|Frontier's "Invest Mongolia Tokyo 2018"||Frontier Securities||Tokyo Japan|
|"Open to Export" ICC WTO International business award||ICC WTO||London|
Last week the U.S. Global Investors office was visited by a living legend in the junior mining industry, billionaire founder and executive chairman of Ivanhoe Mines, Robert Friedland. In case you don’t know, back in the mid-1970s, Robert was caretaker of an apple orchard south of Portland that one of his buddies from Reed College would often visit. That buddy’s name was Steve Jobs, who later went on to found a little company he named—what else?—Apple.
Before Robert and Steve Jobs began palling around, Jobs was known as shy and withdrawn. It was Robert who taught him his skills in what’s been described by many as “reality distortion.” Having seen numerous speeches by Robert over the years, I can attest to his masterful ability to utterly command a room of hundreds with his electric charisma. Some of that charisma must have rubbed off on Jobs, helping the future iPhone innovator evolve into the shrewd, larger-than-life business leader he’s celebrated as today.
Robert’s “reality distortion” was on full display during his visit. I was pleased and honored, as were my U.S. Global team members, to have the opportunity to hear his unique insights on a wide range of issues, from the debilitating smog in Delhi, India; to China’s efforts to become the world’s leading electric vehicle (EV) economy; to Ivanhoe’s development of the Kamoa-Kakula Copper Project in the Democratic Republic of Congo, independently ranked as the largest high-grade copper discovery in the world.
Robert made a very compelling case for Kamoa-Kakula, which he calls “the most disruptive Tier One copper project in the world today.” In its first year of production, its average copper grade is estimated to average an ultra-high 7.3 percent. Because the site is flat and uninhabited, and wages are paid in local currency, the cash cost for the life of the mine is projected to be a low, low $0.64 per pound of copper. As of my writing this, copper is priced at $3.20 a pound, so the margin is significant. After an initial $1.2 billion in capital costs to develop the project, the company expects a payback period of only 3.1 years.
I reminded Robert that we’re bullish on both copper and the industries it supports, including the imminent EV revolution and massive electricity demand in emerging markets, especially China and India. EVs, as I’ve pointed out before, require three to four times as much copper as traditional gas-powered vehicles. By 2027, as much as 1.74 million metric tons of copper will be needed to meet EV demand alone, up from only 185,000 tons today, according to the International Copper Association.
The red metal was one of the best performing commodities last year, surging more than 30 percent, and with investment demand near all-time highs, I predict another year of phenomenal returns. That would represent a third straight year of positive gains, something copper hasn’t accomplished this decade.
As you can see below, open interest in copper futures on the Chicago Mercantile Exchange (CME) is still historically high, even after cooling somewhat from its all-time high set in late July, when contracts hit an average 319,000 contracts. Open positions last month averaged more than 285,000, up 7.3 percent from the previous month and 26.9 percent from December 2016.
Robert expressed confidence that copper—along with aluminum, cobalt, nickel, platinum and scandium—will be among the biggest beneficiaries of the global transition to EVs and clean energy.
“You’re going to need a telescope to see copper prices in 2021,” he told us theatrically.
A rally is already in the works. From its recent low two years ago this month, the Bloomberg Industrial Metals Subindex, which tracks aluminum, copper, nickel and zinc, has surged more than 65 percent. Support looks strong, and copper prices could be headed even higher on global supply disruptions, as labor negotiations continue in Chile, the world’s top producer of the red metal.
“There are between 20 and 25 collective negotiations expected. If some of them lead to significant strikes, that would have a positive impact on [copper] prices,” explained Sergio Hernandez, vice president of Cochilco, Chile’s state copper commission.
Other fundamental trends are driving commodities, as I’ve noted earlier. The global purchasing manager’s index (PMI), a gauge of the manufacturing industry, is near a seven-year high. Construction confidence in the eurozone turned positive. And construction spending here in the U.S. hit $1.257 trillion in November, a new high.
China and India Cleaning Up Its Act
About half of all the copper produced globally every year is consumed by China. Last year, the Asian giant set a new record in importing the red metal. Imports climbed to a never-before-seen 17.35 million metric tons in 2017, up 2.3 percent from the previous year.
The metal is needed not just for the construction of new buildings but also to manufacture millions of new electric vehicles in the world’s largest auto market. Sometime this year, China is expected to announce when it plans to outlaw gas-powered vehicles, joining a growing number of other countries, including the U.K. (which is shooting for a 2040 ban), France (2040), Germany (2030), India (“next 13 years”) and more.
According to Bloomberg New Energy Finance, about 1,293 gigawatts per hour (GWh) are forecast for the lithium-ion battery market. That’s up spectacularly from only 19 GWh in 2015. About two thirds of the demand will come from China and the U.S.
To accommodate all these new EVs, China has pledged to build a charging station for every vehicle on the road by 2020. That equates to around 4.8 million charging outlets and stations, requiring a total investment of $19 billion. China had 190,000 charging stations at the end of September, so to call this goal ambitious is an understatement. The U.S., by comparison, has a little over 64,000 outlets and stations around the country, according to the Department of Energy.
Even William Ford Jr., Ford Motor’s executive chairman, acknowledged that the Chinese are more aggressive than most in their mission to fully embrace the electric vehicle. “When I think of where EVs are going,” Ford said in Shanghai last month, “it’s clearly the case that China will lead the world in EV development.”
Not only was China the largest importer of copper, crude oil, natural gas and other natural resources, it also outspent every other country in new clean energy capacity. The country invested as much as $132.6 billion in 2017, about 16 percent more than the U.S. and Europe combined. The government’s efforts already seem to be having a positive effect, as sales of face masks and air purifiers in Beijing have fallen dramatically compared to last winter.
Sales of face masks in beijing are down this year thanks in part to the governments huge investment in clean energy
Another market that’s in urgent need of clean energy is India. In Delhi, the country’s capital territory, the air quality has become so noxious and filled with heavy metals that the World Health Organization has likened it to smoking at least 50 cigarettes a day. The city’s chief minister, Arvind Kejriwal, went so far as to call it a “gas chamber.”
Shell Shelling Out for Electricity Provider
It’s not just governments seeking to diversify their energy mix. Royal Dutch Shell, the largest oil company in Europe, is steadily acquiring smaller providers of electrical power and natural gas. In December it announced a deal to buy retail energy provider First Utility. It’s just the latest in a series of purchases by large oil and gas companies looking ahead to the day when charging stations, rather than gas stations, might be the norm.
In an interview this month, Shell CEO Ben van Beurden sees the current energy transition as an opportunity.
“We have to embrace the future, and the future will include battery electric cars,” van Beurden said. “Importantly, I believe Shell can achieve this without destroying value in the company. It is about identifying real business opportunities to thrive through the energy transition.”
As my friend Robert Friedland sees it, those business opportunities lie in copper, aluminum, cobalt and other key industrial metals.
“We’re in the battery business,” he told us, adding that very little of lithium-ion batteries is actually lithium....
World’s second largest mining company Rio Tinto (ASX, LON:RIO) has lifted force majeure on shipments of refined copper from its Kennecott unit in the U.S., 79 days after adopting the measure.
The company halted production of refined copper at its smelter at the Utah-based mine on Oct. 8 after a worker was exposed to sulphur dioxide gases at the plant while removing debris from a boiler. The employee died two days later.
Rio Tinto Kennecott accounts for nearly 20% of the US total copper production, and its iconic Bingham Canyon mine is one of the world’s top producing operations.
Visible from outer space, the Bingham Canyon is the also world’s deepest open-pit mine. First discovered by Mormon pioneers in the mid-1800s, it is over 1.2 km deep, 4 km wide and covers 7.7 km².
A massive slide at the mine almost five years ago slowed, but did not stop, Rio’s plans to extend the mine’s life by another decade, to 2029. The company believes there’s still as much ore in the ground as miners have taken out of Bingham Canyon since it began production in 1906.
It is estimated that the mine has produced more copper than any mine in history – more than 19 million tonnes. Last year, the Kennecott generated 125,800 tonnes of refined copper, about 20% less than in 2016.
Ulaanbaatar /MONTSAME/ Parliament ratified a Mongolia-Germany loan agreement on January 26, which will fund the completion of the New Turbine for Darkhan Thermal Power Plant project, being implemented within the Energy Efficiency -I Program.
As such, the Mongolian Government will obtain EUR 5 million loan within the Mongolia-Germany Intergovernmental Agreement on Financial Cooperation in 2016-2017 for the Energy Efficiency -I Program, and an Additional Loan and Second Project Agreement between the Government of Mongolia and KfW Development Bank based in Frankfurt.
The sides agreed on a 30 year-term loan with an annual interest of 2 percent and 10-year moratorium.
Ulaanbaatar /MONTSAME/ On 25 January 2018, the Swiss Agency for Development and Cooperation (SDC) presented its new Cooperation Strategy which will guide Switzerland’s engagement in Mongolia for the next four years.
For this, SDC earmarked a total of CHF 51.5 million, with an annual average expenditure of 12-13 million.
This year, the SCD is aiming to create developed society with accessible for people, equal and green by strengthening capacity of Mongolian citizens and organizations. Moreover, they will focus on three sectors including agriculture and food security, basic education and vocational training, and governance.
The Agriculture and Food Security domain will aim to improve the livelihoods of rural and peri-urban small-scale farmers and vulnerable herders. In this sense, SDC will continue to address the challenges of rangeland degradation due to overstocking and climate change, support the diversification of production in the agriculture sector, and work towards better animal health and strengthened market links to increase the competitiveness of Mongolian products.
The Basic Education and Vocational Training domain will foster increased employment of women and men, by upgrading training programs and building the capacity of teachers and trainers in secondary and TVET schools and civil servants in employment services. The intensive collaboration with the private sector will remain a priority.
The Governance domain will foster accountable and effective national and sub-national government and an empowered civil society, by supporting the decentralization and democratization agenda of the Government of Mongolia. SDC will work towards the institutionalisation of capacity building efforts in partner institutions and continue policy-level support through technical assistance and the provision of Swiss expertise at national and local levels. Climate change and internal migration may become areas of future support in the Governance domain, particularly in peri-urban areas.
Source: Swiss Development Agency in Mongolia
ULAN BATOR, Jan. 27 (Xinhua) -- Team Mongolia won gold in the 28th International Snow Sculpture Championships on Saturday with a piece entitled, "The Secret."
The Artist's Choice Award was another Team Mongolia with a piece entitled, "Time" at the annual event in Breckenridge, the U.S. state of Colorado.
Alongside 14 other teams, Mongolia worked a total of 65 hours across five days until Jan. 27 without the use of power tools, internal support structures or colorants.
This is the sixth year of Mongolian artists participating in the competition. In 2017, Artists' Choice was split between the Mongolian teams. Also, the first place winner of both the Artist's and People's Choice Awards of the 23rd Breckenridge International Snow Sculpture Championships Awards was Team Mongolia, whose "Mongolian Warriors" sculpture depicted life-like 13th-century warriors and their horses striding out of a solid 20-ton block base of snow.
This year's Silver was awarded to Team China for their homage to "The Thinker" piece. Team USA won Bronze with their piece titled "Dance Divine."
Last year's winner of the Snow Sculpture Championships was Team China with a piece entitled, "Mermaid."
One of Japan's largest digital currency exchanges says it has lost some $534m (£380m) worth of virtual assets in a hacking attack on its network.
Coincheck froze deposits and withdrawals for all crypto-currencies except Bitcoin as it assessed its losses in NEM, a lesser-known currency.
It may be unable to reimburse the funds lost on Friday, a representative told Japanese media.
If the theft is confirmed, it will be the largest involving digital currency.
Another Tokyo exchange, MtGox, collapsed in 2014 after admitting that $400m had been stolen from its network.
The stolen Coincheck assets were said to be kept in a "hot wallet" - a part of the exchange connected to the internet. That contrasts with a cold wallet, where funds are stored securely offline.
Coincheck says it has the digital address of where the assets were sent.
Hackers broke in at 02:57 on Friday (17:57 GMT Thursday), the company said in a statement, but the breach was not discovered until 11:25, nearly eight and a half hours later.
Company chief operating officer Yusuke Otsuka said 523m NEMs had been sent from Coincheck's NEM address during the breach.
"It's worth 58bn yen based on the calculation at the rate when detected," he told reporters at the Tokyo Stock Exchange.
Coincheck was still examining how many customers had been affected and trying to establish whether the break-in had been launched from Japan or another country.
"We know where the funds were sent," Mr Otsuka added. "We are tracing them and if we're able to continue tracking, it may be possible to recover them."
Coincheck reported the incident to the police and to Japan's Financial Services Agency.
How damaging is the loss?
NEM, the 10th-largest crypto-currency by market value, fell 11% over a 24-hour period to 87 cents, as of 18:30, Bloomberg news agency reports.
Among the other crypto-currencies, Bitcoin dropped 3.4% and Ripple retreated 9.9% on Friday, according to prices seen by the agency.
More was lost on Friday than in 2014, when MtGox lost what it thought was 850,000 bitcoins. However, MtGox later found 200.000 bitcoins in an old digital wallet.
"In a worst-case scenario, we may not be able to return clients' assets," an unnamed Coincheck representative was quoted as saying on Saturday by Japan's Kyodo news agency.
After the collapse of MtGox shook the digital currency world, a licensing system was introduced in Japan to increase oversight of local currency exchanges such as Coincheck.
"What's the lasting impact? It's hard to tell," Marc Ostwald, global strategist at ADM Investor Services International in London, told Bloomberg.
"Japan is one of the most pro-crypto trading countries, among the G-20. In Japan they don't really want a wholesale clampdown. So it will be interesting how Japanese regulators respond to this, if they indeed do."
50 Cent discovers his Bitcoin millions
What is Coincheck?
Founded in 2012, the company is based in Tokyo, where it employed 71 people as of August last year.
Its headquarters are located in the city's Shibuya district, an area popular with start-ups that was also home to MtGox, Bloomberg reports.
Last year, Coincheck began running adverts on national television featuring popular local comedian Tetsuro Degawa, the agency adds.
Kunihiko Sato, a 30-year-old customer from Tokyo, told Kyodo he had deposited about 500,000 yen ($4,600), into his account with the exchange.
"I never thought this kind of thing would happen with Japan's developed legislation," he said.
How do crypto-currencies work?
Whereas money is printed by governments or traditional banks, digital currencies are generated through a complex process known as "mining". Transactions are then monitored by a network of computers across the world using a technology called blockchain.
There are thousands of them, largely existing online, unlike the notes or coins in your pocket.
It may be more useful to think of them as assets, rather than digital cash. The vast majority of Bitcoin holders, for instance, appear to be investors. But the anonymity that crypto-currencies afford has also attracted criminals.
The value of a crypto-currency is determined by how much people are willing to buy and sell them for....
Rio Tinto and the Government of Mongolia strengthen relationship by setting up a joint working group to create long-term sustainable solutions www. news.europawire.eu
LONDON, 25-Jan-2018 — /EuropaWire/ — The Prime Minister of Mongolia U. Khurelsukh and other government representatives and Rio Tinto chief executive J-S Jacques met in Ulaanbaatar today to progress their partnership.
The two sides discussed ways to strengthen the relationship by setting up a joint working group to explore:
whether funding costs can be reduced to improve benefits from the Oyu Tolgoi project for all shareholders
an accelerated path of development for a power solution in Mongolia
an acceleration of Oyu Tolgoi’s strategy to enable private and public investments towards sustainable community development in Khanbogd, the town proximate to the mine
Rio Tinto chief executive J-S Jacques said: “Rio Tinto remains fully committed to Oyu Tolgoi and Mongolia. Our nearly 14,000 employees and the people of Mongolia should be proud that Oyu Tolgoi is one of Rio Tinto’s safest and most productive mining businesses in the world. We remain committed to creating opportunities for talented Mongolians to build their careers on a global stage.
“We want to work with the Government of Mongolia to create long-term sustainable solutions that benefit all stakeholders and the country while staying true to the established investment frameworks.
“We will continue to work together to solve outstanding issues as the joint working group progresses win-win solutions on matters such as power and community development.”
SOURCE: Rio Tinto
Mongolian officials led by Finance Minister Ch.Khurelbaatar met with International Monetary Fund representatives on Thursday. The IMF delegation has come to Ulaanbaatar to discuss the latest progress on the Extended Fund Facility programme.
The finance minister reported that the Mongolian economy and Tugrik rate has stabilised, foreign reserve and investment has increased and the budget deficit has decreased; since the IMF programme began Mongolia’s credit rating has been upgraded.
The IMF team will stay for 14 days in Mongolia.
ULAN BATOR, Jan. 25 (Xinhua) -- The Government of Mongolia decided to ban horse races in winter, the Mongolian government press office said in a press statement Thursday.
Also, children under the age 12 are prohibited to participate in all horse races held between the 3rd day of the first month of spring in the lunar calendar and May 1.
The decisions were made by the Government of Mongolia in connection with the health and safety of child jockeys and preventing possible risks during horse races.
According to the Rules of the National Naadam Horse Racing, the minimum age of child jockeys is seven years of age. However, this rule does not apply to all horse races in the country organized throughout the year.
Child jockeys are at greatest risk of being hurt when horses race in the extremely cold weather and at their highest speed.
Using child jockeys during winter and spring should be viewed as a dangerous form of child labor, critics say.
According to statistics, over 1,500 child jockeys were injured during training and races in the last five years, many children became disabled for life as a result of these races, and more than 10 lost their lives during a race.
The EBRD is providing Mongolian food producer Teso Group with a local currency loan equivalent to US$ 6.5 million to finance the company’s expansion.
The funds will be used to construct a new production facility for fresh noodles and for the purchase of equipment by the subsidiary Agi LLC. In addition, Icemark LLC – another subsidiary of the Teso Group – will receive a portion of the loan to acquire equipment for ice cream production expansion.
Teso Group is one of the largest local food and beverage companies in Mongolia. Initially founded as a small ice cream family business, the company is today a medium-sized enterprise producing ice cream, snacks, noodles, margarine, dairy products and beverages, as well as importing other foodstuffs.
The cooperation between Teso Group and the EBRD began in 2014 when the Bank provided Mongolia’s first local currency loan equivalent to US$ 5.5 million. Local currency funding reduces the exchange rate risk for Mongolian producers but access to these funds remains scarce.
Irina Kravchenko, the EBRD’s Head of Office in Mongolia, said: “We are proud to sign the agreement with Teso Group today as it will support the expansion and growth of a strong and competitive local producer. Having been a partner of the company for more than three years now, we are impressed with the vision, drive and determination of its owners and employees to make it one of the market leaders in Mongolia. The combination of high quality and reasonable prices is a guarantee that consumers will benefit from Teso Group’s success.”
Damjin Odon, Chairman of Teso Group’s Board of Directors, said: “Teso Group started cooperating with the EBRD in 2012 on an international advisory project in preparation for our first financing from the Bank. As a result, our first project together is being implemented successfully. Today we are signing a second loan agreement to support our business expansion, which is taking our cooperation to the next level of development. I am sure that we will work with the Bank on future projects, bringing significant benefits to the Mongolian economy.”
The EBRD is a leading institutional investor in Mongolia, with over €1.6 billion invested in 93 projects in the country to date. The Bank’s investments aim to make the local economy more competitive, integrated and resilient.