This study was conducted according to the Consulting Agreement between Ivanhoe Mines Mongolia Inc LLC and Achid Consulting LLC.
In broad terms, the main purpose of the study was to explore the major issues related with the future housing program of Oyu Tolgoi project employees. Within this scope of study, Achid Consulting provided a comprehensive consulting service based on quantitative research methodology as well as extensive financial calculations on potential solutions to employee housing programs.
The study is sectioned into 2 major parts with specific focus on Mongolian housing environment where the first part aims to study the overall environment of the housing and construction sector. Within this scope, 8 aspects of this sector were studied and reported on:
Mongolian Construction industry
40000 housing unit program
The program design
The implementation state
Mortgage market development in Mongolia
Mongolian Mortgage Corporation
Mortgage loan terms by bank
Legal and Regulatory Framework
Mongolian Experience in Employee Housing programs
The second part consists of 5 parts each designed to explore the different facets related to the Umno-Gobi province housing sector where primary research methodology such as questionnaire, survey and focus group workshops were utilized extensively. Based on the research outcome, a potential housing program was designed with its financial projections.
Construction and financial market of Umno-Gobi province:
Construction market in Umno-Gobi
Current demand for housing in Umno-Gobi province
Financial Institutions market and its availability in Umno-Gobi Province
Housing cost estimates in Umno-gobi province
Capacity of the market to provide Ivanhoe Mines (IM) desired service
Minimum amount of financing required to provide IM desired service
Period of time required to provide IM desired service
Capacity of building companies to provide IM desired service
Challenges and issues of construction business in Mongolia
Field study report
Compilation and summary of all the survey questionnaire, focus group discussions, and interview results
Possibilities for land possession/use for foreign and foreign invested companies in Mongolia, the licensing process and related laws
Possibilities for land possession/use for foreign and foreign invested companies in Mongolia
Terms and conditions of land use by foreign invested companies
Related laws on terms and conditions of land use by foreign invested companies
About land management plans
Structure and Authority of Government institutions responsible for land issues
Related law clauses on land usage licensing process
Time and costs set by law to acquire a land use license
List of related laws and regulations
Research based alternative to the implementation of the housing program
As the final stage of the project, the findings from the study were introduced to Rio Tinto (the then new management team of the Oyu Tolgoi project) with a two day long discussion.
From the study, Achid team has designed and introduced two alternatives to effectively solve Oyu Tolgoi employee’s housing issues. Such are:
To create financial infrastructure - a company specialized in mortgage loans in Umno-Gobi province and source the financing through investments from the Oyu Tolgoi project.
To link the housing program with financial services by contracting with financial institutions to provide low rate mortgage loans for the employees. This alternative was successfully adopted and solved the employee housing issues.