It was midnight. The pilot informed us of the local temperature: a bitter cold -5 degrees. The airport resembled an old Soviet-style bunker and reminded me of similar buildings in ex-Communist countries like Bulgaria.
I overpaid for the first taxi; the driver pestered me and I settled on a price that was more than I should have paid, but he drove the 15-minute trip from the airport.
The air was heavy with pollution that came from the gur (yurt) village.
People still live in traditional nomadic structures and they burn wood and cow pies and the like. On this night, everyone had a fire going.
The roads were full of potholes. Most lights were off. The buildings I saw as I drove into Ulaanbaatar (or UB, as everyone here calls it), were of the former Soviet-style apartments. More of these ugly grey buildings have been built in the world than any other — that I’m sure of.
My hotel, in comparison, is a top-notch four-star establishment. For $170 a night, I get a place to lay my head, including daily breakfast with eggs to order and thick black coffee.
I hadn’t yet heard from my contact from the National Investment Bank of Mongolia, and so I have to be honest. . . I spent some time biting my nails during my flight to Asia. I was worried that I had annoyed Mr. Bayarsaikhan Banzragch, the CEO of the only investment bank in Mongolia. . .
But it turns out he was in Japan on business and had just returned.
Bayar, as he is known, and his lawyer Mrs. Orgilmaa Siizkhuu took me under their wing and gave me access to the Head of the Stock Exchange, the Vice Governor at the Bank of Mongolia (their central bank), and a regional head at the Mineral, Resources and Petroleum Authority of Mongolia.
I also interviewed the man who is building a world class city called Luminu City with a budget of $500 million. It will be a green city (it is always sunny in Mongolia), with solar panels, a 45-foot office tower, shops, and condos. He told me he is "building a second Dubai in the heart of Asia. . . "
And I almost believed him. I’ll tell you more about those meetings later. . .
First, I want to point out an article I wrote recently about the commodities boom in Mongolia — gaining momentum then, as I wrote the article, and today, as I type these words from my hotel room — and the significance of the political takeover by the Moderate Social Democratic Party last year.
The contextual significance of Mongolia’s political state and the commodities boom is important in understanding just what is on the horizon in regards to the vast fortunes that can be made by this opportunity, as I explained in my last piece:
Untouched for 19 years, the world’s last great energy, metal, and mineral boom is about to launch in Mongolia. In fact it’s already happening. A new tax law has recently changed the business climate, and the likes of Goldman Sachs, China Wealth Fund, Rio Tinto, and many other big players are rushing through the gates. . .
For the better part of a century, Mongolia has been known for its wealth of minerals: gold, coal, rare earth metals. Heck, the Russians had the whole place mapped out in the 1960s.
But under Russia, very little extraction ever took place. In the early 1990s, Mongolia finally broke free from its status as a Soviet puppet state and the country reacted like many former Russian states: It whipsawed from corrupt renegade capitalism back to its former communist party rulers and a collective mentality.
But neither of these systems was conducive to the massive capital inflows necessary to fund long-term gold, copper, and coal mines.
And as a result, during the commodity boom era of the 2000s, Mongolia was taken over by the anti-capitalists and strict laws were made placing punitive taxes on foreign companies after Mongolia’s mineral wealth.
Then last year, the Moderate Social Democratic Party took power. This new group had a pragmatic approach to economics and political ideology. One of the first things those in power did was to cut the corporate tax from 68% to 30%. I bought one small gold miner in anticipation of this new law. . .
It is now up more than 458%.
To give you some perspective, the square footage of this mining property is bigger than the state of Ohio. And the $6 billion investment — coupled with the expansion of the economy — will easily double Mongolia’s $9 billion GDP.
But it wasn’t long after the plane touched down that I realized there were some things I didn’t know when I wrote my article about mining in Mongolia: Mongolia isn’t some warmed-over former Soviet state. These people were hard-working, smart, and aware of the fact that their future is very promising.
If I can generalize a population, they remind me of the people I’ve met from the Western High Plains states, like Colorado and Wyoming. They are a proud, horse-and-mountain people with a long history. After all, one of their ancestors once ruled the world.
They are Buddhists who care very much about the environment and their place among generations. When I mention the amount of gold and uranium their country has, they gratefully attribute from whence they came with the response, "Thank the ancestors."
The feeling I get on the ground is one of controlled optimism.
Mongolia’s people are going to meet the future peacefully, with every intention not to mess with the balance of their present-day lives.
I’ll keep you informed on my adventures and on-the-scenes discoveries in the weeks to come.