* Post-Brexit Britain nurturing new trade ties
* Mongolia has huge reserves of copper, gold, coal
* Exports high volumes to China
By Barbara Lewis
LONDON, Nov 29 Britain and Mongolia signed their
first memorandum of understanding in the mining sector on
Tuesday, pledging an exchange of technology and expertise, and
deepening ties based on Rio Tinto's huge copper mine in the
South Gobi desert.
The agreement, signed on the sidelines of a mining
conference in London, recognised "the spirit of cooperation that
exists between the respective countries" and a willingness "to
promote closer cooperation in the extractive sector".
In an emailed statement, the Department for International
Trade said the cooperation would cover technology transfer,
education and training.
Tumentsogt Tsevegmid, CEO of Erdenes Mongol, set up to
manage the state's mineral reserves, including copper, gold and
coal, said the agreement also covered financing.
Mongolia, a vast country of just three million people, went
on a borrowing spree at the height of the commodity cycle, and
the $12 billion economy is staggering under total foreign debt -
public and private - of more than $20 billion.
It has, however, been helped by this year's commodity price
rally that has seen gains of more than 200 percent for coking
coal and it is hoping to benefit from Anglo-Australian group Rio
Tinto's Oyu Tolgoi copper mine.
In June, Rio gave the go-ahead to a $5.3 billion expansion
of the mine, which will keep a steady flow of foreign investment
during the next five-to-seven years of construction.
Rio says the massive mine will eventually be responsible for
around 30 percent of the economy, but direct benefits for
Mongolia will be delayed.
According to a 2009 investment agreement, investors must
recoup their original investment costs before Mongolia can
collect dividends for its 34 percent shareholding in the mine.
Oyu Tolgoi is jointly owned by the Government of Mongolia
(34 percent) and Turquoise Hill Resources (66 percent, of which
Rio Tinto owns 51 percent). Rio Tinto has been the manager of
the Oyu Tolgoi project since 2010.
Copper aside, Tumentsogt told Reuters he expected Mongolia
would export 20 million tonnes of coking coal this year to China
and slightly more next year.
It is also undertaking a feasibility study on construction
of a 5.2 gigawatt thermal coal plant that would export power to
Since Britain's decision to leave the European Union in
June, the British government has emphasised the importance of
new trade relations and is also seeking, for instance, to
negotiate contracts in Iran.
(Editing by David Evans)