|Frontier's "Invest Mongolia Tokyo 2018"||Frontier Securities||Tokyo Japan|
|"Open to Export" ICC WTO International business award||ICC WTO||London|
Bat-Erdene Jadamba, Minister of Road and Transport Development, is paying a visit to the People’s Republic of China at the invitation of his counterpart Li Xiaopeng. This is considered the first visit of the Road and Transport Development Minister since 2015.
On the first day of his visit, Mr Bat-Erdene Jadamba met with Mr Li Xiaopeng to discuss Mongolia- Russia-China railroad corridor and bilateral cooperation on auto road and air transport.
Chinese Minister Li Xiaopeng remarked “The two countries have been developing cooperation in all sectors, especially focusing on transport sector since the joint declaration of developing Comprehensive Strategic Partnership in 2014.” He then expressed that the Agreement on International Road Transport, which was established between the Governments of Mongolia and China in 2011, is not complying with the current situations; thus, a joint working group needs to be established in order to study the necessary amendments to the agreement.
Minister of Road and Transport Development of Mongolia Bat- Erdene Jadamba expressed Mongolia’s interest in studying China’s practices in the road and transport spheres. Accordingly, Mr Bat-Erdene Jadamba asked China’s support in the following works:
Establishment of highway in Tianjin- Ulaan Uud route auto road; Expansion of railway network and workforces between the two countries;
Expansion of transit transportation in the western, eastern and northern route railways;
He then highlighted the current situations at Nariin Sukhait-Shivee Khuren and Tavan Tolgoi-Gashuunsukhait roads, and emphasized, “Tavan Tolgoi-Gashuunsukhait route auto road has a significant impact on Mongolia’s economy. Therefore, it is important to promptly settle the issue at the border checkpoint.”
Accordingly, Mr Bat-Erdene Jadamba asked to increase access and establish railroad between Zunbayan and Khangi Mandal. He added, “If these areas are connected by railroads, the transportation length of iron ore from Mongolia to a metallurgical plant in Bugat city of Inner Mongolia Autonomous Region of China will reduce by 400 km and will reduce load at Zamiin Uud-Ereen border checkpoint.”
As for air transport, Mr Bat- Erdene Jadamba requested China to increase flight frequency and delays in the Ulaanbaatar-Beijing route, expand flight routes of Hunnu Air LLC and establish Ulaanbaatar- Ulaan-Uud-Manchuria flight route. He emphasized that the route will develop cooperation and tourism between the three countries. Chinese minister informed that a joint working group’s research is important for the above-mentioned issues and expressed his willingness in cooperating with Mongolia after studying the situation.
Russia’s leading airline Aeroflot has leased 50 domestically made MC-21 jets for its fleet. The leasing contract has been signed for a period of 12 years with a possible extension.
Aeroflot will receive the first jet in the first quarter of 2020, with the full delivery to be completed by 2026. The total cost of leasing payments and maintenance fees exceeds $5 billion. Following this latest contract, the delivery of 220 MC-21 jets has now been confirmed.
The state-run carrier has relied heavily on Airbus and Boeing jets, but the Kremlin has encouraged local carriers to introduce homemade aircraft, like the MC-21.
The first 25 MC-21s delivered to Aeroflot will be equipped with American Pratt & Whitney PW1400G engines. It is possible that the remaining planes will be equipped with Russian-made PD-14 engines, which are to be certified later this year.
The maiden flight of the Russian jet took place in May 2017. It can carry a maximum of 211 passengers, and seeks to compete with medium-haul jetliners such as the Boeing 737 MAX, Airbus A320neo and Chinese Comac C919.
The main competitive advantages of the MC-21 include modest operating costs, which are 6-7 percent lower than its competitors. The jet will replace the remaining Soviet-era Yakovlev Yak-42, Tupolev Tu-134, Tupolev Tu-154, and Tupolev Tu-204/214 airliners.
The MC-21 features a composite wing-design, which improves fuel efficiency. The aircraft is also designed to have a cruising speed that is superior to its Boeing and Airbus alternatives, and its price is tens of millions of dollars lower than its competitors.
Ulaanbaatar/MONTSAME/ On January 31, the World Justice Project (WJP) released the 2017-2018 WJP Rule of Law Index, which measures rule of law adherence in 113 countries worldwide based on more than 110,000 household and 3,000 expert surveys.
According to the Index, Mongolia rose four positions for overall rule of law performance (from 55 in the 2016 WJP Rule of Law Index) to 51 out of 113 countries in the 2017-2018 edition. Its score places it at 7 out of 15 countries in the East Asia and Pacific region and 4 out of 30 among lower-middle income countries.
Featuring primary data, the WJP Rule of Law Index measures countries’ rule of law performance across eight factors: Constraints on Government Powers, Absence of Corruption, Open Government, Fundamental Rights, Order and Security, Regulatory Enforcement, Civil Justice, and Criminal Justice.
The WJP Rule of Law Index® is the world’s leading source for original data on the rule of law. The Index relies on more than 110,000 household and 3,000 expert surveys to measure how the rule of law is experienced and perceived in practical, everyday situations by the general public worldwide.
JOHANNESBURG (Reuters) - Rio Tinto on Wednesday denied allegations by a Dutch non-profit organization that it had avoided paying $700 million of tax to Mongolian and Canadian authorities relating to its giant Oyu Tolgoi copper project.
Rio Tinto is investing about a $1 billion a year at Oyu Tolgoi in the Gobi Desert, where it operates a mine and is building an underground extension that would add approximately 500,000 tonnes of production a year in the next decade.
The Centre for Research on Multinational Corporations, known as SOMO, alleged in a report that Rio and its Canadian subsidiary Turquoise Hill used so-called mailbox companies in the Netherlands and Luxembourg to avoid $470 million in Canadian taxes and $230 million in Mongolian taxes.
Rio denied the allegations in a statement. Its shares were trading 0.5 percent lower at 1500 GMT.
“The flawed SOMO report contains a number of unsubstantiated and incorrect allegations regarding tax,” Rio Tinto said. It added Oyu Tolgoi’s (OT) structure was agreed in advance with the governments of Canada and Mongolia and the tax outcomes were in line with those in Australia, Chile and the United States.
From 2010 to 2017, the company paid more than $1.8 billion in taxes and royalties, it said. By the time the underground project begins production in 2020, shareholders will have invested approximately $12 billion, while so far only the government of Mongolia has received any return.
In a 14-page letter to SOMO, dated Jan. 17 and reviewed by Reuters, Turquoise Hill CEO Jeff Tygesen issued a detailed rebuttal of the SOMO report and said the company’s tax practices were compliant with local laws and international standards.
“The OT operation is substantially contributing to Mongolia’s economy and long-term development,” he wrote.
Analysts say Mongolia depends on foreign investors and needs the production of copper and other minerals if it is to meet the terms of an IMF bailout agreed last year.
At the same time, the Mongolian government has been looking to increase its income from its resource wealth.
It issued a tax bill for about $155 million to Turquoise Hill relating to an audit of payments made between 2013 and 2015, which Turquoise Hill earlier this month said it was evaluating.
Rio Tinto last week moved to strengthen its relationship with Mongolia, setting up a new office in the Mongolian capital, separate from Tolgoi, to focus on exploration and local ties.
The Oyu Tolgoi copper and gold mine is jointly owned by the government of Mongolia, with 34 percent, and Turquoise Hill Resources with 66 percent. Turquoise Hill is in turn 51 percent-owned by Rio Tinto.
Relations between the Mongolian government and Rio Tinto have been tricky in the past. They soured in 2013 during a dispute over costs and taxes related to the proposed expansion of Oyu Tolgoi. The matter was resolved in 2015.
Editing by Mark Potter...
After facing major critics and disputes for over a year, the second phase of Oyu Tolgoi’s underground development has started 18 months ago. As of today, a total of USD 1.4 billion, which equals 30 percent of the company’s total investment, has been spent on the underground development.
Rio Tinto Group, 66 percent stakeholder of Oyu Tolgoi JSC, previously announced to invest USD 5 billion for the development. Over 80 percent of Oyu Tolgoi’s total value lies deep underground and the extraction cost is estimated to be around MNT 12 trillion. The company expects that 60 percent of total investment of the underground development will be financed this year. Furthermore, Oyu Tolgoi JSC plans to employ around 14 thousand workforce, which displays the intensity of the second phase development. The company recently announced that the sinking of Shaft 2 is expected soon and fit out will progress throughout 2018. Also, the sinking of Shaft 5, which progressed during the fourth quarter of 2017, is expected to be completed in the first quarter of this year. Armando Torres, CEO of Oyu Tolgoi JSC, announced to increase domestic companies’ involvement in the underground development project.
The company will be able to operate 24/7 on two shifts once the underground mine complex, which is using block-caving mining techniques, starts operation. The deepest shaft is the equivalent of 12 Blue Sky Towers in depth and is expected to progress throughout the year.
The block caving method of mining uses the force of gravity to extract ore from an underground deposit. A series of lateral tunnels are developed under the deposit with an undercut level and extraction level. The ore is undercut creating a void which allows the rock above to fall under its own weight into draw bells. Loaders on the extraction level then remove the fallen rock from the draw points, allowing more rock to feed into the draw bell and as the void created by the initial undercut propagates up through the deposit.
In addition, the company is planning to build around 10 km long conveyor, 3 maintenance shops, 2 drilling machine shops and a shotcrete station, as well as to drill 200 km long tunnels. Around 1000 subcontractor and suppliers can be involved in the underground development. Gold and copper contents in the concentrate is estimated to be tripled with the completion of the underground mine. The company is planning to start its operation by 2020 and reach full capacity by 2027. This will allow Oyu Tolgoi JSC to annually produce 500 thousand tons of copper. The company is currently producing around 175-200 thousand tons of copper annually.
Ulaanbaatar /MONTSAME/ Foreign Affairs Minister D.Tsogtbaatar met representatives of the Federation of Mongolian Freight Forwarders on January 31.
At the meeting, they exchanged views on possibilities to establish dry port and its significance. Mongolia joined the Intergovernmental Agreement on Dry Ports of the United Nations Economic and Social Commission for Asia and Pacific (ESCAP) in 2016 and it provided legal environment to establish international dry port and now it is important to take actions to realize, noted the federation representatives.
Establishment of an international dry port gives advantages to transport freight that carried via shipping to Mongolia free of charge, light-handed and at low cost and to tackle issues in transportion and logistics which play important role in export and import of Mongolia.
The representatives asked the Foreign Minister to render support on establishing related agreements with neighboring countries regartding to establishment of dry port. In turn, Minister D.Tsogtbaatar accepted the request and expressed to back operations of freight forwarders.
Present the meeting were authorities of Ministries of Foreign Affairs and Road and Transport Development.
Shares in Canada's Ivanhoe Mines fell sharply on Wednesday after lawmakers in the Democratic Republic of Congo, where Ivanhoe is advancing two major projects, voted in favour of new mining laws that immediately lifts a provision which exempted licence holders from compliance with the new code for 10 years.
Congo shocker fells Ivanhoe Mines stockIvanhoe Mines, headed by billionaire mining financier Robert Friedland, ended down 11.3% on the Toronto Stock Exchange on Wednesday, not far off its lows for the day.
The Vancouver-based company, worth C$2.8 billion after the day's losses, is in partnership with China's Zijin Mining on the Kamoa-Kakula copper deposit in the Central African nation. Kamoa-Kakula is considered the largest high-grade copper project in development globally with a copper resource of more than 30m tonnes.
Ivanhoe is also building a new operation at Kipushi, a past producing zinc-copper mine in partnership with Congo's state-owned Gécamines. Ivanhoe's most advanced project Platreef platinum is located in South Africa.
Firms operating inside the country which includes Glencore, Randgold Resources, China Molybdenum, Eurasian Resources Group, MMG and others will immediately be subjected to higher royalties on metals including copper, cobalt and gold, as well as a new 50% tax on so-called super profits.
Super profits are being defined as income realized when commodity prices rise 25% above levels included in a project's bankable-feasibility study. Given the improvement in the price of most metals over the past couple of years – copper is up 67% since January 2016 and zinc +130% – having to deal with the new levy is more than just a possibility.
Samsung Electronics has revealed it is making chips designed specifically to harvest crypto-currency coins.
The firm made the disclosure in its latest earnings report, where it said the activity should boost its profits.
The report also confirmed that the South Korean company overtook Intel to become the biggest chipmaker last year.
And it forecast strong demand for its forthcoming Galaxy S9 smartphone, which is due to be revealed on 25 February.
Samsung Electronic's fourth quarter net profit totalled 12.3tn won ($11.5bn; £8.1bn), which was roughly in line with analysts' expectations.
But its shares jumped nearly 9% after the company revealed that it was splitting its stock 50-to-1, which should encourage trade in the asset.
For now, Samsung is providing little detail about its new crypto-currency business.
"Samsung's foundry business is currently engaged in the manufacturing of crypto-currency mining chips," it said in a statement given to the BBC.
"However we are unable to disclose further details regarding our customers."
Mining, in this context, refers to solving complex mathematical problems as a means to verify crypto-currency transactions - a task for which the owners of the computers involved are rewarded with new digital tokens or "coins".
The Bell, a Korean-language newspaper, has reported that the processors involved are Asic (application-specific integrated circuit) chips.
These are chips that are custom-designed to carry out a single task - in this case "mining" Bitcoin or another specific crypto-currency - but not general computing operations.
Until 2013, Asic chips were more commonly associated with the TV industry.
But that year, a New York-based entrepreneur began selling processors custom-designed for Bitcoin mining, which promised better performance and lower energy use than GPU (graphics processing unit) chips, which are still more commonly associated with the task.
In recent months, a shortage of high-end GPU cards has pushed up their prices, making the rival Asic technology even more appealing.
According to The Bell, Samsung completed development of its own Bitcoin-related Asic chip last year and began mass production earlier this month.
Until now, Taiwan's TSMC was the only other major processor-manufacturer engaged in the activity.
One expert said Samsung's move represented a bet that Bitcoin's rise in value does not represent a bubble that is about to burst.
"We don't know how low Samsung can sell its chip for and still be profitable," said Garrick Hileman, a crypto-currency researcher from the University of Cambridge.
"But if Bitcoin's price were to collapse and enter a bear market like in 2014 to 2015, one would wonder if Samsung would stay with this line of business through such a turn."
Taking top spot
Samsung's latest venture coincided with news that its semiconductors division logged 74.3tn won ($69.6bn; £49.1bn) of sales last year.
That compares with a figure of $62.8bn reported by Intel last week.
It marks the first time the US firm has not occupied the top spot since 1992, according to the Bloomberg news agency.
Much of Samsung's success is down to the popularity of its memory chips - it highlighted demand from the computer server and mobile device storage markets in particular.
Intel is hoping to increase its own market share in the sector by offering a new proprietary memory technology called 3D Xpoint, which it began selling last year.
However, it risks being distracted by the need to redesign its processor chips after a flaw with their current architecture was recently revealed....
According to Masa Igata, CEO and President of Frontier Securities LLC, Mongolia’s investment environment is improving. The Government is starting to focus on investors and taking prompt actions. As a result, foreign investors’ trust is rebuilding.
As for the cooperation between the International Monetary Fund (IMF) and Mongolian Government, Mr Masa Igata noted that the sides need to negotiate to further the terms to ease public frustration.
We held Mongolian investment forums in Hong Kong, London, Ulaanbaatar and Tokyo last year. The investors had positive approach for Mongolia.
He added, “In order to implement more efficient economic partnership with Japan, it is important for the Government to hear the suggestions of Mongolian and Japanese private sector. Although taxes on several import products have been reduced, business entities are facing more challenges. There is a risk in the legal environment due to fast approval of some bills. It is possible that the laws did not take certain stakeholders’ positions into account.
Law making process has to be complex and consider the interest of policy makers and business representatives. This can prevent possible loopholes. I think certain bills have been rushed; however, I do no think it is increasing risk for the investors. We held Mongolian investment forums in Hong Kong, London, Ulaanbaatar and Tokyo last year. The investors had positive approach for Mongolia.
MNT rate started to stabilize, so the financing cost has reduced. Furthermore, thanks to repaying foreign debts on time, foreign investors are still interested in Mongolia. Presently, the investors are waiting for the asset quality review (AQR) of Mongolian commercial banks. Although it was scheduled to be disclosed last year, it has not been disclosed yet. The investors’ trust will restore further with the transparency that follows the AQR.”
Moody’s Investors Service published its report on the medium-term prospects for growth, liquidity and fiscal strength for Mongolia. In the report, the ratings agency says that Mongolia’s GDP growth will be strong over the medium term, rising towards seven percent by 2021, backed by demand for its natural resources.
Mongolia’s medium-term growth potential is backed by its abundant mineral resources, demand for which is expected to remain solid. A recent debt refinancing has coincided with an improvement in external metrics to alleviate liquidity and external pressures, albeit from high levels. Sustained adherence to IMF rules designed to improve accountability and tighten the budgetary process would distinguish the current improvements in credit metrics from previous boom-bust cycles, said Moody’s.
However, at the current juncture and in the next few years, the ratings agency says that Mongolia’s credit metrics will remain vulnerable to commodity price cycles.
The full report, titled the “Government of Mongolia: FAQ on medium-term prospects for growth, liquidity and fiscal strength” reaches a conclusion on three main questions.
Moody’s said that its report answers the three questions below:
What are Mongolia’s medium-term growth prospects?
Does the recent refinancing eliminate external liquidity risks?
What is the outlook for Mongolia’s fiscal metrics in light of implemented and planned reforms?
Consumption of coal and copper, both key exports for Mongolia, is likely to remain robust, given structural changes in the market, such as those associated with urbanization and the electrification of transport in China. Based on the stable market for copper and coal, Moody’s forecasts that Mongolia’s GDP growth will creep closer to the record levels that it had achieved in 2011.
In the short term, the ratings agency forecasts that GDP growth will be 3.3 percent in 2018. In 2017, Moody’s said GDP growth exceeded their expectations with 4.2 percent.
“This denotes some capacity of the economy to respond to a favorable external environment, and a greater resilience to fiscal and monetary policy tightening than we previously estimated,” Moody’s said.
Risk to the strong expectation of growth stems from a very high reliance on China as a destination for its exports and source of investment, as well as lack of predictability on the regulatory environment which can weigh on investment.
However, both liquidity risks and external vulnerability remain key constraints to the credit profile. Moody’s estimates that external debt obligations due over the next year are still around 1.5 times larger than foreign exchange reserves, underscoring the prominence of external risks.
Due to this, Moody’s says that a sustained observance to structural reforms developed under the IMF program is crucial for credit quality because these reforms are designed to prevent a return to boom-bust cycles, that Mongolia has tended to be vulnerable to in the past....