On Saturday, Asian Development Bank (ADB) approved the issuing of a 35 million USD loan to Erdenes Mongol LLC which the company says will be invested in strengthening its management and investment capacity, allowing it to more effectively support the country’s drive for economic diversification.
Erdenes Mongol says it will spend the money on improving the efficiency and activities of its subsidiaries, including Erdenes Tavan Tolgoi, Baganuur, and Shivee Ovoo. The company estimates that with the financing from ADB, the operations of its subsidiaries will improve and the companies will be able to contribute two trillion MNT in royalty payments, 825 billion MNT in taxes, and 518 billion MNT in dividends to the state budget through 2016 to 2024.
ADB Specialist Hiroko Uchimura-Shiroishi said, “Shifting away from an over-reliance on income from mining is crucial for sustainable and inclusive growth in Mongolia, and Erdenes Mongol would play a key supporting role in the government’s efforts to diversify the economy. However, the company’s performance is hindered by current constraints in its corporate structure and capacity. This technical assistance project will help it manage assets and identify investments more effectively, in line with its mandate.”
Executive Director of Erdenes Mongol B.Byambasaikhan said, “We are taking out the concessional loan for fifteen years at a two percent annual interest rate. We are going to implement this project today, because if we lose time, our competiveness on the market will weaken. We need to advance our business methods.”
B.Byambasaikhan noted that Erdenes Mongol is implementing many other new projects. “If we raise money in accordance with regulations and standards, we will be able to draw in real investment and implement our projects. The market requires our company to have best qualified personnel, best management, and best technology. That’s why we are implementing this project systematically, with responsibility and planning.”
The ADB underlined that its technical assistance loan will help Erdenes Mongol draw up a full corporate strategy for its operations, with mid-term and long-term targets. ADB says it will support the company in keeping its project development and management in line with international standards. Erdenes Mongol plans to embed new systems for investment decision making, sound corporate governance, and prudent risk management.
To accompany ADB’s loan, Erdenes Mongol is providing counterpart support equivalent to 6.2 million USD for the management and investment project, which will be carried out over the next three years.
The agreement was signed by Erdenes Mongol’s Executive Director B.Byambasaikhan and ADB’s Country Director for Mongolia Robert Schoellhammer.