Temasek, the Singapore state investment agency, has become the latest investor to take a punt on Mongolia as it expands its natural resources portfolio.
This week Temasek confirmed it had taken a 5.5 per cent stake in Ivanhoe Mines of Canada. Ivanhoe controls a 66 per cent stake in Mongolia’s Oyu Tolgoi mine, with the country’s government holding the rest.

The mine, which is still under development, is expected to be one of the world’s gest sources of copper and gold and is near Mongolia’s border with China, the world’s largest copper consumer. Ivanhoe is controlled by global mining group Rio Tinto.
Rio Tinto has estimated that the complex could add a third to Mongolia’s gross domestic product, employ up to 13,000 people and emerge as a top-five copper producer.
Mongolia’s economy grew 17 per cent last year and the country has become a leading destination for investment by global miners such as Rio Tinto, Peabody and Shenhua that are keen to exploit its vast deposits of copper and coal.

However, in spite of predictions that Mongolia could become “the new Qatar” through its mineral wealth, some observers are concerned about the impact that mining riches could have on the country.
Investors also face political risk. Legislation, which may soon be reviewed, currently restricts foreign ownership of “strategic industries” – including mining – in deals worth more than $75m to 49 per cent unless approved by parliament.