A view from the statue of Genghis Khan in Ulaanbaatar, Mongolia on April 04, 2022.
Anadolu | Anadolu | Getty Images
Mongolia, lengthy reliant on mining, plans to construct data facilities powered by renewable power because it prepares its first sovereign wealth fund aimed toward channeling its mineral wealth to social welfare and infrastructure.
“We have a massive land with a very favorable climate for activities like [hosting] data centers,” Temuulen Bayaraa, CEO of the sovereign fund, instructed CNBC on the sidelines of the Milken Institute Asia Summit in Singapore on Friday.
The landlocked East Asian nation is creating particular financial zones devoted for data facilities, she added, referring to the Hunnu City that’s envisioned as a sensible, sustainable city metropolis.
The Chinggis Khaan Sovereign Wealth Fund, established by legislation in April final yr, has $1.4 billion in reserves and seeks to faucet international demand for computing energy and clear power. Its funding technique continues to be pending the federal government’s evaluation and closing approval.
A bunch of Asian nations have accelerated efforts to develop data facilities this yr amid rising demand for cloud computing and synthetic intelligence. Japan, Singapore and Malaysia have ramped up investments in constructing out their data center capability.
The recent explosion in AI workloads globally requires huge computing energy, electrical energy, cooling and networking infrastructure. Goldman Sachs expects global power demand from data facilities to rise 50% by 2027 and by as a lot as 165% by 2030.
Aside from data facilities, a part of the fund’s returns may even be used to construct “mega-scaled” renewable power energy grids and initiatives, as a part of the nation’s efforts to increase inexperienced power exports to neighboring nations, Bayaraa stated. Mongolia, sandwiched between Russia and China, has upgraded its ties with each superpowers to the extent of “comprehensive strategic partnerships” lately.
The plan comes because the Mongolian authorities pledged to increase the share of renewable power, particularly wind and solar energy, within the nation’s electrical energy capability to 30% by 2030, up from 18.3% in 2023.
The fund’s funding methods may even center on countering dangers related with worth fluctuations in commodities, Bayaraa stated, because the funds’ sources are “very dependent on commodities.” The Chinggis Fund is managed by Erdenes Mongol, a government-owned holding firm that owns a share within the nation’s mining property.
The sparsely-populated nation, with nearly 3.5 million residents, has benefited from a increase in costs for its wealthy provides of crucial minerals, together with coal, copper, uranium and rare-earth components.
TOPSHOT – A common aerial view reveals homes and Yurts in Ulaanbaatar, Mongolia on June 25, 2024.
Hector Retamal | Afp | Getty Images
Rebuilding belief
The Mongolian authorities has been below rising stress to distribute its mineral wealth amongst its individuals and put an finish to corruption within the sector. Anti-corruption protests in its capital, Ulaanbaatar, earlier this yr compelled Oyun-Erdene Luvsannamsrai to step down as prime minister.
“People didn’t feel like mining contributed to the wealth, betterment of their livelihoods while eroding the natural resources. But now the sovereign wealth fund is positioned in a way to rebuild that trust,” Bayaraa stated.
The fund will play a central function within the nation’s improvement plan aimed toward offering extra transparency and fairness in wealth distribution, she added, by pulling in mineral wealth to be “managed and disbursed in a ring-fenced manner to support people, their educational needs, financing, educational, healthcare and housing needs.”
“The critical work is to build a governance model [for the fund],” she added. Citizens can be ready to entry on an app particulars of the fund’s sources, allocation and stability. “It’s very targeted intervention for expanding middle class, pushing labor market participation,” she stated.
The fund’s chief plans to rent members of the Mongolian diaspora with expertise within the banking, funding, and wealth administration industries to return house and assist handle the fund.
“For the longest time, Mongolia has been attracting investment into Mongolia. For the first day, we are becoming an investor to contribute to the global agenda,” Bayaraa stated.