, relying on technology, and taking into account that the mining boom is temporary. The main point is that its economic power is sufficient enough to transfer itself from mining sector dependency.
Australia doesn’t support the processing of raw materials. It prefers to export its vast coal resources unprocessed for environmental reasons. What is your opinion of this?
Coal fired power sources account for 75 percent of its domestic energy demand. Thus, the government created a carbon tax from 2012 to minimize the effect on climate change. Therefore, the miners are forced to export raw coal. The coal to liquids industry is developing very slowly. However, the government supports the renewable energy industry. The goal is for renewable energy to account for 20 percent of the energy supply in 2020, and 40 percent in 2035 from wind, solar, and other renewable sources. Australia is a part of the nuclear weapon free-zone of the South Pacific. It has more uranium deposits than any other country. However, it will not build nuclear power plants, and exports only yellowcakes. I think it is a suitable policy for us to follow as we are keen to talk about uranium.
What is Australia’s approach as a new competitor in the coal market, particularly as a supplier to China?
Indeed, competition is the basis of success. However, I do not agree that Mongolia and Australia are competitors. On top of that, nobody will consider us as competition. Australia exported 170+ million tons of coal. Sixty percent of exports are for two main established markets: Japan and South Korea. The remaining 20 percent went to China. It’s 16 percent of China’s overall coal imports. Australia and Mongolia account for only one-fourth of China’s coal imports. Thus, maybe there is the perception that the two countries will compete for China’s coal market. China is expected to grow further, and its energy production and consumption will increase, but, at same time, the PRC’s economic growth is not forever, but midterm stable growth is certain. In other words, the market will not be exhausted soon. Thus, the two countries could work collaboratively on the Chinese coal market by coordinating their operations.
Do you agree that Mongolia should learn from the Australian experience in managing foreign investment? Also, could you tell us about the Foreign Investment Review Board, and their decision making process.
Australia’s engine of development is foreign investment. Foreign investment reached its peak at over 500 billion USD in 2011. Thirty-two percent of this was invested in mining. The Foreign Investment Review Board is operated under the Finance Minister. The Board is composed of only 5 members, and the members are not directors and chiefs like in our country.
If foreign state-owned enterprises are buying real estate, land or certain parts of Australian companies, approval is needed from this board. The second economic driving force is agriculture. Thus, land purchase is always under control. Foreigners can own land, but a permit is required. If the privately owned enterprises are investing more than 244 million AUD, approval is also needed from the board. We are told that the Board responds to over ten thousand requests annually. The board must respond within 30 days of the request. Non-responsiveness is a sign of refusal, but it happens very rarely.
There are many Australian exploration companies in Mongolia that own a license. However, because of the law that limits foreign investment, many of them are leaving the country. What do you think of that? What do Australian investors think of us? Is there any change of opinion due to the recent drafts of the Foreign Investment and Minerals Law?
There are over 200 small and mid-sized Australian companies involved in business in Mongolia directly and indirectly. I believe that half of them are Oyu Tolgoi suppliers. Forty-five Australian companies opened offices in our country. They have actually established operations in the country, which is very promising. I would say very promising in terms of the “third neighbor policy” perspective. Therefore, we should view this as encouraging and beneficial for both countries.
After approving the Law on Regulation of Foreign Investment in Business Entities Operating in Sectors of Strategic Importance, the Australian government officially expressed their discontent in 2012 and, again, in 2013. Generally, foreign investment is in decline. Some tell us that if you can’t work with the biggest investor, what can we do. Some ask us what have we done to create a stable investment environment. It is hard to hear such things from investors. Mongolia is not well known in Australia. There isn’t much information on Mongolia. It is a big mistake to think that we have vast resources and the world knows us. Thus, we are concentrating on introducing ourselves. It is hard to explain the differences in mentality between foreign investors and ourselves. Thus, promoting ourselves as a democracy, market economy, with free competition, and APEC membership seems to fall on deaf ears.
There is a planned meeting between the Australian Minister of Resources and Energy and the Mongolian Mining Minister. Can the meeting be seen as an attempt to solve the dispute between Rio Tinto and the government of Mongolia in a friendly manner?
Former Australian Minister of Resources and Energy Mr. Ferguson had planned two trips to Mongolia which both were unsuccessful. One was delayed because of MIAT, and the other was because of the Australian internal situation. The Australian Minister of Resources and Energy is also responsible for tourism. It is not very pleasant to hear that the delegation arrived in Incheon Airport and waited for the Mongolian plane for hours, and when it didn’t arrive, they decided to fly back. Australian Minister of Resources and Energy, Mr. G. Gray, will meet with our Minister, Mr. D. Gankhuyag, in Sydney. Also, the joint working group of the two ministries will meet for the second time there.