1 MONGOLIA-CHINA AGREE TO COLLABORATE IN INCREASING MEAT EXPORT WWW.MONTSAME.MN PUBLISHED:2018/09/21      2 U.S. AND MONGOLIA SEEK TO STRENGTHEN ECONOMIC RELATIONSHIP WWW.STRTRADE.COM PUBLISHED:2018/09/21      3 MONGOLIA, U.S. LEADERS DISCUSS BILATERAL TIES WWW.XINHUANET.COM PUBLISHED:2018/09/21      4 BELT AND ROAD SIGNIFICANT TO MONGOLIA, PEOPLE AROUND WORLD -- ACADEMIC WWW.ENG.YIDAIYILU.GOV.CN PUBLISHED:2018/09/21      5 PETRO MATAD UPDATES MONGOLIA EXPLORATION WWW.OGJ.COM PUBLISHED:2018/09/21      6 RIO TINTO’S EXIT FROM COAL PAYS OFF, TO RETURN $3.2B FROM SALES PROCEEDS TO SHAREHOLDERS WWW.MINING.COM PUBLISHED:2018/09/21      7 OPENING CEREMONY OF SAINSHAND SALKHIN PARK HELD WWW.MONTSAME.MN PUBLISHED:2018/09/21      8 ALIBABA’S MA SAYS TRUMP’S TRADE WAR ‘DESTROYED’ HIS PROMISE TO CREATE JOBS FOR 1MN AMERICANS WWW.RT.COM  PUBLISHED:2018/09/21      9 LEGAL DISPUTE OVER EMC OWNERSHIP COMES TO AN END WWW.ZGM.MN PUBLISHED:2018/09/20      10 ERDENES TAVAN TOLGOI REVENUE SURGES DUE TO HIGHER COAL PRICES WWW.NEWS.MN PUBLISHED:2018/09/20      НУРАХ ДӨХСӨН БАЙРУУДЫГ ШИНЭЧЛЭХ КОМПАНИ ОЛДОХГҮЙ БАЙНА WWW.ZGM.MN НИЙТЭЛСЭН:2018/09/21     МОНГОЛ УЛС ВАШИНГТОН, ПЁНЬЯНЫ ХЭЛЭЛЦЭЭРТ ЗУУЧЛАХАД БЭЛЭН ГЭДГЭЭ ЗАРЛАЛАА WWW.EAGLE.MN НИЙТЭЛСЭН:2018/09/21     УЛСЫН ХЭМЖЭЭНД 85.3 МЯНГАН ТОНН ТӨМС ХУРААН АВААД БАЙНА WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/09/21     ЗГ: БУЦАЛТГҮЙ ТУСЛАМЖИЙГ УСНЫ НӨӨЦИЙГ САЙЖРУУЛАХ, ХЭРЭГЛЭСЭН УСЫГ БУЦААН АШИГЛАХАД ЗАРЦУУЛНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/09/21     ҮСХ: УЛААНБААТАРТ АЖИЛЛАГЧДЫН САРЫН ДУНДАЖ ЦАЛИН УЛСЫН ДУНДЖААС 121.7 МЯНГАН ТӨГРӨГӨӨР ИХ БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/09/21     МОНГОЛ УЛСЫН ИХ ХУРАЛ, ЕВРОПЫН ПАРЛАМЕНТ ХООРОНДЫН XII УУЛЗАЛТААР ХАМТАРСАН МЭДЭГДЭЛ ГАРГАЛАА WWW.DNN.MN НИЙТЭЛСЭН:2018/09/21     ТӨРИЙН АЛБАНЫ УДИРДАХ АЖИЛТНЫ УЛСЫН ЗӨВЛӨГӨӨН БОЛЖ БАЙНА WWW.UNUUDUR.MN НИЙТЭЛСЭН:2018/09/21     2019 ОНЫГ МОНГОЛ, АМЕРИКИЙН ЗАЛУУЧУУДЫН ЖИЛ БОЛГОНО WWW.EAGLE.MN НИЙТЭЛСЭН:2018/09/21     УУРХАЙЧДЫН АЖЛЫН БАЙР НЭМЭГДЭЖ, ЦАЛИН ӨСЧ БАЙНА WWW.GOGO.MN НИЙТЭЛСЭН:2018/09/20     “ЭРДЭНЭТ”-ИЙН 49 ХУВИЙН ӨМЧЛӨЛ ТОЙРСОН ХУУЛЬ ЗҮЙН МАРГААН ЭЦЭС БОЛЛОО WWW.ZGM.MN НИЙТЭЛСЭН:2018/09/20    

Events

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

NEWS

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US started biggest trade war in history, China forced to retaliate – Beijing www.rt.com

China's commerce ministry says the country has no choice but to fight back after the US "launched the largest trade war in economic history," as Washington's 25 percent tariffs on various Chinese imports go into effect.

"On July 6, the US began to impose 25 percent tariffs on $34 billion worth of Chinese imports. The US has breached WTO trade rules and launched the largest trade war in economic history to date," the ministry's statement read​​​.

The Trump administration's new 25 percent duties apply to 818 Chinese imports worth $34 billion. They are the first stage in levies threatened by the US on a total of $450 billion worth of Chinese goods.

China warned that while it promised not to "fire the first shot," it will now be forced to "counterattack" in order to defend its core interests. Beijing has vowed to inform the World Trade Organization and work with other countries to "jointly safeguard free trade and the multilateral system."

As Beijing geared up to respond to the new tariffs, it warned that the US would be “shooting itself in the foot and hurting the world” if it were to go through with the measure. Reciprocal levies had reportedly been prepared, which were set to take effect on the same day.

Beijing has been actively seeking an EU ally in the mounting trade war, with senior Chinese officials offering European states access to its market if they take Beijing's side in the row. However, Europe has rejected China’s proposal to team up against the US.

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Reduction of consumer loans stipulated to have impact on business investment www.gogo.mn

The Bank of Mongolia reports that Mongolian consumer loan holders spend 69 percent, on average, of their net income for loan repayments each month, thus negatively affecting their quality of life.

As of the first quarter of 2018, consumer loan growth reached 47.3 percent in conjunction with the total household debt increase of 18.2 percent. Consumer households contribute to 57.6 percent of total banking sector loans.

Corporate loans show an average growth of 1.5 percent for the last nine quarters, representing low business and investment growth and even lower creation of new jobs. In June, the Monetary Policy Committee of the Bank of Mongolia issued a decision to set the consumer loan debt/income ratio at 70 percent.

According to officials, the decision will help to maintain balance between the public’s current and future consumption levels, to diminish the debt burden of households and to avoid potential financial risks. In addition, it is expected that financial resources will be effectively allocated for businesses.​

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Mongolia mulls halving tax on waste recycling plants www.china.org.cn

ULAN BATOR, July 5 (Xinhua) -- Mongolia will support waste recycling plants with tax reduction policies to fight against climate change, pollution and environmental degradation, Mongolian Environment and Tourism Minister Namsrai Tserenbat said Thursday.

"We are working to tackle environmental issues caused by a build-up of garbage. We have to improve waste management and recycling systems," Tserenbat said at an event on environmental problems.

"We are considering reducing tax on waste recycling plants by 50 percent," he said.

Statistics show that over 76 percent of Mongolia's land area suffer from soil degradation.

Recently, the government decided to ban single-use plastic bags from March 1, 2019. Enditem

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Inside the lives of Mongolia's 'millennial monks,' who play basketball, pray for 12 hours a day, and hold the fate of their religion in their hands www.businessinsider.com

In Mongolia, the future of one of the world's oldest religions is in the hands of millennials.

Young Buddhist monks are increasingly being given control of Mongolia's monasteries as the religion struggles to find new blood.

The millennial generation of monks is the first to come of age since democracy was introduced to Mongolia in 1990. Prior to that, Buddhists in this sparsely-populated country faced deadly persecution — an estimated 17,000 monks were killed in Stalinist purges in the late 1930s.

Now, monks in their 20s and 30s are tasked with leading the next generation of Buddhist religious leaders. At one monastery in northern Mongolia, the monks alternate hours of religious study with games of basketball and the occasional phone call, a privilege reserved for people older than 25.

Here's what life is like for Mongolia's generation of millennial monks.

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'Mongolia does not need to join SCO' says transport minister www.news.mn

During the 18th Shanghai Cooperation Organisation (SCO) summit earlier this month in Qingdao, Mongolian President Kh.Battulga said that his country is studying the possibility to upgrade the level of its participation in the SCO and a discussion on this matter has been launched in political and social circles in Mongolia. However, J.Bat-Erdene, Minister of Road and Transport Development said there is no need to join the SCO.

Under the “Development Road” programme, Mongolia aims to increase the volume of foreign trade to USD 200 billion by 2020. It was USD 84 billion last year. Furthermore, Mongolia is pursuing a policy to develop transit transportation for connecting an economic corridor between Mongolia-Russia-China to European Union as well as the economic and trade transportation corridors of the SCO.

Under the SCO corridors, six countries such as Russia, China, Uzbekistan, and Kazakhstan have united for conducting transit transportation along six key routes. Mongolia has the right to join an agreement of a member states of the SCO for composing good environment for international transportation. It does not need to be member of the SCO for joining the agreement.

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Copper price takes another huge hit www.mining.com

The price of copper suffered its seventh straight day of declines on Thursday, losing more than 3% in New York to $2.8205 or $6,220 a tonne on the Comex market, its lowest level since July last year.

It was one of the busiest days of 2018 on commodity futures markets with with over 2.3m tonnes of September copper worth $14.6 billion exchanging hands by mid-afternoon. 2018 star performer nickel also succumbed on Thursday, becoming the last of the base metal complex to drop below its 100-day moving average at $14,200 a tonne. Zinc's woes continued and the metal is now down nearly 20% year to date.

Reports out on Thursday suggest the trade spat between the US and China, responsible for half the world's consumption of copper, could quickly turn nasty. President Trump's 25% tariffs on more than 800 Chinese goods worth $34 billion kick in midnight Friday. The latest round comes a few months after duties on steel and aluminum exports from China and other countries went into effect.

Investment bank Goldman Sachs poured cold water on the notion that a trade war represents a serious threat to raw materials, saying most of them aren’t likely to be significantly impacted, and after recent declines now’s the time to buy.

Growth in global industrial production and manufacturing output appears to have peaked in the first-half of 2018, suggesting that resource commodity prices may generally have set their highs for the cycle.
“The trade war impact on commodity markets will be very small, with exception of soybeans where complete rerouting of supplies is not possible,” analysts including Jeffrey Currie said in the July 4 note. “This is consistent with our economists’ view that the macroeconomic impact of the trade war is likely to be very small,” it said, with added emphasis on the final two words.

Raw materials have been hurt by growing concern among global investors about the potential impact of the trade tariffs planned by Washington, and the threatened Chinese response. In June, the Bloomberg Commodity Index suffered its biggest monthly slump since mid-2016.

“In metals, we believe Chinese domestic concern over credit availability has been the primary driver of recent weakness, fueled by trade wars, and is set to reverse given recent policy shifts in China,” it said in the latest report, citing moves including the recent reduction in some banks’ reserve requirements.

“China will want to negotiate the trade wars from the position of a strong economy, which reinforces fading the trade war rhetoric but buying the trade war reality (which will likely be small),” Goldman said.

Other banks are more cautious. Among them, Morgan Stanley has flagged risks for consumption from a potential deepening of the global trade squabble, as well as from any slowdown in China. “Escalating global trade tensions bring a risk of demand destruction across commodity markets,” it said last week.

“Trade tensions between the U.S. and its major trading partners have the potential to undermine confidence and hinder global economic output,” Australia's Department of Industry, Innovation & Science said on Monday. Trade wars aside, the government forecaster sounded gloomy about the prospects for metals and minerals prices:

Growth in global industrial production and manufacturing output appears to have peaked in the first-half of 2018, suggesting that resource commodity prices may generally have set their highs for the cycle.

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Thermal coal prices hit 6-year high www.mining.com

Benchmark seaborne thermal coal prices jumped to $120.10 per tonne on Thursday, its highest level since November 2012, thanks to tight supply in key Asian export regions. Measured from lows hit end-2015, early 2016 coal used in power generation has gained 140%.

Strong consumption in China, despite ongoing efforts by Beijing to reduce reliance on coal for electricity generation, and restocking from the spot market by Japanese utilities have buoyed prices.

Import demand from China has been supported by hotter than average temperatures, weak hydro power output, and limited growth in domestic supply, the Australian dept of resources said in its quarterly report released this week.

Supply in South Africa has been diverted to domestic power-generating facilities, impacting exports. In May this year prices at the African nation's Richards Bay terminal topped $100 for the first time since April 2012 and was trending higher again this week at $106.25.

Coal at the Rotterdam port in the Netherlands is set to enter triple digits for the first time since January 2012 exchanging hands for $98.95 this week.

The Australian government forecaster said spot prices are forecast to remain well supported over the next few months, as a result of a relatively tight market, but sounded a note of caution on the longer term outlook:

However, with most of the contributing factors expected to be temporary, the price is forecast to decline from late 2018, to average US$74 a tonne in 2020 as import demand growth slows relative to supply.

Both China and India are expected to increase domestic thermal coal output.

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New Fund Plans Could Divert Mongolia’s Focus from Mining Sector Reforms www.resourcegovernance.org

Mongolian Minister of Mines and Heavy Industry D. Sumiyabazar has stated that he wishes to create a new “sovereign wealth fund” managed by state-owned miner Erdenes Mongol. This fund would invest inside Mongolia and would be financed from dividends of Erdenes Mongol subsidiaries and possibly by the sale of state mining assets.

Several ideas have been floated, from selling shares of certain mines on a stock exchange to increasing production at state-owned mines. After all, a recent valuation of just three state-owned mines owned by Erdenes Mongol found they are valued in the many billions of dollars.

Based on these statements, the minister seems intent not on creating a sovereign wealth fund—defined by the International Monetary Fund (and our organization, the Natural Resource Governance Institute) as an entity investing partly in foreign assets for a macroeconomic purpose—but rather a “strategic investment fund” managed by Erdenes Mongol.

While we support the minister’s aim to enhance Mongolia’s benefits from the mining sector, such a fund might lack adequate safeguards. We are also concerned that a new fund would divert Mongolia’s scarce government income away from essential public services, such as education and healthcare.

Strategic development funds and development banks, which are similar institutions, have often proven to be sources of patronage, corruption and mismanagement. The Development Bank of Mongolia (DBM), for example, has made a long list of bad loans. It is a major source of the Mongolian state’s indebtedness, which led to an IMF-led bailout last year.

The DBM has provided financing for a number of important development projects, including an hydroelectric plant, apartment construction and renovations to central heating systems. However, some investment decisions were politically motivated. Furthermore, the former CEO was arrested for approving debt issuances without tender.

Of equal concern: strategic development funds often undermine public financial management systems by bypassing parliamentary oversight and general procurement procedures for domestic contracting. The USD 10 billion Russian Direct Investment Fund, for example, invests in domestic companies virtually without independent oversight, creating an unaccountable source of financing for supporters of the ruling regime. The fund is currently subject to U.S. sanctions due to management’s alleged involvement in corruption.

Mongolia already has a plethora of public institutions to manage its mineral wealth. These include Erdenes Mongol, the General Local Development Fund, the Fiscal Stability Fund and the newly enacted Future Heritage Fund, each of which draws money away from the general budget. These allocations, while potentially useful, imply less spending on healthcare, education and public infrastructure. Depending on its design, a new fund could either improve this situation or make it worse.

As such, we believe the Mongolian government should consider alternative proposals to boost mining and better manage the sector.

First, management of Erdenes Mongol itself can be improved. Profitability at Erdenes Mongol-controlled mines generally underperform private sector mines in terms of production and cost effectiveness. While we congratulate the company for making essential information, such as a financial report, publicly available for the first time, more reforms are urgently needed if Erdenes Mongol is to become a world-class mining company.

Second, the government ought to avoid the mistakes of the past when signing mining contracts and tax treaties with other countries. A recent analysis of the Oyu Tolgoi copper mine contract showed that profit shifting and use of a Dutch tax treaty may cost the government up to USD 9.8 billion over the life of the existing mine, notwithstanding the planned expansion. Poor understanding of these types of fiscal devices has led to consistent overestimation of government revenue, meaning even existing funds do not receive the money they expected and do not function as designed.

Third, Mongolia’s mining revenue management can be improved via prudent budget spending and better fiscal management. The government has committed to a number of fiscal rules and development plans to ensure that future generations benefit from today’s mining, but these rules and plans exist mainly on paper. As indicated by high deficits and the threat of defaults, the government budget remains unstable.

If the government is set on creating a new fund, we would suggest that proper governance rules be enacted in law. Following on the good examples of Germany’s Kreditanstalt für Wiederaufbau and the Korean Development Bank, there would be a need for clear ownership policy, legal framework and performance monitoring framework. These institutions are characterized by high degrees of professionalism, effectiveness, transparency and oversight.

Still, success stories such as these are few and far between. The global experience demonstrates that strategic development funds and development banks often divert scarce resources away from public sectors that need them the most. The government may be better served by improving the performance of existing institutions, such as Erdenes Mongol and the Future Heritage Fund, than creating new ones.

Andrew Bauer is a consultant with the Natural Resource Governance Institute (NRGI). Dorjdari Namkhaijantsan is NRGI’s Mongolia manager.

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Mongolia's foreign reserves hit new record high in May www.akipress.com

Mongolia's foreign currency reserves reached 3.26 billion U.S. dollars in May, a new high since June 2013, Xinhua reported citin Bank of Mongolia.

The international reserves grew by 9.3% from the previous month and 2.6 times more than the same period last year.

The growth was attributed to the implementation of the third phase of the International Monetary Fund's (IMF) extended fund facility (EFF) program in Mongolia and higher commodity prices on international markets, the central bank said.

The three-year IMF program was approved in 2017, aiming to stabilize the economy and establish the basis for a more sustainable and inclusive growth.

Mongolia's foreign currency reserves have more than doubled since the start of the program, according to the central bank.

Experts with the central bank predict that by the end of 2019 the country's foreign currency reserves will reach 3.8 billion U.S. dollars, and 4 billion U.S. dollars by 2020.

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Mongolia and Malaysia renew ties strained by Altantuya murder www.thestar.com.my

ULAANBAATAR: Datuk Seri Dr Wan Azizah Wan Ismail’s visit here seems to have rejuvenated bilateral ties between Malaysia and Mongolia.

This follows Mongolian President Khaltmaagiin Battulga’s impromptu invite for a meeting with the Deputy Prime Minister yesterday.

“I was asked to have an audience with the Mongolian president at the State Palace,’’ Dr Wan Azizah told Malaysian journalists at the sidelines of the Asian Ministerial Conference for Disaster Risk Reduction 2018 here yesterday.

Although diplomatic ties between Mongolia and Malaysia was set up in 1971, there was very little interaction or exchange between both countries over the years.

The relationship became strained after the murder of Mongolian national Altantuya Shaariibuu in Bukit Raja, Klang, in 2006.

Dr Wan Azizah, who left to meet the president after attending the conference, said it was important for Malaysia to be seen doing the right thing in connection with Altantuya’s murder.

“If there is any course for a review (of the case) or anything, I think we can consider,’’ said Dr Wan Azizah, adding that this would be an indication of how the new Pakatan Harapan government administered the country.

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