Mongolians can  export mining-based IT knowledge

The Mongolian Mining Journal /May.2023/

D. Oyunchimeg

As mining continues to be the backbone of our economy,  the Law on Mining Products Exchange,  to be enacted soon, should incentivise to revenue from this industry. However, the  mining exchange system should not be uncertain. 

We created an exchange for agricultural commodities, but it did not work properly. Therefore, to avoid repeating mistakes, it is necessary that the new system is optimized from the beginning, with good management and clear “rules of the game”. The organizers and participants of the Mining Exchange Ecosystem Forum expressed confidence that they can do this.

B. Buyanmunkh, executive director of the Erdenes IT Consortium, expressed his position at the Mining Exchange Ecosystem Forum, which was organized for the first time at the initiative of the private sector: Mining is the largest industry in Mongolia. If this sector is developed transparently and fairly, it will lay the foundation for the development of other sectors. We consider it important to contribute to the development of the mining industry, and not just the IT sector. Our industry has not fallen behind the international level, but has moved to the forefront. Technology development skills have also improved. We have big ambitions to develop IT knowledge exports based on the mining industry.

Ambitions of youth

The Law on Mining Products Exchange stipulates that “the state will have some ownership in the exchange, and the exchange will cooperate with the private sector, including technology developers. So, we can say with confidence that the ambitions of young people in the IT sector will be met, and there will be an incentive to develop a world-class system”.

On approval of the Law on Mining Products Exchange, the Parliament resolution stated that “the activities of the Mining Exchange should be digitized, and the systems and software developed by national IT companies should be studied for use in the activities of the exchange”. Therefore, the national IT companies formed the Erdenes IT Consortium.

Forum participants noted that the successful establishment of a mining exchange in Mongolia will increase the inflow of foreign currency and tax revenues. It will also help professional investors to enter the Mongolian market, develop reliable and transparent exchange trading, and gradually and systematically solve logistics problems. The executive director of Ulzii & Co. Capital, B. Ulziibayar said: “Exchange trading will help us learn the discipline and culture of contracting. I have clearly felt the importance of public-private cooperation and effective partnerships during the development of over-the-counter (OTC) markets in the past. Partnerships bring results.” The mining exchange has a very different legal framework. It is important to see and learn from the mistakes of the agricultural commodities exchange and draw the necessary conclusions.

Experts say that minerals account for 93% of our country’s exports. Previously, only 33% of coal export revenues used to come into Mongolia. Now the industry professionals say the situation will change dramatically. They note that it is a great achievement that revenues from coal exports are flowing into Mongolia, rather than being deposited in offshore accounts.

Competitiveness of  the mining industry will increase

T. Bold, director general of the Mongolian National Mining Association, said that if the mining exchange works for real, the competitiveness of the industry will improve. According to him, the new legal environment will play an important role in making the mining industry more competitive. Not only will the value of coal increase, but many tax disputes will be settled with it. From the exploration phase onward, the mining industry faces enormous risks and requires huge investments, time, involvement of all parties and hard work. At the end of it all, everyone expects the extracted mineral to be traded at world prices.

The IT industry has been actively developing in our country for 20 years. Although our IT companies have expanded their activities internationally, Mongolia is still not fully recognized in the world for its software development and IT. Therefore, the establishment of a software ecosystem based on the mining industry can serve not only as a gateway for our country’s software industry to the outside world, but also as a stimulus for the development of exports of intellectual goods and services.

The current electronic trading does not work properly yet. But the mining exchange should work in Mongolia in accordance with the principles of international exchange agreements. The forum participants reminded that this should be clearly reflected in the procedures of the exchange. The creation of a mining exchange is the right decision. But the problem is how to set up the system correctly. Daily trading on mining exchanges is not measured in a few billion MNT. There are huge transactions and deals taking place. So, the payment system has to be reliable, secure, and fast, able to withstand high loads, and work without interruptions. 

There is no doubt that ambitious young people in the IT industry can  develop technological solutions and create new systems capable of competing in the world.