TORONTO, Oct 22, 2004 (The Canadian Press via COMTEX) --
Robert Friedland, the mining financier who helped discover the massive nickel deposit in Voisey's Bay, encouraged Canadian companies to follow his lead by investing in mineral-rich Mongolia while publicly thanking the Asian country's president Friday f
or promoting an investment-friendly environment.
In an impromptu lunchtime speech to the visiting President Natsagiin Bagabandi, Friedland compared Mongolia to Canada, because it ships its plentiful resources to a rich southern neighbour, and said in the future that Mongolia, flanked by China and Russia, is "going to be very wealthy indeed."
He added that if other Canadian companies follow the example set by his company, Vancouver-based Ivanhoe Mines, "they will experience enormous success by coming to Mongolia."
"The fact that Mongolia is opening its hands to Canadian industry is of great importance to my company, Ivanhoe Mines," Friedland said.
Ivanhoe (TSX:IVN) has staked its future on its 110,000-square-kilometre gold and copper property in Mongolia, a huge land-locked country with a tiny population.
Ivanhoe's Oyu Tolgoi project in Mongolia's Gobi desert contains over $60 billion US worth of metal, according to the company, which is forecast to begin entering the market in 2007. Friedland has said the company would likely sell minority equity interests in the project to Chinese industrial or financial companies or to Japanese or Korean trading houses. In the summer he said Ivanhoe turned down a business-combination proposal from Canadian nickel giant Noranda Inc. (TSX:NRD).
Having recently emerged from communist control, the developing country has been eager to give lucrative tax holidays to investors. Its biggest investor is China, which accounts for 33 per cent of foreign direct investment in its neighbour, followed by Canada, at 13 per cent. As well, the portion of its gross domestic product that Mongolia gets from the mining sector has been growing by about 10 per cent annually for the last decade.
On the first-ever visit by a Mongolian president to Canada, Bagabandi told about 60 mining executives and other business people Friday that he "conducted extensive talks" with Prime Minister Paul Martin before arriving in Toronto. They agreed, he said, to "develop further business ties and economic ties between the two countries."
"Mongolia is very wealthy in minerals and natural resources and there is room for further co-operation between the two countries," Bagabandi said.
"I believe the beginning of this process has already started."
Other Canadian countries currently enjoying or poised to enjoy a big payoff in Mongolia include Centerra Gold, the Cameco Corp. spinoff that is the only Canadian company already mining gold in the country. Explorers Erdene Gold Inc. (TSXV:ERD), Entree Gold Inc. (TSXV:ETG) and QGX Ltd. (TSX:QGX) are also involved, with the latter two having significant investments from Barrick Gold Corp. (TSX:ABX), Canada's largest gold producer.
Peter Ackerley, president and chief executive of Erdene Gold, pointed out that Canadian mining and exploration companies have spent more than $200 million in Mongolia in the last two years and that it still "remains largely unexplored."
"We believe Mongolia has the formula for successful exploration and mine development: a rich mineral endowment with limited exploration, a strong support system and the world's biggest buyer waiting on its doorstep," Ackerley told the lunchtime crowd.
His remarks came on the same day China confirmed its GDP grew by 9.1 per cent in the third quarter of 2004 over the same quarter last year, despite attempts by the government to cool the country's hot economy. The booming Asian country's GDP for the first nine months of the year grew to $1.13 trillion US, the National Bureau of Statistics said.
Chief among China's needs for continued growth is a large supply of metals, especially copper and nickel.
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