Identifier
Created
Classification
Origin
09HONGKONG800
2009-04-30 10:26:00
CONFIDENTIAL
Consulate Hong Kong
Cable title:
MONGOLIA MINING FOR MONEY IN HONG KONG
how-toVZCZCXRO3076 RR RUEHCHI RUEHCN RUEHDT RUEHGH RUEHHM RUEHVC DE RUEHHK #0800 1201026 ZNY CCCCC ZZH R 301026Z APR 09 FM AMCONSUL HONG KONG TO RUEHC/SECSTATE WASHDC 7524 INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS RUEHOO/CHINA POSTS COLLECTIVE RUEHUM/AMEMBASSY ULAANBAATAR 1393 RUCPDOC/DEPT OF COMMERCE WASHDC RUEATRS/DEPT OF TREASURY WASHDC
C O N F I D E N T I A L HONG KONG 000800
SIPDIS
STATE FOR EAP/CM, EEB/IFD, TREASURY FOR OASIA
E.O. 12958: DECL: 04/29/2034
TAGS: ECON EFIN PGOV PREL HK MG
SUBJECT: MONGOLIA MINING FOR MONEY IN HONG KONG
Classified By: Acting Consul General Chris Marut, Reasons 1.4 (b) and (
d)
C O N F I D E N T I A L HONG KONG 000800
SIPDIS
STATE FOR EAP/CM, EEB/IFD, TREASURY FOR OASIA
E.O. 12958: DECL: 04/29/2034
TAGS: ECON EFIN PGOV PREL HK MG
SUBJECT: MONGOLIA MINING FOR MONEY IN HONG KONG
Classified By: Acting Consul General Chris Marut, Reasons 1.4 (b) and (
d)
1. (C) SUMMARY: A private conference in Hong Kong March 31
brought together top level Mongolian government officials,
world class economists, some of the biggest investors in
Mongolia and multinational companies to help participants
identify the best investment opportunities in Mongolia and
how to access them. Promises by government officials didn't
boost investor confidence. Instead, attention was focused on
those who had been disappointed with Mongolia's investment
climate. For most Hong Kong investors, continued regulatory
confusion and a government lacking credibility will keep
Mongolia in the "prospect" file. End Summary.
2. (C) COMMENT: With two large pending mining deals that
will reportedly double the GDP of Mongolia, the absence of
representatives from Ivanhoe or Rio Tinto, the two largest
investors in those projects, was surprising. In a separate
conversation, an Ivanhoe board member told ConOff that he was
still confident a deal would be signed but had no idea when,
noting that the CEO of Ivanhoe has been predicting an
imminent deal for over six years. The lack of certainty in
Mongolia is clearly keeping Hong Kong investors on the
sidelines. Until they see others having success, most are
unlikely to put their own resources in. End Comment.
3. (U) More than 300 representatives from Hong Kong's biggest
banks and private equity firms attended the March 31
conference, jointly sponsored by EUROMONEY/Foreign Investment
Foreign Trade Agency (FIFTA) of Mongolia. Panel discussions
focused on Mongolia's economic outlook; political, economic
and legal reforms currently underway; strategies for
financing Mongolia's infrastructure needs; and developments
in the mining sector. The mining regulatory environment,
specifically regulations affecting the two major mining
projects, Oyu Tolgoi and Tavan Tolgoi, were the focus in
every panel discussion.
Mongolia's Isolated, Get In Now!
================================
4. (U) The Vice Chairman of FIFTA, Zanabazar Battushig, the
Mongolian Ambassador to China, Galsan Batsukh, and the
Mongolian Deputy Prime Minister Miyeegombo Enkhbold kicked
off the event with virtually identical messages: Mongolia was
not exposed to the international financial crisis, the
current issues surrounding the two major mining deals would
be resolved soon and now is the time to get involved in
Mongolia's large mining projects. DPM Enkhbold openly
discouraged investment in activities ancillary to mining; he
said domestic investors are already fully meeting the needs
of those markets. He stressed his desire for international
investors to focus on the largest mining development
projects.
No First Mover Advantage
========================
5. (C) Peter Morrow, CEO of Khan Bank, (Note: Khan Bank was
privatized in 2003 and is the country's largest bank. End
Note) pitched hard for international investment in large
mining projects, while simultaneously noting how Mongolia's
lack of integration with the rest of the world financial
system has protected it from financial contagion. However,
comments by Ralph Parks, Chairman-Asia of Oaktree Capital,
were the focus of panels and side-bar discussions for the
remainder of the conference. Parks, who has been exploring
deals in Mongolia for several years but has yet to
successfully invest there, was decidedly pessimistic about
the government's promises to resolve regulatory disputes and
clarify regulatory confusion related to the large mining
projects the government was flogging. At the break, Parks
was swarmed by scores of delegates who wanted to know why his
group pulled out of planned investments in Mongolia and what
advice he could offer them. The Vice Chairman of FIFTA and
Deputy Prime Minister, who noticeably made themselves
available to participants, received no attention from
investors.
MARUT
SIPDIS
STATE FOR EAP/CM, EEB/IFD, TREASURY FOR OASIA
E.O. 12958: DECL: 04/29/2034
TAGS: ECON EFIN PGOV PREL HK MG
SUBJECT: MONGOLIA MINING FOR MONEY IN HONG KONG
Classified By: Acting Consul General Chris Marut, Reasons 1.4 (b) and (
d)
1. (C) SUMMARY: A private conference in Hong Kong March 31
brought together top level Mongolian government officials,
world class economists, some of the biggest investors in
Mongolia and multinational companies to help participants
identify the best investment opportunities in Mongolia and
how to access them. Promises by government officials didn't
boost investor confidence. Instead, attention was focused on
those who had been disappointed with Mongolia's investment
climate. For most Hong Kong investors, continued regulatory
confusion and a government lacking credibility will keep
Mongolia in the "prospect" file. End Summary.
2. (C) COMMENT: With two large pending mining deals that
will reportedly double the GDP of Mongolia, the absence of
representatives from Ivanhoe or Rio Tinto, the two largest
investors in those projects, was surprising. In a separate
conversation, an Ivanhoe board member told ConOff that he was
still confident a deal would be signed but had no idea when,
noting that the CEO of Ivanhoe has been predicting an
imminent deal for over six years. The lack of certainty in
Mongolia is clearly keeping Hong Kong investors on the
sidelines. Until they see others having success, most are
unlikely to put their own resources in. End Comment.
3. (U) More than 300 representatives from Hong Kong's biggest
banks and private equity firms attended the March 31
conference, jointly sponsored by EUROMONEY/Foreign Investment
Foreign Trade Agency (FIFTA) of Mongolia. Panel discussions
focused on Mongolia's economic outlook; political, economic
and legal reforms currently underway; strategies for
financing Mongolia's infrastructure needs; and developments
in the mining sector. The mining regulatory environment,
specifically regulations affecting the two major mining
projects, Oyu Tolgoi and Tavan Tolgoi, were the focus in
every panel discussion.
Mongolia's Isolated, Get In Now!
================================
4. (U) The Vice Chairman of FIFTA, Zanabazar Battushig, the
Mongolian Ambassador to China, Galsan Batsukh, and the
Mongolian Deputy Prime Minister Miyeegombo Enkhbold kicked
off the event with virtually identical messages: Mongolia was
not exposed to the international financial crisis, the
current issues surrounding the two major mining deals would
be resolved soon and now is the time to get involved in
Mongolia's large mining projects. DPM Enkhbold openly
discouraged investment in activities ancillary to mining; he
said domestic investors are already fully meeting the needs
of those markets. He stressed his desire for international
investors to focus on the largest mining development
projects.
No First Mover Advantage
========================
5. (C) Peter Morrow, CEO of Khan Bank, (Note: Khan Bank was
privatized in 2003 and is the country's largest bank. End
Note) pitched hard for international investment in large
mining projects, while simultaneously noting how Mongolia's
lack of integration with the rest of the world financial
system has protected it from financial contagion. However,
comments by Ralph Parks, Chairman-Asia of Oaktree Capital,
were the focus of panels and side-bar discussions for the
remainder of the conference. Parks, who has been exploring
deals in Mongolia for several years but has yet to
successfully invest there, was decidedly pessimistic about
the government's promises to resolve regulatory disputes and
clarify regulatory confusion related to the large mining
projects the government was flogging. At the break, Parks
was swarmed by scores of delegates who wanted to know why his
group pulled out of planned investments in Mongolia and what
advice he could offer them. The Vice Chairman of FIFTA and
Deputy Prime Minister, who noticeably made themselves
available to participants, received no attention from
investors.
MARUT