|Frontier's "Invest Mongolia Tokyo 2018"||Frontier Securities||Tokyo Japan|
|"Open to Export" ICC WTO International business award||ICC WTO||London|
Joining the chorus of regulators calling for a crackdown on cryptocurrencies, the French and German finance ministers said digital tokens “could pose substantial risks for investors” and potentially long-term financial stability.
In a letter to fellow G20 finance ministers – signed by French Finance Minister Bruno le Maire and his interim German counterpart Peter Altmaier, along with the heads of the two countries’ central banks – they said that cryptocurrencies currently have “limited” implications for global financial stability.
“Given the fast increase in the capitalization of tokens and the emergence of new financial instruments” based on them, “these developments should be closely monitored,” the ministers said.
Cryptocurrencies “are currently largely mislabeled as ‘currencies’ in the media and on the internet,” they said, adding that a “lack of clarity” about the nature of tokens “can only fuel speculation.”
They also called for greater protections for retail investors speculating in crypto, saying “the buildup of individual exposures to such volatile tokens could have damaging consequences for misinformed investors who do not understand the risks they are exposing themselves to.”
This week, warnings have been voiced by regulators and watchdogs from the Bank for International Settlements (BIS), the European Central Bank (ECB), and Hong Kong’s Securities and Futures Commission.
ECB board member Yves Mersch said on Thursday that “cryptocurrencies” are “not money, nor will they be for the foreseeable future.”
Bitcoin is “a combination of a bubble, a Ponzi scheme and an environmental disaster,” Agustin Carstens, the head of the BIS, said.
He called on central banks to clamp down on bitcoin and other cryptocurrencies to stop them “piggybacking” on mainstream institutions and becoming a “threat to financial stability.”
Bitcoin better than gold & will be worth $340,000 - cryptocurrency billionaire Winklevoss www.rt.com
Bitcoin has the potential to grow up to 40 times its current value, according to cryptocurrency billionaire Cameron Winklevoss, who described the leading digital currency as “better than gold”.
"Taking bitcoin in isolation… we believe bitcoin disrupts gold. We think it's a better gold, if you look at the properties of money. And what makes gold gold? Scarcity. Bitcoin is actually fixed in supply so it's better than scarce… it's more portable, its fungible, it's more durable. It sort of equals a better gold across the board," Winklevoss told CNBC.
"So, if you look at a $100 billion market cap today, now last week it might have been more like 200, so it's actually a buying opportunity, we think that there's a potential appreciation of 30 to 40 times, because you look at the gold market today, it's a $7-trillion market. And so a lot of people are starting to see that, they recognize the store of value properties. So, we think regardless of the price moves in the last few weeks, it's still a very under-appreciated asset," he said.
As of Thursday, bitcoin’s market capitalization was almost $150 billion. So, according to Cameron Winklevoss's forecast, bitcoin’s price could someday grow from its current $8,500 to as much as $340,000 with a market cap of $6 trillion.
Cameron Winklevoss is one of the Winkelvoss twins, who are famous for their settlement with Mark Zuckerberg, who they accused of stealing their idea for Facebook. It has been reported that the twins were the world’s first bitcoin billionaires.
"You know the criticisms are just a failure of the imagination," Tyler Winklevoss told the media. "Cryptocurrencies aren't really important for human-to-human transactions... but when machines-to-machines trade economic value, they are going to plug into protocols like bitcoin and ethereum. They are not going to open bank accounts at JPMorgan... those were invented by bankers before the internet existed. Trying to use them as payments or money on the internet is a square peg in a round hole at best."
Mongolia is back on the mining map as some standout discoveries, higher commodity prices
and a host of mainly positive political developments have brought the Asian nation to the fore.
Copper and gold are the two commodities gaining interest this time around for a country that
has the biggest consumer of both metals on its doorstep.
Politics is usually the first port of call for any investor looking to Mongolia and the country has
had its fair share of comings and goings in the past few years.
First up, it has a new president.
Khaltmaa Battulga, a former judo champion, has not made a huge impact since coming into
office in July, but his entrepreneur origins have given investors comfort he will be in the probusiness
The country, just before Battulga arrived, agreed a US$5.5 billion lifeline from the
International Monetary Fund. This not only helped it escape a sovereign debt default, but
restored confidence in the economy.
The budget deficit has subsequently been cut, bond payments have been rolled over, the
national currency has started to appreciate and the IMF has billed strong GDP growth for the
country over the next two years.
Commodity price rises have had a positive impact on the latter.
Copper is now above the magic US$3 per pound (US$6,615 per tonne), gold has recently
made moves to US$1,350 per ounce and coking coal, which Mongolia is a key supplier of to
China, is changing hands for more than US$200/t.
Mineral exports are important to the Mongolian economy, accounting for more than 30% of its
And, the biggest project in the mining industry at the moment, the US$5.3 billion Oyu Tolgoi
(OT) underground expansion, is moving forward to first production in 2020.
An impasse between the government and Rio Tinto was eventually ended in 2016, with an
agreement struck to expand the copper-gold behemoth's life and production.
Coming out of the bear market
There are a few companies that hung in during the gloom in Mongolia and are now set to
profit from an improved environment.
Erdene Resource Development, Kincora Copper and Xanadu Mines could be considered the
poster boys for the mining sector, with Rio Tinto being the country sponsor.
The three all offer something different but, as with the country's flagship mine, scale is the big
Erdene, a TSX-listed company, made a discovery on the Altan Nar epithermal poly-metallic
project in late 2011, but the reveal of an intersection of 55m at 1.02g/t Au and 12g/t Ag from
just 20m depth came at the wrong time in the cycle.
Investors let the discovery go by without a passing mention as the stock, like all exploration
stocks at the time, went on a downward run.
Bayan Khundii, discovered in 2015, is now the flagship.
Situated in the same south-western part of the country, it is a 1.7km-long gold system hosted
within a zone of intensely silicified and sericitised devonian volcanic units overlain in part by
younger cretaceous and quaternary units.
Bayan Khundii is on the same Tian Shan Belt that has yielded the prolific Kumtor gold mine in
Kyrgyzstan, the 13 million ounce Kyzyl project being advanced by Polymetal in Kazakhstan
and, of course, the huge OT copper-gold porphyry.
The Tian Shan Belt has yielded some very large deposit
It is on its way to a maiden resource after capturing investor attention with shallow drill hits
such as 116m grading 2g/t Au, 131.5m averaging 3.86g/t and 108m at 2.8g/t.
These intervals show continuous mineralisation suitable for bulk mining, but CEO Peter
Ackerley is keen to emphasis the high-grade potential that could provide a high-margin kicker
at the front end of its mine life.
Back in October, he said about 20% of the holes have had hits higher than an ounce (28g/t),
with a target in excess of 500,000oz of 4g/t material already sitting at surface.
The exciting thing about Bayan Khundii - and many of the projects getting airtime in Mongolia
- is the fact it is a brand new discovery that is still growing.
The maiden resource, at last check in October, was set to come out around 1.4-1.5 million
ounces at a grade cutoff of 0.3g/t, according to Paradigm Capital analyst Don MacLean.
Yet, recent geological mapping and drilling has shown up several interesting prospects close
to the four main zones that could come into the fold after the resource debut.
On top of that, the discovery it made at Altan Nar over six years ago is still in the portfolio with
249,000 ounces of gold equivalent at an average grade of 2.1-2.5g/t. This is also growing
C$14 million (US$11 million)-capitalised Kincora Copper is the earliest stage of all three
Mongolian poster boys, but CEO Sam Spring would argue his firm has the most potential
Having stuck it out during the bear market, Kincora now has over 1,500sq.km of land in the
South Gobi covering both carboniferous finger-type porphyries and some devonian targets
already drawing analogues with OT.
The company's Bronze Fox asset is the most advanced in the portfolio and is in the
Kincora was recently handed an exploration target by consultancy Mining Associates of 416-
428 million tonnes grading 0.26-0.3% Cu for up to 2.4 billion pounds of copper and 840,000oz
of gold at Bronze Fox. This was compiled from 76 holes, or 24,139m, of drilling.
This exceeded Spring and Kincora's expectations, ranking as one of the largest potential insitu
copper-gold systems in Mongolia.
As the company turns this exploration target into a 43-101 resource, it will inevitably go back
to the West Kasulu prospect, which, before a licensing issue blocked access to it back in late
2013, had seen a drill hit of 37m at 1.11% copper equivalent from 573m. This was part of a
bigger plus-800m interval grading more than 0.40% CuEq.
However, the bulk of the C$5.92 million raised at the back end of last was slated to go
towards the company's earlier-stage opportunities.
Kincora, through an all-share deal with IBEX sealed in 2016, gained access to several targets
just down the road from OT and the under-construction Tsagaan Suvarga (TS) copper mine.
The age of these rocks has Spring and the company thinking they could have tier-one
Kincora is gradually working up the targets on its plus-1,500sq.km of land in the Gobi
"The geological theory goes: if you're going to find tier-one assets it is most likely to be in
those devonian rocks that host the two existing large-scale economic projects in the belt,"
Spring told Mining Journal.
That would be OT and TS.
While OT's 550,000t per annum peak copper production is well-known, TS' construction has
gone under the radar.
The $1.1 billion development, being carried out by a local company, is slated to produce
316,000tpa of copper concentrate and 4,000tpa of molybdenum concentrate at full capacity. It
has resources of 256Mt at 0.55% Cu and 0.02% Mo.
These are two pretty good analogues for a junior explorer to draw on.
Kincora's first two "tier one" targets - Bayan Tal and East Tsagaan Suvarga - are coming
Quote: “The geological theory goes: if you're going to find tier-one assets it is most
likely to be in those devonian rocks that host the two existing large-scale economic
projects in the belt”
First phase drilling has started at Bayan Tal, one of its "Oyu Tolgoi style" targets, for some
2,850m across six holes. Past intercepts include 18m grading 0.66% CuEq and 18m at 0.75%
It has also carried out some 3,145m of drilling over 13 holes at East Tsagaan Suvarga, which
it refers to as its "brownfield TS style target". Six of these 13 holes intersected the interpreted
devonian quartz monzodiorite of the regionally-important Tsagaan Suvarga Intrusive
All of this bodes well for the company increasing its modest market capitalisation.
"If we can get Bronze Fox into that more advanced drilling peer group - and try to support our
valuation on that - and then you have the rest of the district that has the best chance of a tierone
asset that sits in the portfolio as well, then that is hopefully an attractive scenario for
investors," Spring said.
Australia-listed Xanadu Mines shows up in the Kincora corporate presentation several times
and for good reason.
Its flagship Kharmagtai copper-gold project in the South Gobi is what the Toronto-listed firm
hopes its Bronze Fox asset could one day turn into.
Xanadu, taking its lead from Ivanhoe Mines' 2001-2006 work on the asset, has generated a
1.53 billion pound copper and 2.18Moz gold resource grading 0.55% CuEq from three
deposits at Kharmagtai. Mineralisation starts from just below surface and has been shown to
go down beyond 1,000m vertical depth.
Kharmagtai accounts for the majority of Xanadu's circa-A$150 million (US$118 million)
market capitalisation, but it also has the Oyut Ulaan project, 260km east of Kharmagtai, to its
name. This has some interesting porphyry and epithermal gold targets highlighted by
intersections such as 184m grading 1.06% CuEq from surface and 3m at 13.28g/t Au.
Xanadu has been working on expanding its 2015 resource at Kharmagtai
The majority of focus in 2018 will be on Kharmagtai.
The company has uncovered significant mineralisation during stepout and depth drilling since
the maiden resource was published in 2015 and is continuing to up the ante through the
addition of a fourth drill rig.
Part of the company's success can be put down to its use of advanced geochemistry and
geophysics. This has helped identify targets under cover in the South Gobi.
It has ended up giving Xanadu many potential targets to work on, but this year it will continue
to maintain its dual drill strategy of expanding known mineralisation through exploration of
tourmaline breccia-hosted mineralisation below and along strike from the current resource
base and test all shallow high-priority porphyry copper-gold and gold targets under cover.
The discovery of a new blind porhryry would have the "greatest impact on the project
economics", according to managing direct Andrew Stewart.
Smelling the sentiment
The South Gobi offers the geological bounty and geographical location to make these
Investors are slowly realising this, with Erdene, Kincora and Xanadu raising equity close to
US$29 million in equity, combined, for exploration last year.
Those not clued into the country still struggle to get their heads around a developing nation
quick to intent on profiting from its nascent industry but, as has often been the case,
sentiment is still summed up by Rio Tinto's actions.
On that note, the most recent indications have been positive.
Despite its well-publicised Mongolia tax squabbles, it has recently set up shop in Ulaanbaatar.
Its office is unlikely to used as just a handy stopover for its executive team on their way
through Asia, with Rio saying it will act as a working exploration hub.
Such an investment, along with the $5.3 billion being spent underground at OT, requires
confidence in the country's ability to put in place a workable long-term investment framework.
If that wasn't enough, Codelco has reportedly made plans to invest in Mongolia after
exhausting options in Chile and realising there are few jurisdictions, globally, offering the
same rich copper mineralisation.
It may have taken its decision after analysing Rio's in-country exploration work.
Just last year, Rio's Turquoise Hill subsidiary started drilling a licence outside of OT, near to
Kincora's Red Well licence. It also has plans to drill other targets this year.
Spring said: "When you've got the largest expansion project already in the industry that has
100-year mine life (Oyu Tolgoi openpit and underground), what are you looking for at
grassroots exploration that could move the needle?"
"Perhaps there is at least another Oyu Tolgoi out there - the distribution of orebodies in more
established porphyry districts would suggest so."
Canadian billionaire Robert Friedland, founder and executive chairman of Ivanhoe Mines (TSX:IVN), has joined the debate over the Democratic Republic of Congo’s imminent hike to mining taxes by saying his company would pay higher royalties and taxes, but only if that money benefits locals.
The Vancouver-based company, which is developing the Kamoa-Kakula copper deposit in the Central African nation in partnership with China's Zijin Mining, told investors attending a mining conference in Cape Town that he was not opposed to updating the country’s 16-year-old mining code.
However, he said the mining industry needed stability, transparency and prove the new taxes collected by Congo goes to “develop, help and empower local people.”
“I’m not concerned about the level of taxation, that’s not the fundamental issue,” he said according to FT.com. “The issue is the mining industry needs stability and we absolutely need transparency.”
Ivanhoe is also building a new operation at Kipushi, a past producing zinc-copper mine in partnership with Congo's state-owned Gécamines. The company's most advanced project, however, is Platreef platinum, located in South Africa.
The revised mining code, approved by the country’s parliament last week, would increase copper royalties from 2% to 3.5%, creating also a 50% "super-profits" tax if commodity prices rise much faster than expected.
But what really has miners up in arms against the new rules is a move to eliminate a clause that would have protected resources companies present in the country from tax increases for 10 years.
While the legislation has yet to be signed into law by President Joseph Kabila, some such as Congo’s state-owned miner, Gécamines, are already seeking to take advantage of the new rules.
Last week, the miner said it would revise all contracts with its international partners, claiming the old rules meant those firms benefitted more from the country’s riches than Gécamines itself.
Revisions should to start in the second quarter and be completed by the end of this year or beginning of 2019, it said.
Other international mining companies operating in Congo include Glencore, Randgold Resources, China Molybdenum, Eurasian Resources Group, and MMG. All of them have already seen their shares dive in the last week and said they will challenge the new law through international arbitration while they lobby Kabila not to sign it.
The nation is world’s main supplier of cobalt, a key component in the lithium-ion batteries that power electric cars and mobile phones, and Africa’s largest copper producer.
Doctor Patrick Soon-Shiong, a California biotech billionaire and a minority owner of the Los Angeles Lakers basketball team, struck a big deal on Wednesday to buy Los Angeles Times from Chicago-based Tronc Inc.
Soon-Shiong, a 65-year-old doctor turned entrepreneur who was born in South Africa to Chinese parents, is the founder and CEO of NantHealth, based in Culver City, California.
He is a major shareholder of the Times' former parent company, Tronc, which also owns the Chicago Tribune, Orlando Sentinel, South Florida Sun-Sentinel, Baltimore Sun and the New York Daily News.
As part of the $500 million deal, Soon-Shiong also will get The Times' sister newspaper, the San Diego Union-Tribune, and will assume $90 million in pension liabilities. The sale is expected to close in April.
The sale of the Times came after the newspaper has gone through three editors in six months, its publisher placed on unpaid leave during a sexual harassment investigation and an overwhelming vote by staff members to unionize the newsroom.
A former surgeon at the University of California, Los Angeles, Soon-Shiong has been described by Forbes as "America's richest doctor", and one who has said his goal is to cure cancer in his lifetime. Forbes estimates his wealth at $7.8 billion.
He was born in Port Elizabeth, South Africa, to Chinese immigrant parents who fled during the Japanese occupation during World War II. His parents were originally from Guangdong province.
Soon-Shiong received his medical degree from the University of Witwatersrand, where, in the late 1970s, he treated South Africans who had been injured during the Soweto riots.
He joined UCLA Medical School in 1983 as an assistant professor in the gastrointestinal surgery division. He later became director of UCLA's pancreas transplant program.
After developing a method for treating diabetes by transplanting insulin-producing cells into a patient's pancreas, Soon-Shiong left UCLA and founded his own medical research firm in 1991.
His wealth came from companies he founded to make blockbuster treatments for breast cancer and diabetes. He sold two of his biotech companies for nearly $9.1 billion.
One drug that his companies developed is Abraxane, which became the foundation of his fortune. It is a redesigned version of a top-selling cancer drug called Taxol.
A story posted on the Times' website on Wednesday about the new owner of the newspaper read: "Who is Patrick Soon-Shiong? An LA billionaire with big ideas - and mixed achievements". And the article said "his work has not been without controversy".
It noted that when Abraxane was approved in 2005, a group of top oncologists questioned whether the expensive drug was "just old wine in a new bottle".
Soon-Shiong now controls a network of health-company startups called Nantworks as he continues his search for a cancer cure.
Soon-Shiong has been described as a basketball fanatic who shoots hoops on a hardwood court inside his multimillion-dollar mansion in Los Angeles. He bought his minority interest in the National Basketball Association Lakers from former NBA star Magic Johnson, the team's president of basketball operations.
His involvement with Tronc started in May 2016 when he bought $70.5 million in stock, which made him the company's second-largest shareholder, and he was named vice-chairman.
He joins other billionaires who have become US newspaper owners. Amazon founder Jeff Bezos bought The Washington Post in 2013. That same year, Red Sox owner John Henry acquired The Boston Globe and, in 2014, Minnesota billionaire and Timberwolves owner Glen Taylor bought the Minneapolis Star-Tribune....
Alongside its fast growing economy, Mongolian national brands are seeking access to bigger markets. For a country that is heavily dependent on mining, economic diversification has been the main area of focus.
Particularly, the agriculture is considered the second biggest industry in Mongolia following its massive mining resources. Several companies have successfully penetrated international markets utilizing its substantial renewable natural resources. Mongolian Customs General Administration has reported that the food products export doubled last year. Phytogenic products export grew by over USD 12 million, reaching USD 67.4 million, while wooden products export rose by around 50 percent, to USD 633 million.
One of the high in demand agricultural businesses is, without a doubt, brewery. APU JSC’s Golden Gobi premium lager beer has succeeded in penetrating Japanese market, finding a place in the 7-Eleven, an international chain of convenience stores.
Named after the largest desert region in Mongolia and Asia, Golden Gobi beer is brewed strictly according to the German Beer Purity Law (Reinheitsgebot), and has started exporting to Japan since last year. Batsaikhan Purev, CEO of APU JSC’s parent company Shunkhlai LLC, previously said during an interview, “We are done competing with one another in the domestic market. It is time to compete in the world”. Fulfilling its objectives one after another, the company is now one step closer to its visionary goal to become Mongolia’s global brand ambassador.
Regardless of the economic downturn in the recent years, certain national producers successfully maintained their growth and improved their competitiveness in the global market. TESO Corporation, one of Mongolia’s major players, has started exporting their products to Kazakhstan and People’s Republic of China (PRC). The company increased its export goods and volume over the last year.
According to the company officials, TESO Corporation has started exporting Golden Milk, Zuv curd drink and Lapsha noodles, quadrupling its export revenue and became Mongolia’s biggest food exporter in 2017. Furthermore, the company has recently raised a total of USD 6.5 million from the European Bank of Reconstruction and Development to increase competitiveness and manufacture of its innovative products.
Aside from food exports, Mongolia excels in cashmere industry. Holding 66 percent of domestic market share, Gobi Corporation opened a branch in Ereen city of PRC and Brussels of Belgium in 2017.
The company currently has three branches and 57 franchisee in 26 cities of 11 countries. As a result, the company’s revenue grew by MNT 9 billion in the first half of 2017. Furthermore, Erdenet Carpet LLC opened a store in Khukh Khot of PRC. With over 20 years of experience, the company opened branches in PRC, Germany, Russian Federation, Japan, the U.S. and France. According to an official of Erdenet Carpet, the company is planning to export their products to Switzerland....
The Minister of Mining and Heavy Industry Sumiyabazar Dolgorsuren has indicated that Mongolia has several undiscovered deposits of gold, copper, uranium, other rare earth elements, lithium, cobalt and graphite. Experts expect soar in demand for core components of modern technology, such as copper, uranium, lithium, cobalt, nickel, graphite and other rare earth elements, with growth in the development of renewable energy and production of cutting-edge technology and electric cars. Accordingly, the officials are planning to conduct mineral exploration on over 20 percent of the country, covering a total of 30 million hectares of lands.
Currently, a total of 57 million tons of copper reserves, 2,500 tons of gold, 37.2 billion tons of coal, 197 thousand tons of uranium reserves have been discovered around the country. These numbers are expected to grow in the future with the upcoming explorations. “Looking at the mineral resources, processing, supply, production and recycling as a whole, Mongolia has the potential to sustainably supply minerals to the global commodity market,” remarked the minister.
The Government is planning to build several preparation plants including an oil refinery, synthetic natural gas plant, metallurgical plant and copper smelter with an aim to develop transparency and responsibility in the mining and heavy industry, increase the country’s wealth fund and developing a balanced, multi-pillar economic structure.
These plants will apply modern and advanced technologies that are environmentally friendly and low emission. For example, in an effort to reduce greenhouse gas emissions, some companies are producing cathode copper from ore stockpile of the copper-molybdenum deposit that is not suitable for ore processing by applying advanced technology, known as “Solventextraction- electrolysis”. As demand for some minerals grow, prices increase and income rises there will be definite opportunities for the Government of Mongolia to develop and finance production that is directed towards reducing greenhouse gas emissions and is environmentally friendly.
So the officials are deeply aware of the fact that the future development of the country depends on the proper management of wealth accumulated during global boom periods. As a result, some ministers have been studying Norway and Kazakhstan, countries that have years of experience and expertise in wealth fund management, governance and transparency before they attend Economic Forum 2018 in Davos, Switzerland.
As of 2017, mining sector makes up 86 percent of Mongolia’s total exports, 71 percent of the total industrial output and almost 30 percent of total state budget revenues.
FEBRUARY 8, 2018 —In Mongolia, there is excitement about young opera singers. In 2017, Mongolian baritone Ariunbaatar Ganbaatar won the prestigious BBC Cardiff Singer of the World competition. Two years earlier, Mongolian baritone Amartuvshin Enkhbat was a finalist in the same competition, while Mongolian tenor Batjargal Bayarsaikhan won the Grand Prix at the K. Bazarsadaev Fifth International Vocalist Contest in 2015.
What lies behind the country’s prowess in opera? Guardian reporter Kate Molleson traveled to Mongolia to find out. Her conclusion: The Soviets brought it with them when Mongolia became the first satellite state of the Soviet Union in 1921.
But Mongolians had something to contribute, notes Ms. Molleson. Mongolians have a centuries-old tradition of throat singing, a challenging form of overtone singing that requires great vocal stamina and – perhaps – has inspired young opera singers.
These beekeepers carve beehives out of wood, smoke them over beeswax and moss for two days to make them appealing to bees, and then place them high in tree canopies where the bees can live safely, away from creatures that might disturb them.
Harvesting the honey at such great heights is dangerous, but most of the families have been doing it for generations, reports the BBC.
The price of copper regained its footing and iron ore prices continued the climb on Thursday after customs data showed imports of raw materials by China stayed robust in January after a strong 2017.
In brisk trading New York Comex copper for delivery in March were flat compared to Wednesday settlement price trading at $3.0855 a pound ($6,802 per tonne). Copper is still down sharply for the week after suffering its worst trading session of the year yesterday.
While down slightly from December (traditionally a high-import month when Chinese traders try to meet annual volume targets), January customs data from China showed import volumes of unwrought copper rose 16% compared to last year totalling 450,000 tonnes during the month. 2017's annual total came in at 4.7m tonnes, down 5.7% from the year before.
The January jump in copper concentrate cargoes were even more impressive, increasing 25% from the same month last year to total 1.6m tonnes in January. China's copper concentrate imports reached a record high in November of 1.78m and for the year reached a new record of 17.3m tonnes.
The increased volumes over 2017 are indicative of Beijing's clampdown on copper scrap imports as part of the country's crackdown on pollution and consolidation of heavy industries. A recent report by BMO Capital Markets forecasts that China's scrap imports could halve in 2018 boosting concentrate cargoes to another all-time high this year.
China's iron ore imports rose in January even as steel mills are idled as part of a government drive against pollution and stockpiles at ports reached new peaks above 150m tonnes.
China consumes more than two-thirds of the seaborne iron ore market and produces as much steel as the rest of the world combined.
Beijing's winter war on smog has concentrated on the country's steelmaking hubs near the capital where mandated cuts came into effect in October. Chinese steelmakers are increasingly seeking out high-quality imports over domestic ore in anticipation of restart of production in mid-March.
Imports of high-quality iron ore fines and lump ore from Australia, Brazil and South Africa jumped 19% from December to just above 100m tonnes last month. Cargoes reached a record high of 102.8m in September last year.
Total shipments for 2017 topped record imports in 2016 of just over 1 billion tonnes.
The Steel Index benchmark price for Northern China 62% Fe ore climbed for the fifth straight session on Friday to trade at $77.85 a tonne, up 7% since the beginning of the month as it continues to rally from lows in the $50s struck in June last year.
Later on Wednesday, Rio Tinto will release 2017 profit numbers that will fully underscore its emergence from a relatively penurious decade triggered by ill-starred ambition in aluminium and a concert of global financial crisis and a long post-resources boom bust.
According to Bloomberg, the balance sheet is buoyant and getting stronger courtesy of recovered pricing in bulk commodities markets and a strategy that sees Rio Tinto shrinking itself to further greatness through shareholder-enriching sales of unwanted legacy assets. But the road to recovery at Rio has, over recent times, been potholed by a succession of shocks, the best known of which is the self-reported governance issue in Guinea that cost two senior executives their jobs and has inspired formal investigation by a triptych of securities market regulators. Most recently there has been a succession of challenges on the Mongolian fringes of the Rio empire.
Twice in less than a year, problems on the Chinese border have stopped shipments from the Oyu Tolgoi copper and gold mine and on January 16, the Mongolian government (itself a shareholder in the mine) presented the project operator with a USD 155 million tax re-assessment for the years 2013 to 2015. It has been reported since in London that a major Rio shareholder has complained to UK authorities over failures to effectively disclose Oyu Tolgoi's heavy risk profile and just last week a Dutch anti-multinational lobby published a report into the relationship between the miner and Mongolia that alleged tax minimisation and evasion and described Rio's relationship with its sovereign host as abusive.
Now, given a succession of Mongolian calamities that stretches from the material to the spurious, it is remarkable to us that Rio could find itself accused of refusing to talk to the other really big investor in the Canadian- listed entity that owns Oyu Tolgoi, a project that will have soaked up USD 12 billion of development capital by the time it hits peak output sometime after 2025. Rio's place in Oyu Tolgoi is owned through Turquoise Hill. The Canadian listing owns 66 percent of the project and it, in turn, is 50.8 percent owned by Rio Tinto.
That leaves Rio with a 33.5 percent economic ownership of the mine. The arrangements also leave Rio Tinto as the operator of the mine and the management fees generated by that are shared equally by Rio and Turquoise Hill. The balance of Turquoise Hill is owned by long and short investors and the biggest of those minority shareholders is a San Francisco-based investment fund called SailingStone Capital Partners. It owns 12.16 percent of Turquoise Hill, a position that is presently worth USD 716 million. On Thursday last week, SailingStone went public with simmering frustration over the way Rio expresses control over Turquoise Hill and its mine.
For all that it is openly content with the progress at Oyu Tolgoi, Sailing- Stone is concerned that the management teams of the Canadian company and its mine are universally "bound to Rio Tinto". In a letter to the board of Turquoise Hill, SailingStone complained that management has "no job security, no ability to hire and, based on their tenure at Rio, has likely far more leverage to Rio Tinto's stock price than Turquoise Hill's". SailingStone noted that, until recently, long-term executive and management compensation was paid in Rio Tinto paper rather than that of the Canadian listing. That changed last year as a result of previous
SailingStone lobbying. SailingStone, which is, as we noted, content with outcomes at Oyu Tolgoi but not so much with the way they are being achieved. "We are pleased with the progress that has been made over the last few years in terms of the restart of underground development work, the execution of the project finance facility and the remarkable free cash flow stream generated by the open pit operations through the recent downturn in commodity prices," SailingStone said in opening its correspondence, "It's clear that all stakeholders, including the government and citizens of Mongolia, are benefiting from the activity and investments being made at site. However, we remain concerned about corporate governance, given the potential for conflicts of interest which exist between Rio Tinto, your majority shareholder and the operator of Oyu Tolgoi, and the minority shareholders of Turquoise Hill.
Specifically, we believe that basic corporate governance standards require an independent and informed management team and board of directors. These requirements are particularly acute given the unique relationship between TRQ and Rio, and yet today neither of these conditions is being met." It is worth noting here that the Turquoise Hill board already boasts a majority of independents, that decisions are taken on a majority basis and that all matters involving Rio are dealt with by the independents alone.
SailingStone's concern is that the direct relationship between Rio and Oyu Tolgoi makes it very difficult for the Turquoise Hill board to be fully informed of project progress and options. It is even more concerned that project management owes affiliation to Rio over Turqouise Hill's board. Now, these are patently very complex issues and the commitment by the board of Turquoise Hill to engage with SailingStone is necessary and sensible. The SailingStone letter complained that Rio had refused any and all invitation to discuss concerns over the nature of the global miner's relationship with Turquoise Hill and the risk that its approach oppresses minority owners.
SailingStone singled out Rio's recent decision to open its own office in Mongolia as "explicit acknowledgement of Rio's attitude towards minority shareholders". "They simply don't exist," SailingStone complained. With that, the other largest investor in Turquoise Hill complained that Rio had rejected "numerous requests for meetings, including offering to fly to their London headquarters at Rio's convenience". The fact that Rio is about to launch brand advertising across three of its most important constituencies (Australia, Canada and Mongolia) stands testimony to its acute appreciation of the importance of reputation to its social licence.
Matthew Stevens, Tugsbilig.B...