November 21, 2014 / 7:38 AM / 4 years ago

Mongolia gets new prime minister as economy slumps

ULAN BATOR (Reuters) - Mongolia’s parliament has appointed Chimed Saikhanbileg as prime minister, it said on Friday, more than two weeks after it ousted his predecessor for failing to get to grips with a slumping economy and foreign investment.

Saikhanbileg replaces Norov Altankhuyag, who was removed from his post following a no-confidence vote on Nov. 5 amid concerns about a serious economic downturn in the landlocked Asian country, which depends heavily on foreign mining investment and commodity prices.

Saikhanbileg was a member of Altankhuyag’s cabinet.

Dale Choi, an independent Mongolian mining analyst, said the appointment of Saikhanbileg represented “business as usual” for the government, and could further drive away foreign investment.

“If Mongolia cannot get its house in order now then everyone will have to wait until 2016 (elections)... and only a few large foreign investors have the funding cushion to afford that,” Choi said in emailed comments.

Only two out of the 44 members of parliament present during this morning’s session voted against Saikhanbileg, but the opposition Mongolian People’s Party (MPP) refused to attend.

The MPP rejected Saikhanbileg on Thursday evening, saying in a statement that as a member of Altankhuyag’s cabinet, he was “instrumental” in the deterioration of the country’s economy.

Mongolia sits on some of the world’s most promising mineral deposits, but it has so far struggled to convert its vast underground wealth into tangible economic gains, amid disputes with foreign investors and delays to big mining and infrastructure projects.

Turquoise Hill Resources, co-owner of Mongolia’s huge Oyu Tolgoi copper and gold mine, expressed concern last week that the ousting of Altankhuyag could prolong a long-running dispute over the property.

The new prime minister must sign a memorandum of understanding before banks will lend $4 billion to the Oyu Tolgoi project.

Those funds will be used for the construction of a mine expansion that Rio Tinto, the majority owner of Turquoise Hill and operator of the mine, says will unlock 80 percent of the wealth.

“I’m sure he’ll try (to fix Oyu Tolgoi) but he was in the cabinet for the past three years and we’re still at a deadlock,” said Bontoi Munkhdul, head of market intelligence firm Cover Mongolia.

“But he’s well liked in the business community,” he added.

Foreign investment into Mongolia has slumped 59 percent in the first three quarters of this year, and falling commodity prices have also hit the country’s earnings and put the government’s ambitious spending plans under heavy pressure.

Reporting by Terrence Edwards; Writing by David Stanway; Editing by Nick Macfie

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