A Pestle Analysis of Mining Industry

Topics: Mongolia, Economy, Economics Pages: 8 (2614 words) Published: January 8, 2013
| A PESTLE Analysis of Mongolian Mining Industry|
Hui Wu (Meredith)|


A PESTLE analysis of the Mongolian mining industry2
1.Executive summary2
3.PESTLE Analysis3
4.Analysis of the future environment8
5.Entry mode options8
6.Potential risks9
7.Recommendations and strategic option10

A PESTLE analysis of the Mongolian mining industry
1. Executive summary
This report has analysed the investment environment of mining industry in Mongolia. The PESTLE analysis is considered first as a basic narration of the situation, and then the evaluations based on this PESTLE analysis are given to show the quality of the Mongolian investment environment. From the former analysis it can be seen that the overall investment atmosphere is good for the Chinese company. And considering the particularity of the local investment environment, it is better that the Chinese mining company forms a joint venture company with the local government. And in the initial stage of the company’s operation, a strategy with high FSA and low CSA are recommended in order to build the brand awareness and to be localised. Furthermore, the future environment and the potential risks are considered to be able to overcome and approved. Therefore, it is a good decision that to expand the mining business in Mongolia. 2. Introduction

With the development of the global economies, the current demands for the energy resources are becoming more and more difficult to meet. It can be seen in the world that the conflicts of resources have involved more and more countries in recent years. The Mongolia, however, possesses a rich amount of undeveloped mineral resources, which attracted plenty investors, especially countries like the U.S and China, who are intending to get benefits from the co-operations on resources mining industry. Therefore, an analysis based on the relationship between Mongolia and China is vital to the Chinese companies which are planning to expand their businesses in Mongolia. This report is going to do a PESTLE analysis based on the literature review of the previous introduction reports of Mongolia. Then further discussions about the future entry options and risks will be briefly considered to present the recommendations and strategic options about the investment in Mongolia. 3. PESTLE Analysis

Mongolia used to been known for its herding and agriculture export products. Since 1980’s, over 80 mineral reserves have been proven and that made the minerals and ore concentrates become one of the major export products. However, because of Mongolia’s remote geographical position and the less-development of the transport methods, large amount of the resources are not being exploited yet. (SKhouri, 2008). It can be seen that there is large potential profitability of the Mongolian mining industry. 3.1 Political

* Mongolia used to be a part of Qing dynasty before the early 20th century, being considered as an important military area between Bolshevik Russia and Qing dynasty. And then with the help of Bolshevik Russia, the Outer Mongolia has separated from a province of Qing dynasty and become a Soviet system modelled country. Before the collapse of the U.S.S.R., Mongolia has no significant popular unrest during the one-party communist system period. And with the reformation of the state system, which is changing from communist rule to the parliamentary system with a multi-parties’ congress, Mongolia has reverted to the stabilisation of its political environment.( U.S. Department of State Background Note of Mongolia, 2007)

* Since the Outer Mongolia was separated from China in 1946 and became an independent country, its domestic political environment is constant until the disintegration of the U.S.S.R. happened in early 1990s (Mongolia, 2010). Because of the disappearance of the Soviet assistance, Mongolia has felt...
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