|Frontier's "Invest Mongolia Tokyo 2018"||Frontier Securities||Tokyo Japan|
|"Open to Export" ICC WTO International business award||ICC WTO||London|
The latest report by The World Gold Council on global trends showed a sharp drop overall demand for the metal during the third quarter as investor purchases of gold-backed exchange traded funds cooled and jewellery demand softened.
Research from WGC, an industry body, indicate global demand fell 9% to 915 tonnes during the September quarter. Year to date demand is down 12%.
According to the report global jewellery demand was down 3% year-on-year for the three-month period, hurt by a new sales tax and tighter anti-money laundering regulations governing retail jewellery transactions in India, the world's number one consumer of the metal. Jewellery demand on the subcontinent was down 25% to just shy of 115 tonnes. In contrast US jewellery demand so far in 2017 is at a seven-year high.
Investors continued to pour money into ETFs, but it was more of a trickle – down 87% compared to the 144 tonnes of net inflows into the sector in Q3 2016. Total assets under management grew to 2,343 tonnes valued at $96.7 billion by end-September. Last year saw more than 660 tonnes of inflows into ETFs, the best annual performance since 2009.
Bar and coin investment strengthened by 17% to 222 tonnes, albeit from a low base according to the report.
The WGC said central bank demand stayed robust thanks to continued buying from Russia and Turkey. Net purchases by the official sector jumped 25% year-on-year to 111 tonnes.
Although not a significant source of demand, volumes of gold used in technology increased for the fourth consecutive quarter on the back of strong demand for LEDs and continued growth in the use of 3D sensors in new smartphones which boosted demand by 2% to 84 tonnes.
2016 full year gold demand gained 2% to reach a three-year high of 4,308.7 tonnes.
Record gold production
While gold production at mine level declined by 1% year-on-year in Q3 to 841 tonnes, output so far this year of 2,420 tonnes is the highest on record according to WGC data.
Top producer China, which overtook South Africa a decade ago in terms of gold output – registered its fifth consecutive year on year decline during the quarter. Recently imposed regulations, which target the discharge of cyanide in tailings, continue to bite and may impact production over several more quarters according to the WGC.
The dispute between Acacia Mining and Tanzania’s government again significantly disrupted production in that country, leading to a fall in total Q3 production of 15% year on year, while Burkina Faso also recorded sharply lower production.
In Canada, output rose 10% compared to last year thanks to increases at Brucejack and Hope Bay, both of which started commercial production earlier in the year. Rainy River, NewGold's mine in northern Ontario, is expected to hit commercial production this month.
On November 09, 2017, 74,522 shares of 20 firms listed as Tier I, II, and III were traded. 11 firms’ shares increased in price, 7 decreased and 2 remained unchanged. State Department Store JSC /UID/ was the top performer, increasing 12.43 percent, whereas Mik Holding JSC /MIK/ was the worst performer, decreasing 6.99 percent.
On the secondary market for government bonds, 116,922 bonds with a value of MNT11.5 billion were traded.
The MSE ALL Index decreased by 0.22 percent to stand at 1,157.07 points. The MSE market cap stands at MNT 2,276,235,680,859.
AKIPRESS.COM - Mongolia-UK relations and cooperation have been increasingly developing in many sectors since the establishment of diplomatic relations of two countries in 1963, Mongolian Parliament Speaker Miyegombo Enkhbold said during a meeting with British parliamentarians John Grogan and Wayne David, who arrived in Mongolia for Nov.4-10 visit.
Enkhbold said inter-parliamentary cooperation is vital in bilateral relations, in particular, Mongolia has a lot to study from the experience, customs and historical path of British parliament that has a history of hundreds of years and is one of prominent legislative bodies in Europe, Montsame reporred. "Within this visit, it will be effective to strengthen friendship of young parliamentarians and share mutual experiences.”
In turn, John Grogan thanked the Speaker for cordial welcome and said that "20 years ago, I came to Mongolia as a member of Britain’s first parliamentary delegation. There have been just three official visits of parliamentary delegates between our countries. Last year, a Mongolian parliamentary delegation headed by MP R.Amarjargal visited our country,”
“Mongolian singer's win in the 2017 BBC Cardiff Singer of the World competition made me feel proud. When we have recently visited the Oyu Tolgoi mine in Umnugobi aimag, I was very satisfied with two things; firstly Oyu Tolgoi copper and gold mine is mega-project with gigantic constructions and secondly, Mongolians are so skilled to work shoulder by shoulder with world’s experienced professionals,” he said.
The sides also exchanged views on relations and cooperation in other sectors, such as education, culture and defense.
Mongolia, a country with abundant mineral resources but with so much unfulfilled potential, appears to be slowly digging itself out from its economic woes, and most importantly restoring investor confidence.
In this CRU Spotlight, John Johnson, CEO of CRU China who has been visiting Mongolia regularly since 2009, explains what has changed in recent times following a recent visit.1
Earlier this year, Mongolia was in danger of defaulting on debt repayments and investor confidence was extremely low. Mongolia turned to the IMF for support, and already there are encouraging signs that the country is turning a corner. The Mongolian economy has stabilised and investor confidence is slowly being restored. While Mongolia has benefited enormously from exogenous factors such as rising commodity prices and China’s supply-side cutbacks, it is also important to note that improvements have occurred as a result of changes in government policy. Not all of Mongolia’s structural problems have been solved, but CRU thinks that it may have passed a turning point.
This should be of interest to the international mining community keen to unlock Mongolia’s considerable mineral potential.
Not only does the country have some of the world’s largest undeveloped copper, gold and coal reserves, but it has many other undeveloped mineral deposits, in addition to being on the doorstep of the world’s largest commodity consuming market.
Chief Executive Officer, CRU China
Positive developments in 2017
What positive changes have occurred in Mongolia recently? In 2016, Mongolia’s external debt was 218% of GDP, its fiscal deficit was 20% of GDP, foreign exchange reserves were tumbling, and the Mongolian Tugrik was one of the world’s worst performing currencies. Foreign debt payments were due, and there was a high risk of default. Furthermore, foreign direct investment (FDI) was tumbling and the mining sector was struggling, having been through a period of several years of low prices and falling export volumes.
Fast forward one year later to 2017 and the IMF implementation of a $5.5 billion Extended Concessional Loan Facility appears to have marked a new beginning. Government actions, including fiscal transparency, tax increases and monetary tightening, have started. The budget deficit has been cut, foreign exchange reserves have been replenished and the Mongolian currency has actually started rising again. Bond payments have been rolled over, a new bond offering launched and real GDP growth has recovered from almost zero in 2016 to 5.3% in H1 2017.
Increasing commodity prices and export volumes have clearly helped, since export revenues have increased significantly. In particular, the Mongolian economy has been boosted by an increase in prices for coking coal during 2017, with coal overtaking copper as the largest revenue earner, which was also aided by the collapse of North Korean coal exports to China. Mineral exports are important to the Mongolian economy, accounting for more than 30% of GDP.2 Furthermore, approximately 90% of these exports are destined for China, so Mongolia’s prosperity is unavoidably linked to China’s commodity imports.
Restoring investor confidence is a government priority
Although the economy appears to have stabilised in the short term and the government has introduced some positive policies, more structural reform is required. At a conference in Ulaanbaatar attended by John Johnson in September of this year, the then Prime Minister, Erdenebat, indicated that the most important objective is to promote foreign direct investment, but this has yet to materially pick up. The Prime Minister also reported that the government is planning to resolve road blocks to delayed projects, most notably in mining and infrastructure.
One of the most important developments for the international investment community has been the Mongolian government’s willingness to restore investor confidence. Uncertainty concerning administration, interpretation and enforcement of existing regulations was one of the biggest obstacles for investors. In order to address this issue, one tangible government policy is the creation of the Investment Protection Council (IPC) in 2016, which is a “one-stop shop” for investors. The IPC consists of senior government officials and interested stakeholders from the international community.
The IPC’s main purpose is to protect investors with more transparent processes and time lines for settling investment disputes and improving the investment framework. Already more than 80 grievances have been heard and new proposals made to simplify mining license procedures. The IPC will join international forums on investment such as the Investor Competition Forum in Vienna in November. It is relatively early on in the lifetime of this new shift in Mongolian policy to assert the success of the IPC, but it clearly represents a move in the right direction designed to encourage FDI.
It will take time for international investor confidence to return. In the 2016 Fraser Institute Survey of Mining Companies about perceptions of investment attractiveness, Mongolia ranked 87 out of 110 mining jurisdictions. Most importantly, the international investor needs to know that projects are making money and will not be a cause of local resentment. Towards this end there is a pipeline of major projects, including the Oyo Tolgoi underground copper-gold mine, Tavan Tolgoi coal mine, new power plants and rail projects, which should provide such evidence, but these will take time to be successfully developed.
The Oyo Tolgoi copper-gold underground mine project, owned 66% by Rio Tinto and 34% by the Mongolian government, is by far the largest flagship project proceeding at the moment, with more than US$6 billion invested so far, and current investments being made at a rate of more than US$1 billion annually. This project employs more than 11,000 workers and has additional spin-off benefits for the Mongolian economy. Underground production will begin in 2020/2021, when the export revenue benefits to the Mongolian economy will be enormous.
Further structural changes required
Mongolia is a land-locked country and infrastructure remains one of the biggest challenges. Projects to pave roads are progressing, but Mongolia is still ranked relatively low in global measurements for infrastructure. In the 2016 Fraser Institute Survey, Mongolia ranked 97 out of 104 jurisdictions based on perceptions of infrastructure.3 In particular, further advances in the rail route from the Tavan Tolgoi coal mine to the Chinese border remain stalled and this creates a considerable bottleneck. Such a rail connection could potentially reduce coal transport costs by at least $10/tonne, thereby increasing Mongolia’s competitiveness, and facilitate raising coal export capacity on this route from 45 to 65 million tpy.
Meanwhile the relative weakness of Mongolia’s banks compared to the overall size of the economy and the large amounts of capital required to fund Mongolia’s growth continue to act as a constraint. Much remains to be done, since Mongolia still has a low sovereign debt rating. The IMF has expressed satisfaction with the results of its first “inspection” which took place in early August, meaning that the monies from Japan, Korea, the World Bank and the Asian Development Bank should also be forthcoming. China has rolled over swap-lines, too. Few obstacles are expected to the release of the next tranche of money from the IMF in December, pending meetings between the IMF, the new Prime Minister and the new cabinet.
Other trends may boost Mongolia further, such as China’s Belt and Road initiative and rising global commodity prices. However, Mongolia must avoid the complacency that can come with higher commodity prices. Diversification away from mining is considered a key priority by the government, but profits are likely to be required from mining activity before reinvestment in non-mining activities can succeed. Meanwhile, a number of projects to add value to minerals have been identified, such as copper smelting and coal washing plants.
In conclusion, Mongolia has stabilised its economy over the short term. Structural reforms and key projects are taking place over the medium term, which should lead to economic growth rates of 8-10% at the end of the decade.
For Mongolia to unlock its mineral potential, the most important issue is for investors to return, and this will depend on the consistency and continuity of policies.
Chief Executive Officer, CRU China
Perhaps most importantly, political stability and consistency in civil service policy need to be restored. Unfortunately, these have not been helped by the previous Prime Minister and his cabinet being forced to resign by a vote in parliament in September. Nonetheless, there are clear signs that the former government made considerable progress on a variety of issues that concern investors, such as the establishment of the Investors’ Protection Council. It is understood that the new Prime Minister, Khurelsukh Ukhnaa, and newly appointed cabinet, are even more pro-FDI than Erdenebat was. Furthermore, there appears to be broad agreement among the political parties on the importance of foreign investment to Mongolia and the measures required to attract it. Any future government is likely to adhere to the policies set out by the previous one if Mongolia is going to continue to receive the support of the IMF. Therefore, the economy is likely to continue to improve, a virtuous-circle created and investment influx should follow.
John Johnson presented at two conferences in Ulaanbaatar – Invest Mongolia and Discover Mongolia – in September 2017.
Mongolian 2016 nominal GDP was approximately US$11.2 billion.
This ranking is based on % of respondents who thought the quality of infrastructure a) encourages investment b) is not a deterrent to investment c) is a mild deterrent or d) is a strong deterrent.
Ulaanbaatar/MONTSAME/ Minister of Food, Agriculture and Light Industry B.Batzorig met Wednesday Yolanda Fernandez Lommen, Asian Development Bank’s (ADB) Country Director for Mongolia to discuss ADB’s partnership with the country.
At the meeting, B.Batzorig highlighted the ADB's significant contributions to all sectors of Mongolia, in particular its loans and nonrefundable assistance to restore agricultural sector. “Mongolian herders are very thankful to the ADB’s great assistance for overcoming dzud disaster,” he added.
The Minister expressed an interest in paying a special attention and cooperating in creating jobs, augmenting export and developing irrigated farming, greenhouse farming and animal husbandry by means of promoting agriculture and animal husbandry.
Yolanda Fernandez Lommen stated that the ADB will focus on maintaining bilateral cooperation in agriculture and animal husbandry in harmony with the sector’s policy, and on improving effectiveness of the projects.
Ulaanbaatar /MONTSAME/ On occasion of the 95th anniversary of mining industry of Mongolia, a seminar themed ‘Mineral Industry and Gender’ will be held on November 17 at a conference hall of ‘Chinggis Khaan’ hotel.
To be co-organized by the Ministry of Mining and Heavy Industry and the ‘SESMIM’ project, the upcoming seminar will discuss the Mongolia’s 2030 Sustainable Development Vision, the law and national program on ensuring gender equality.
Attendees will conclude a present state of mineral sector and determine further works.
The Saudi anti-corruption push involving the arrest of princes and government ministers may lead to the confiscation of cash and other assets worth of at least $800 billion, according to people close to the issue, writes the Wall Street Journal.
“They reckon they could get around two to three trillion riyals from these people. That’s the number they are talking about,” a person close to the government told the paper.
On Saturday, Saudi state media reported the arrest of at least 11 Saudi princes and four incumbent ministers, with the minister of the National Guard, and the economy minister among those detained. The arrests are reportedly the part of a broader plan to fight corruption in the kingdom.
Some leading businessmen have been arrested since the crackdown started, with more than 60 princes, officials and other big-name Saudis in custody, according to the sources cited by the WSJ.
The kingdom's central bank has reportedly frozen the accounts of “persons of interest” and said the step was “in response to the Attorney General’s request pending the legal cases against them.”
According to the media, most of the frozen assets are abroad, which will make the process of reclaiming and confiscating longer and more complicated. All the funds accumulated through corruption are to become state property.
The anti-corruption crackdown is led by a newly established committee chaired by Crown Prince Mohammad bin Salman. The agency was created by royal decree of King Salman bin Abdulaziz Al Saud, and published by Saudi Arabia’s official news agency on Saturday.
The committee is exempt from “laws, regulations, instructions, orders, and decision” while performing its wide range of duties, namely “identifying offenses, crimes, persons and entities” complicit in corruption, and gives it the power to impose punitive measures on those caught red-handed. Those include asset freezes, travel bans and arrests.
CIC, Goldman Sachs establish China-U.S. industrial cooperation fund -U.S. State depart www.reuters.com
BEIJING (Reuters) - China Investment Corp (CIC) and Goldman Sachs have signed a strategic agreement to establish a China and United States industrial cooperation fund on the sidelines of a state visit to Beijing by U.S. President Donald Trump.
CIC and Goldman’s new fund will target $5 billion in commitments to invest in U.S. companies in industries such as manufacturing, industrial, consumer and healthcare that have or can develop China business connections, the U.S. Department of State said in a release on Thursday.
Following the Financial Regulatory Committee's October 2016 order to nine non-banking financial institutions (NBFIs) to increase their shareholder value, NFBIs including National Credit, Khaan Credit, Ashig Golomt, Utpala Finance, Mongolian Financial Partners, Asia Capital Corporation, SONK, and others have raised their capital value to a minimum of 2.5 billion MNT.
Newly established NBFIs are no required to hold a minimum of 2.5 billion MNT in capital, and veteran institutions have been gradually raising their shareholder value over the past year. Exponential Fund Management LLC’s shareholder value increased by 110 million MNT in the past 12 months, reaching 214 million MNT....
Copper and iron ore prices bounced back on Wednesday despite customs data showing a sharp drop in imports by China as the country's winter anti-pollution program cuts down refinery and blast furnace production.
In heavy volume of more than 1.1m tonnes by lunchtime in New York Comex copper for delivery in December added nearly 1% from Tuesday's close to $3.1115 a pound ($6,860 per tonne). Copper hit an intra-day high of $3.25 a pound, the highest since February 2014, mid-October and year-to-date gains for the bellwether metal remain above 23%.
October customs data from China showed import volumes of unwrought copper fell to the lowest since April, totalling 330,000 tonnes during the month, down more than 20% from September. While imports were up from September last year, cargoes are down nearly 8% over the first 10 months of 2017 to 3.76m tonnes compared to the same period in 2016.
Shipments of copper concentrate in October were up slightly from last year but fell back month-on-month to total 1.37m tonnes in October. Year to date Chinese concentrate imports are up slightly from last year. China consumes nearly 50% global copper output.
Iron ore volumes at year-and-a-half low
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 war on smog has concentrated on the country's steelmaking hubs near the capital where mandated cuts of as much as 50% came into effect last month.
Imports of high-quality iron ore fines and lump ore from Australia, Brazil and South Africa topped 100m tonnes for the first time in September, but plunged by 23% last month to 79.5m tonnes as steelmakers work through inventory amid lower production. Total shipments for the first ten months of the year is up 6.3% to 896m tonnes.
Reuters report usual seasonal factors are also behind the slump.
"The steel production cuts should be the main reason (behind the October drop in imports) but at the same time because we have a National Day holiday in October and if you look at historical data, October imports are usually lower," said Wang Di, consultant at CRU in Beijing.
"I think imports will remain relatively low (for November and December), but maybe not as low as October. Given the production cuts and the very high port stocks at the moment, I don't think there's very strong demand."
The Steel Index benchmark price for Northern China 62% Fe ore was up slightly on Wednesday to trade at $62.50 a tonne. While down sharply from highs struck early in 2017, year-to-date iron ore has averaged $71.10 a tonne compared to $56.50 over the course of 2016.