India-Mongolia Current Affairs - 2020

Cabinet approves India-Mongolia Agreement on exploration of outer space

On January 8, 2020, the Union Cabinet chaired by PM Modi approved the agreement between India and Mongolia to explore outer space for civilian and peaceful purposes. The countries signed the agreement in September 2019.

Highlights

The agreement enables the countries to pursue research in planetary exploration, space system, application of space technology. The plan is to set a Joint Working Group by drawing members from ISRO (Indian Space Research Organisation), DOS (Department of Space). Communications and Information Technology Authority (CITA) of Mongolia. The finances for the project are to be approved in stage-by-stage basis.

India-Mongolia

India maintains close ties with Mongolia and is interested in developing trade with the country as it is rich in mineral deposits. During PM Modi’s visit to the country in 2015, which was the first ever Prime Ministerial visit to Mongolia in the Indian history, PM announced 1 billion USD grant to the country. Mongolia has abundant deposits of minerals namely coal, gold, copper, molybdenum, tin, fluorspar, tungsten and tin. The country also holds huge Uranium deposits.

Mongolia is one of the 29 resource rich developing countries in the world according to International Monetary Fund.

In 2018, India exported 51.6 million USD of goods to Mongolia and imported goods with 1 million USD. This is very little as compared to that of its neighbours China and Soviet Union.

Mongolia launches construction of its first oil refinery with $1 billion Indian aid

Mongolia has launched construction of its first strategically important oil refinery funded by India in southern Dornogovi province. The ground-breaking ceremony of long-awaited project was attended by Mongolian Prime Minister Khurelsukh Ukhnaa and Indian Minister of Home Affairs Rajnath Singh. 

Key Facts

The refinery will be capable of processing 1.5 million tonnes of crude oil per year. That is about 30,000 barrels per day (bpd). It planned for completion in late 2022. On completion, it will meet all of the nation’s demand for gasoline, diesel, aviation fuel and liquefied petroleum gas (LPG).

The cost of the refinery is estimated at $1.35 billion, and it will include a pipeline and its own power plant. Its financing is part of $1 billion soft credit line agreement between Mongolia and Export-Import Bank of India, made during 2015 official visit by Indian Prime Minister Narendra Modi.

The refinery will process Mongolia’s own crude oil, which is now sold to China. The large landlocked country wedged between giants China and Russia had produced 7.6 million barrels of oil in 2017, about 21,000 bpd, amounting to 6% of its total export earnings.

Significance

The strategically important oil refinery will make Mongolia independent from energy imports and stabilise fuel and commodity prices in its domestic markets. It is expected to boost Mongolia’s gross domestic product (GDP) by 10%. It will end country’s dependence on Russian fuel as it imported almost 1.5 million tonnes of oil products in 2017, virtually all from Russia, thus diversifying its sources of oil products from the current single source. The refinery is expected to increase Magnolia’s crude oil output, helping it to increase its export earnings. The refinery project is also considered as important milestone in bilateral ties between India and Mongolia.