Enter GE:
November 17, 2011 5:28 am
GE signs $100m Mongolian wind power deal
By Kathrin Hille in Beijing
General Electric, the US conglomerate, will help build Mongolia’s first wind energy park in a $100m deal with Newcom, a Mongolian private investment company.
The agreement marks GE’s entry into a market it hopes will generate infrastructure contracts that could help make up for slower growth in mature markets.
More
ON THIS STORY
Global demand boosts GE industrial revenues
GE to build solar module factory
Andrew Hill
GE’s bright sparks take the lead
GE sets ambitious energy earnings target
GE and UTC cut offshore wind power plans
ON THIS TOPIC
Boomtown Mongolia
“Our order volume in Mongolia exceeds $100m in the near term, with this project accounting for about half of that,” said John Rice, vice-chairman and chief executive of GE’s Global Growth & Operations.
The two companies said Salkhit wind farm, 70km south-east of Ulan Bator, would supply almost 5 per cent of the country’s electricity when it starts operating in the second half of next year. Mr Rice said a second and third phase are under consideration.
In addition, GE is also in talks about supplying locomotives and signalling as the country seeks to modernise its rail system to support exploration of its rich natural resources, and is eyeing opportunities in the health sector.
Mr Rice said while the Salkhit contract is smaller than many others in GE’s energy business, he expected it to become the stepping stone for more business in Mongolia. “Many other markets that have a size of $500m-$1bn for us now, were at an order volume of $100m six or seven years ago,” he said.
“Energy demand in Mongolia is increasing by 8-10 per cent a year,” said Bayanjargal Byambasaikhan, Newcom chief executive. “Salkhit will help support Mongolia’s growing demand and also help facilitate further infrastructure development for railway, road and electrical infrastructure.”
The increasing exploration of Mongolia’s
ample natural resources such as coal and copper, which are powering large neighbouring economies led by China, has driven rapid economic growth in the country of just 3m people. In the first half of this year, its GDP grew at a rate of 17.3 per cent, the fastest in the world, according to the World Bank.
But with its wide, windswept high plains, the country also has large untapped potential for wind energy.
Newcom, which will run the Salkhit wind farm, is a diversified conglomerate with interests in telecommunications, transportation and finance. The group owns Mongolia’s largest private airline and introduced mobile phones to the country by founding Mobicom, the leading mobile operator, in 1996.
Mr Rice, who
moved to Hong Kong earlier this year in an assignment seen as a signal of the growing economic weight of Asia, and particularly China, in multinationals’ global strategies, said GE still expected its revenues in emerging markets to grow at low double-digit rates next year despite the crises in the US and Europe.
“We have seen no big change in order flows,” he said, attributing this to the fact that much of GE’s revenue in these markets comes from infrastructure projects which are unlikely to be stopped immediately when end demand weakens.