AGENCE FRANCE-PRESSE in Beijing

Updated at 4.26pm:
Mongolia has agreed to provide coal as fuel for neighbouring China’s rapidly growing economy, the small country’s top leaders said on Wednesday.

“The governments of Mongolia and China will work together to develop certain large coal deposits in Mongolia on the basis of which energy will be produced in Mongolia and exported to China,” Foreign Minister Tsendiin Munkh-Orgil said.

“This is a rather long-term project, but it’s important to have the political understanding and to have the commitment to work in that direction,” he told a briefing in Beijing.

The agreement is part of a series of deals signed in the course of an ongoing China visit by Mongolian President Nambaryn Enkhbayar.

It is not the first time Mongolia has been described as a possible supplier of energy to China.

Previously, there has been talk of an oil pipeline linking the Zuunbayan field, first discovered in the 1990s, to Mongolia’s giant neighbour.

Mongolia is currently considering amendments to its mining law to facilitate foreign investment in the business.

Mr Enkhbayar said one of the objectives of the amended law is to ensure a balance between foreign investment, private investment and “some representation of government” in mining.

“The three things have to find the right combination or balance, so that foreign investors and the private sector don’t feel excluded,” Mr Enkhbayar told the briefing.

As a landlocked country, Mongolia is facing significant difficulties in getting foreign direct investment, the president said.

“In fact we exceeded the [accumulated] level of US$1 billion [HK$7.8 billion] of investment only in autumn of 2003 after 15 years of hard work as a democratic country and market economy,” he said.