1 US-MONGOLIA 'THIRD NEIGHBOR TRADE ACT' ON THE WAY WWW.THEDIPLOMAT.COM PUBLISHED:2018/11/17      2 CHINA'S FIGHT AGAINST SMOG MAKES PALLADIUM 2018'S BEST METAL WWW.MINING.COM PUBLISHED:2018/11/17      3 MILLENNIUM CHALLENGE CORPORATION PRESENTS GMS LICENSES WWW.MONTSAME.MN PUBLISHED:2018/11/17      4 MONGOLIA CALLS FOR GLOBAL ATTENTION ON CLIMATE CHANGE WWW.NEWS.MN PUBLISHED:2018/11/17      5 ADB OPENS A NEW WASTEWATER TREATMENT PLANT IN ARVAIKHEER, MONGOLIA WWW.AGENPARL.EU PUBLISHED:2018/11/17      6 CHINA TO BOOST COOPERATION WITH INDIA, MONGOLIA: DEFENSE MINISTER WWW.GLOBALTIMES.CN PUBLISHED:2018/11/17      7 DEATH ON MONGOLIA’S ‘COAL ROAD’ WWW.NEWS.MN PUBLISHED:2018/11/17      8 MONGOLIA SHAKEN BY WIDENING LOAN SCANDAL WWW.ASIA.NIKKEI.COM PUBLISHED:2018/11/17      9 MONGOLIA’S UNEMPLOYMENT FALLS BY 2.2 PERCENT WWW.NEWS.MN PUBLISHED:2018/11/16      10 MEETING MEAT DEMAND: MONGOLIA TO TRADE 17.9 PERCENT OF LIVESTOCK WWW.NEWS.MN PUBLISHED:2018/11/16      БНСУ-ЫН АЖ АХУЙН НЭГЖҮҮДИЙН АУТСОРСИНГ ЗАХИАЛГЫГ ГҮЙЦЭТГЭХ ЗАЛУУЧУУДЫГ СОНГОН, ШАЛГАРУУЛНА WWW.UNUUDUR.MN НИЙТЭЛСЭН:2018/11/17     НҮҮРСНИЙ ЭКСПОРТ 10 ХУВИАР ӨСӨЖ, 31.3 САЯ ТОНН БОЛОВ WWW.GOGO.MN НИЙТЭЛСЭН:2018/11/17     СУДАЛГААГААР ЖДҮ ЭРХЛЭГЧИД ЗЭЭЛИЙН ХҮҮНИЙ ЗАРДАЛ ХАМГИЙН ИХ ХҮНДРЭЛ УЧРУУЛДАГ ГЭЖ ХАРИУЛЖЭЭ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/11/17     ERDENE RESOURCE DEVELOPMENT: ХАЙГУУЛЫН ЗАРДАЛ III УЛИРАЛД 42 ХУВИАР БУУРСАН WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/11/17     ГОРХИ, ТЭРЭЛЖИЙН БАЙГАЛИЙН БОХИРДОЛД АНХААРАЛ ХАНДУУЛЖ ЭХЛЭВ WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/11/17     ИРЭХ БААСАН ГАРАГТ ХОТЫН ДАРГЫГ ОГЦРУУЛАХ ЭСЭХИЙГ ХЭЛЭЛЦЭНЭ WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/11/17     “АМГАЛАН” ХОТХОНД БАЙРЛАХ ГЭРТЭЭ КАННАБИС ТАРЬЖ, УРГУУЛЖ БАЙСАН ТУРК ИРГЭНИЙГ БАРИВЧИЛЖЭЭ WWW.MEDEE.MN НИЙТЭЛСЭН:2018/11/17     ӨНӨӨДӨР АВТОМАШИНЫ ДУГААРЫН ХЯЗГААРЛАЛТ ҮЙЛЧЛЭХГҮЙ WWW.EAGLE.MN НИЙТЭЛСЭН:2018/11/17     ГАШУУНСУХАЙТЫН НҮҮРСТЭЙ МАШИНЫ ЦУВАА 120 КМ БОЛЖЭЭ WWW.EAGLE.MN НИЙТЭЛСЭН:2018/11/16     ТАТВАРЫН ОРЛОГО 32.2 ХУВИАР ӨСӨЖ, ТӨСВИЙН ТЭНЦЭЛ 341.9 ТЭРБУМ ТӨГРӨГИЙН АШИГТАЙ ГАРЛАА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/11/16    

Events

Name organizer Where
Frontier's "Invest Mongolia Tokyo 2018" Frontier Securities Tokyo Japan
"Open to Export" ICC WTO International business award ICC WTO London

NEWS

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US-Mongolia 'Third Neighbor Trade Act' On The Way www.thediplomat.com

Mongolia is utilizing its third-neighbor foreign policy to its highest potential by expanding bilateral economic relations with countries around the world without provoking too much conflict with the two giant geopolitical powers, and the country’s only neighbors, Russia and China.

In 2017, Mongolia and the United States celebrated the 30th anniversary of diplomatic relations. Over the past 31 years, since 1987, the two countries have expanded ties from the economy to culture to the military, and are now working toward a bilateral trade act that may present a win-win situation for both the United States and Mongolia.

On July 26, 2018, Representative Ted Yoho and nine other members of the U.S. House of Representatives introduced a trade bill between the United States and Mongolia. The proposed Mongolia Third Neighbor Trade Act seeks to promote Mongolia-U.S. trade by authorizing duty-free treatment for certain imports, like cashmere and textile materials. The Mongolia Third Neighbor Trade Act would play a crucial role in Mongolia’s overall economic development, increasing exports-led businesses as well as diversifying its markets. Following the legislative proposal, on July 30, 2018, Mongolian President Khaltmaa Battulga expressed his full support for the trade act and gratitude to the sponsors.

One notable example of how the act could help Mongolia’s economy is in regards to exporting high-end cashmere and other final textile products. Mongolia is the second largest producer of cashmere behind China. While China is Mongolia’s main purchaser of cashmere and textiles, the final product on the global market is labeled as made in China. “In 2017, only 1,100 tons out of total of 9,400 tons raw cashmere, which is almost 50 percent of world cashmere, is processed within the country while the rest of 8,300 tons is exported mainly to China in raw [form] without adding value,” Battulga said. The act, if passed, would allow Mongolia to produce a final product and export it to the United States duty-free, skipping the Chinese middleman.

Relatedly, the act could boost economic trilateralism between Mongolia, the United States, and Japan, with which Mongolia signed an economic strategic partnership agreement in 2015.

The proposed Mongolia Third Neighbor Trade Act is viewed as an opportunity and a positive shift in bilateral relations for both the United States and Mongolia. As the act moves through the U.S. legislative process, it has garnered 12 additional supporters in the House.

On October 23, 2018, Mongolian National Security Council Secretary Gansukh Amarjargal visited the U.S. State Department East Asian and Pacific Affairs Bureau (EAP) to discuss deeper cooperation between the two countries on “leveraging our shared democratic values to further strengthen economic and political ties.” Following the high-level meeting, the U.S. State Department EAP Bureau tweeted, “Mongolia is a key Indo-Pacific partner.”

From a geopolitical standpoint, the United States is strengthening its Asia-Pacific presence and is seeking democratic countries with which to expand cooperation. Mongolia’s active position in the region is timely, efficient, and economically beneficial; it allows the implementation of Mongolia’s foreign policy objectives at a grander scale. Gansukh has said that the government of Mongolia is very hopeful for the Mongolia Third Neighbor Trade Act.

During a discussion with former U.S. Ambassador to Mongolia Dr. Jonathan Addleton, he told The Diplomat that, “In my view, the approval of this act would be a positive step, both for Mongolia and the United States. Appropriately focused on animal fiber products, it involves duty-free access for an item that does not compete directly with any U.S. products while also contributing significantly towards the diversification of Mongolia’s economy and exports.”

If this act were to be passed, it would help solve Mongolia’s export dilemma, address the U.S.-China trade deficit, and expand Mongolia’s economic positioning in the region as well as globally.

By: Bolor Lkhaajav

Bolor Lkhaajav has an M.A. in Asia-Pacific Studies at the University of San Francisco.

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China's fight against smog makes palladium 2018's best metal www.mining.com

Palladium prices are shattering record highs, and investors are betting that tight supplies mean the bull run is just getting started.

The metal, used in pollution-control devices in cars, has jumped almost 9 percent this year in New York, the best performance among major metals. Demand is roaring thanks to China, which is on a mission to reduce smog emissions. Tougher pollution standards mean carmakers are using more of the commodity in catalytic converters. We’ve been dealing with supply deficits going on eight years, and that’s expected to continue. Supply’s certainly been an issue on the mining front as well as the draw-down of existing stockpiles

Global palladium production is falling short of the robust demand, and market forecasters including Citigroup Inc. are projecting further price gains ahead. Hedge funds are also wagering on an extended rally, with the biggest positive bet on the metal since early March.

“The market has a very positive fundamental outlook,” said Maxwell Gold, director of investment strategy at Aberdeen Standard Investments, which oversees $730 billion. “We’ve been dealing with supply deficits going on eight years, and that’s expected to continue. Supply’s certainly been an issue on the mining front as well as the draw-down of existing stockpiles.”

Palladium is a thinly traded market. Much like sister-metal platinum, its production is extremely concentrated, with Russia and South Africa collectively producing about three quarters of the world’s mined supplies.

Auto Demand
Almost 70 percent of palladium demand comes from the auto industry, according to researcher CPM Group. Car sales have stayed relatively strong in most places, helping to insulate prices from the hand-wringing over global growth that’s dragged down many industrial commodities.

Supplies are so constrained that users have turned to exchange-trade products to borrow the material they need. This has pushed palladium holdings in ETFs to the lowest since 2009 as manufacturers seek supplies above ground, said Gold.

Hedge funds are adding to their bullish outlook. In the week ended Nov. 13, money managers increased their net-long position, the difference between bets on a price increase and wagers on a decline, for a second straight week to 12,837 futures and options, according to data from the Commodity Futures and Trading Commission published Friday. That’s the most since March 6.

Palladium futures in New York jumped 5.2 percent in the week ended Friday to $1,154.60 an ounce.

Substitution Threat
One threat to demand: substitution. Historically, palladium has usually been cheaper than platinum, and therefore was used as a popular alternative since the two metals share many of the same chemical properties. But the recent rally has reversed the price relationship, and now palladium suffers the threat of substitution from platinum.

Still, manufacturers need 18 to 24 months for such changes to take place, so that probably won’t be an issue in the immediate future, Suki Cooper, a precious metal analyst with Standard Chartered Bank in New York, said by telephone.

In terms of substitution, “many manufacturers have indicated that it’s not something that can be switched easily or quickly, even though is economically possible,” she said. “The longer-term outlook remains positive and price risks are skewed to the upside.”

(By Marvin G. Perez)

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Millennium Challenge Corporation presents GMS licenses www.montsame.mn

Ulaanbaatar /MONTSAME/. Previously, the second Compact agreement between the Government of Mongolia and US Millennium Challenge Corporation (MCC) was authenticated, with Prime Minister U.Khurelsukh and US Secretary of State Michael Pompeo signing MCC USD 350 million compact.

In the frameworks of the feasibility study that was done by MCC, the corporation presented two types of licenses for Groundwater Modeling System (GMS) software to the Ministry of Environment and Tourism. “The GMS is vital in accurately defining the output of the aquifer, currently available as well as new water resources for water extraction. It can also define the water extraction amount by calculating the number of days the Tuul river have less water when more water is pumped and showing the linkage between surface water and groundwater in detail,” said Head of the Land Management and Water Policy Coordination Department of the Ministry of Environment and Tourism Sh.Myagmar and expressed his gratitude.

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Mongolia calls for global attention on climate change www.news.mn

Dramatic temperature changes and extreme weather events in Mongolia have been blamed for the deaths of thousands of livestock in recent years and is believed to be forcing hundreds of families each year to abandon their traditional nomadic farming ways. As world leaders prepare for the UN climate conference in Poland next month, Mongolians are pleading for international action.

Government figures show average temperatures have risen by about 2.2 degrees Celsius (4.0 degrees Fahrenheit) since systematic records began in 1940 — well above the global average rise of about 0.85 degrees Celsius (1.53 degrees Fahrenheit) since 1880.

Summers, when most of the rainfall occurs, have become drier, and “extreme climate events” have become more frequent, said G.Purevjav, head of climate research at Mongolia’s Information and Research Institute of Meteorology, Hydrology and Environment. In result, hundreds of rivers, lakes and springs have dried up across the country, the environment ministry says.

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ADB Opens a New Wastewater Treatment Plant in Arvaikheer, Mongolia www.agenparl.eu

ARVAIKHEER, MONGOLIA (16 November 2018) — The Asian Development Bank (ADB) and the Uvurkhangai Provincial Government of Mongolia today inaugurated a new wastewater treatment plant in the provincial capital Arvaikheer. The state-of-the-art plant was built under additional financing for the ADB-funded Southeast Gobi Urban and Border Town Development Project, and will ensure safe, reliable, and environmentally friendly wastewater treatment for over 28,000 residents.
“The new plant replaces an inefficient treatment system that was built more than 30 years ago,” said Uvurkhangai Provincial Governor Mr. Ganbold Gonchoo. “It is designed to meet current and future demand for the next 25 years and will play a significant role in the economic development and improved livability of Arvaikheer city. It is also an important milestone in the strategic partnership on urban development between ADB and the province.”
“The new plant is the first of ten similar facilities to be built in Mongolia with ADB support,” said ADB Country Director for Mongolia Mrs. Yolanda Fernandez Lommen. “It will facilitate the town’s ongoing growth and development and will ensure that domestic and commercial wastewater will no longer be discharged into the local river basin.”
The plant was opened ten months ahead of plan and has an operating capacity of 3,000 cubic meters per day. It features integrated fixed-film activated sludge technology designed by Mongolian engineers and produces high quality effluent through effective and energy-efficient treatment processes. The plant will reduce odor and adhere to strict environmental conditions and national effluent standards.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.

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China to boost cooperation with India, Mongolia: defense minister www.globaltimes.cn

State Councilor and Minister of National Defense Wei Fenghe met with Indian Defense Secretary Sanjay Mitra and State Secretary of the Mongolin Ministry of Defense Khalzankhuu Batbileg in Beijing Thursday.

While meeting with Mitra, Wei said China and India see far more common interests than divergencies between each other, stressing that the two countries should boost military exchanges, improve mutual trust in the security field and properly manage and control any disparities.

India's relationship with China is one of its most important bilateral ties, said Mitra, who hopes the two sides will further develop relations between the two countries and two militaries.

China highly values its relations with Mongolia and hopes to upgrade development of China-Mongolia comprehensive strategic partnership, Wei said while meeting with Batbileg.

Batbileg said Mongolia hopes the two countries cooperate on issues including peacekeeping and disaster prevention while further promoting their military relations.

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Death on Mongolia’s ‘Coal Road’ www.news.mn

Kh.Sugar, director of the Citizens’ Representative Assembly has held a press conference regarding the dangerous situation on the main coal transportation route to China.

Currently, nearly 12000 coal trucks from 161 enterprises are transporting coal on the 239 km road between the giant Tavan Tolgoi mine and the Gashuun Sukhait border crossing. Recently, queues of 4000-5000 coal trucks have been occurring, stretching far into the Gobi, because the border crossing has not been able to meet the export demand. An unfortunate consequence of the queues has been dangerous and reckless driving by some of the truck drivers involving racing each other, speeding and using unauthorized roads.

It has now been revealed that a total of 51 truck drivers have died on the coal road with 42 others being injured over the last three years. In the first 10 months of 2018, a total of 464 accidents occurred involving the coal trucks.

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Mongolia shaken by widening loan scandal www.asia.nikkei.com

ULAANBAATAR -- Braving subzero temperatures, hundreds of demonstrators gathered outside Mongolia's State Palace on Wednesday to demand prosecutions of officials caught in a widening loan scandal.

"I'm here to fight against the crooks who stole from the people, and I will fight until they face justice," said Munkhtsetseg Ulzii-togtokh, a shopkeeper in her 60s.

Her anger stems from years spent fruitlessly trying to expand her business with a government loan -- the Small and Medium Enterprises Development Fund extends loans with an interest rate of around 3% versus typical business bank rates of up to 20%.

The rage at Mongolia's biggest political demonstration of the year is over allegations that three members of Prime Minister Ukhnaa Khurelsukh's cabinet have benefited by getting the low-interest loans for business controlled by them or their family members. More than a dozen lawmakers and police officials have also been implicated.

The head of the fund has been arrested, and the state auditor and the minister overseeing the fund -- himself an alleged beneficiary -- have both been ousted. Others are under investigation.

The aspersions are tainting the premiership of Khurelsukh, who took office just last year after a separate scandal over officials getting favorable deals led to the ousting of his predecessor.

The Mongolian National Chamber of Commerce and Industry announced Wednesday that its more than 3,500 member companies would withhold tax payments until the lending scandal is resolved. The chamber is also demanding a constitutional amendment to public oversight of government finances.

"Over the past two years, the crisis in the Mongolian economy has been overwhelming," the chamber said in a statement. "Meantime, high-ranking officials are taking advantage of funds meant to support businesses and are using their power and privilege to benefit themselves."

Julian Dierkes, who heads the program on Inner Asia in the School of Public Policy and Global Affairs of the University of British Columbia, said the demonstrations could get much bigger.

"If officials and organizations neglect the deep-seated public frustration over corruption, we might expect massive protests for calling changes," Dierkes wrote in a blog post earlier this month.

In financial distress after years of slumping commodity prices, Mongolia last year began a $5.5 billion bailout program with the International Monetary Fund. At the same time, the country's politicians have sought to avoid becoming overly dependent on neighboring China for support and trade.

The loan scandal is sharpening a constitutional standoff between Khurelsukh and his Mongolian People's Party government and President Khaltmaagiin Battulga of the opposition Democratic Party.

Battulga, who has been pushing for the country to shift away from parliamentary government, late last month sought the dissolution of the legislature -- a demand rejected last week by a parliament dominated by the People's Party.

Khurelsukh has demanded that lawmakers who received SME Fund loans apologize and repay the money. The People's Party, however, has been split by the scandal, with some lawmakers calling for a no-confidence vote against their own cabinet.

"SME embezzlement is a result of too many businessmen holding political powers and making our society dirtier and more corrupted," said Tserendash Tsolmon, a senior politician and former minister.

"Powerful politicians like Khurelsukh must fight to declare justice at any cost," the lawmaker said. "I think its better for the MPP to provide political stability. It is not good for Mongolia in case of foreign investment when we have unstable governance, and cabinets changed in every one year or two."

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Mongolia’s unemployment falls by 2.2 percent www.news.mn

According to the National Statistic Office of Mongolia, the number of people aged 15 and above, who are in work reached 1.3 million in the first 10 months of 2018; a total of 721.1 thousand of them are men and 610.2 thousand are women.

The unemployment rate has fallen to 6.9 percent nationwide; a decrease of 2.2 percent on the same period last year, while it has increased by 0.6 percent on the previous quarter.

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Meeting meat demand: Mongolia to trade 17.9 percent of livestock www.news.mn

Mongolia is planning to trade 17.9 percent or 15.1 million head of livestock nationwide from 2018-2019. According to provincial administrations, they have planned to use 5.5 million for local meat demands and to trade 9.6 million animals.

A total of 52 meat plants are operational in Mongolia. The plants have the capacity of slaughtering 26.6 thousand livestock a day.

Former Minister of Food, Agriculture and Light Industries B.Batzorig recently reported that the number of Mongolian livestock has reached 84.4 million.

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