US Ambassador to Mongolia Piper Campbell took questions from MMJ during her recent visit to Peabody Winsway’s Ereen mine restoration project. She sees “potential for tremendous growth and expansion” of cooperation between Mongolia and its third neighbor, and wants U.S. companies to play a bigger role in it.
What is your impression of the reclamation work of Ereen mine?
I was very impressed by what we saw today. I had read a lot about how important this reclamation project -- which is really the first of its type in Mongolia – is, but I think you feel it in a different way when you have a chance to see it and to walk through it, to smell it, and to see the animals and plants.
What do you see as the challenges and opportunities of mining sector in Mongolia?
Like other countries which have a resource-based economy, Mongolia needs to grapple with the fact that there are negative, as well as positive things on the economic side coming from mining and resource development. What we saw today, certainly was proof that after you’ve successfully mined, you actually can return a depleted mine site to a natural state and that it can continue to be used by the community. That’s a very important message and it addresses some of the concerns about the environmental impact of mines.
Are there opportunities for the United States and Mongolia to work together on environmental, mineral, or water resources protection projects?
I see opportunities for the U.S. government to work with the Mongolian government in this area, but I also see a role for U.S. companies. One of the reasons I came out to Ereen today is that after regularly talking about some of the technical capabilities that U.S. companies would bring if they were engaged in Mongolia, I wanted to see for myself what that it looks like in practice.
On the government side, there are some programs that we are currently engaged in with different ministries also supporting some nongovernmental organizations that are already working in Mongolia. So we are in fact working on various projects in the areas you mentioned.
Some of these are on environmental issues. Some projects, financed through either USAID or the Millennium Challenge Compact, are helping people to adapt. For example, as you have more herder groups living near towns, there has to be some adaptation in the ways herders live and work. And so that’s been a project for the Millennium Challenge Compact. There’s also been some work on air quality which is an important aspect of the environment. We’re also trying to help various ministries as they draft the laws and regulate, for example, development of nonconventional hydrocarbons or nonconventional fuels. So there are various areas in which we are working.
What is the level of cooperation between U.S. and Mongolian companies in the mining industry and what is the potential for its growth?
There is certainly potential for tremendous growth and expansion. What we’ve seen so far is some U.S. companies working in joint ventures with Mongolian companies. And there certainly is a lot more opportunity to have U.S. and Mongolian companies operating together. In fact, the first piece of advice that we provide to U.S. companies which are looking to enter the Mongolian market is that they should, first of all, understand the laws and regulations of Mongolia and that it also often helps to partner with a Mongolian company or a Mongolian individual in order to better understand the environment.
U.S. companies have had success in their role of supporting the mining industry in here. For example, we have Wagner Asia which sells the heavy equipment Caterpillar that is used by so many mining companies. Other companies have been helping by providing advice and consultancy services. From this engagement in Mongolia, we’d like to see more significant U.S. companies, like Peabody, as mine operators here, because they would bring with them that American standard, the transparency, environmental standards and technological advancements that we’re proud to see in the U.S. mining industry.
Cooperation in the coal sector is already there, but given the shale oil revolution in the United States, how do you see the potential for cooperation between the United States and Mongolia in this area?
You may know that Speaker Enkhbold Z. went to the United States this spring. He had the opportunity to visit some U.S. facilities which are doing coal to liquid and coal to gas conversion. We’re certainly talking with the government of Mongolia and there are U.S. companies which are talking with the government of Mongolia and with Mongolian companies about the potential for U.S. technology or U.S. firms to be involved in some of these areas in Mongolia.
Mongolia has the assets. We know that they have coal. We think that there are some shale oil in Mongolia. And so, I think it is very important for Mongolia to develop the legislative base and feel that they have the right laws and the right ability to inspect and regulate in order to develop that industry which will help with Mongolia’s fuel independence, which I know is a goal of the government.
Considering that the U.S.is a third neighbor of Mongolia, what are the opportunities to expand and deepen relations in other sectors?
We’re very proud to be a third neighbor of Mongolia and it really is one of the foundations of both our countries’ diplomatic and political relationship. But it is also the foundation for the growth that we both want to see in economic and commercial relationship. That will come when U.S. companies are in Mongolia in sectors other than mining. We’re encouraging companies to look particularly at infrastructure, construction, and the health sectors. Some U.S. companies are already involved in many of these areas, but we see great potential for more.
How do you see the potential for Mongolia’s economic growth?
There are three important things to keep in mind.
The first is what the government of Mongolia can do in terms of creating and maintaining a positive business environment. And I believe there’s more that it can do in this in order to attract foreign direct investment. The second is focusing on efficiency of developments. For example, if you’re trying to develop a lot of small coal mines and you have inefficient ways to move the coal to market much of the value is lost and so you can have many small unprofitable units. One of the reasons that we advocate for companies like Peabody, for example, to be involved in Tavan Tolgoi is we believe that a more ambitious scheme to develop the whole area using the latest technology and the latest methods would be more efficient. You got to acquire those efficiencies, especially in today’s market.
And then the third thing is diversifying the economy. Mongolia must not be reliant only on the mining sector or only on one commodity in that sector, so that you don’t need to be pushing tons of coal to market, for example, at a time when prices are low.
The state of the commodity market is dependent on the economic situation in the U.S. and China. What are conditions in these two countries now?
I certainly spend a lot of my time -- and the people on my staff also spend a lot of their time -- looking at these questions. It’s important that Mongolians are educating themselves about world markets and noting developments in China. As for the United States, some of our efficiencies are actually allowing us to lower our coal prices. To be able to put their resources in that global context, and this is how our companies come and look at Mongolia. Their decisions on whether to invest in Mongolia or in some place else will be based on a very careful assessment of markets and other global factors. And I think that’s a great question for you to be asking because it’s really important to look at the Mongolian mineral sector in that broader, global context.
There are serious differences of opinion worldwide on the use of coal. What place does coal have in the energy sector of the United States?
There’s tremendous interest in the United States about the right energy sources. We have statements by the President, as also policy decisions reflecting this concern on whether to give financial support to expansion of the renewable energy sector. Ordinary Americans also have views on this.
There is a strong desire in the United States to see a diversification of energy sources, a lot of interest in renewables. There’s also a strong interest in energy independence or at least not being overly dependent on import from anywhere as a primary source of all of our energy. So people watch things like the price of oil per barrel. They watch global political trends. And there’s a strong desire in the States to have a balance.
There are various technologies that allow for cleaner coal production. I think there’s a real interest as well in the States in how new technologies can allow us to mine and process and then also burn coal in the most environmentally efficient and friendly way.
A final word on the Mongolian mining sector and the Mongolian economy. Thank you!
I think it’s clear that the mining sector is going to be one of the drivers of the Mongolian economy over the next decades. And there are many important decisions -- for the government of Mongolia, but also more broadly for all Mongolians -- to take about how they want to see the sector develop. And so I think it’s really important that people in Mongolia should keep themselves informed about global developments, including in areas such as the proper ways of mine reclamation. It is encouraging that Mongolian institutions responsible for regulating the mining sector are doing their work in the most active and effective way. And also, it’s very good to have ministries like that of Environment and Green Development and to give them real power to ensure the green side of development.