TORONTO, March 6 (Reuters) - Mineral-rich Mongolia plans to double the amount of land available for exploration in an effort to tap into the mining industry’s appetite for new resources and help shore up its finances following an IMF-led bailout.
Mongolia will increase the land to 20.9 percent of the country from 9.6 percent currently, and could announce the change later this month, the minister of mining and heavy industry, Dashdorj Tsedev, said in an interview on Monday.
Miners say Mongolia ranks as one of the best prospects in the world for new copper reserves, as the best quality ore bodies in many other parts of the world have been depleted and electric vehicles raise the possibility of a surge in demand.
The expansion reflects improved geological surveys, and the land open for exploration could increase as further improvements are made, the minister said at the Prospectors and Developers Association of Canada conference in Toronto.
“A big amount of land will be up for exploration and license,” said Tsedev, speaking through a translator, adding that ecologically sensitive areas are excluded.
The land-locked country is home to Rio Tinto’s massive Oyu Tolgoi copper-gold mine. Rio decided in June to go ahead with a $5.3 billion expansion, which will take five to seven years.
The mine will eventually be responsible for around 30 percent of the economy, Rio said, but direct benefits for Mongolia will be delayed. According to a 2009 agreement, investors must recoup their original investment costs before Mongolia can collect dividends for its 34 percent shareholding in the mine.
Mongolia’s economy grew at a double-digit annual rate over 2011-2013 as foreign investors rushed in to take advantage of its vast untapped mineral deposits, but it has been hit hard by an economic crisis since 2016 due to government overspending and declining revenues from commodity exports.
Slowing demand for coal and copper, Mongolia’s chief exports, and a plunge in foreign investment have left the world’s most sparsely populated sovereign country with soaring debts and a rapidly declining currency, forcing government to hike interest rates and slash spending. (Additional reporting by Barbara Lewis in London; Editing by Leslie Adler)