1 TESLA IS GETTING A CHINA FACTORY. THIS $4 BILLION STARTUP WILL BE WAITING WWW.BLOOMBERGTV.MN PUBLISHED:2018/07/17      2 HOW MINING TYCOONS ARE TRYING TO FOIL A BIG UK BRIBERY PROBE WWW.MINING.COM PUBLISHED:2018/07/17      3 MONGOLIA'S TOURISM REVENUE INCREASES BY 20 PERCENT WWW.NEWS.MN PUBLISHED:2018/07/16      4 WATER LEVELS OF MAJOR MONGOLIAN RIVERS EXCEED ALARM LINE WWW.XINHUANET.COM PUBLISHED:2018/07/16      5 CHINA SETS RECORD DAILY STEEL OUTPUT FOR THIRD MONTH IN A ROW WWW.REUTERS.COM PUBLISHED:2018/07/16      6 RUSSIAN RETAILERS, HOTELS EMERGE AS WORLD CUP WINNERS WWW.THEMOSCOWTIMES.COM PUBLISHED:2018/07/16      7 BIOGRAPHY OF TAVAN TOLGOI RESIDUAL COAL DEPOSITS WWW.ZGM.MN PUBLISHED:2018/07/16      8 NAGOYA BASHO LOSES LAST OF THREE YOKOZUNAS WWW.MONTSAME.MN PUBLISHED:2018/07/16      9 CHINA'S GDP HITS 6.7% IN Q2 OF 2018 WWW.CHINADAILY.COM.CN PUBLISHED:2018/07/16      10 US-CHINA TRADE WAR DIMS BRIGHT FUTURE FOR SEMICONDUCTORS WWW.ASIA.NIKKEI.COM PUBLISHED:2018/07/16      МАНАЙ УЛСЫН ЗЭЭЛЖИХ ЗЭРЭГЛЭЛ ДЭЭШИЛЖЭЭ WWW.EAGLE.MN НИЙТЭЛСЭН:2018/07/16     “ЭРДЭНЭС-ТАВАНТОЛГОЙ” 40 САЯ ДАХЬ ТОНН НҮҮРСЭЭ ОЛБОРЛОЖЭЭ WWW.NEWS.MN  НИЙТЭЛСЭН:2018/07/16     1,5-2 САЯ ТӨГРӨГИЙН ЦАЛИНТАЙ ЖОЛООЧИЙН АЖЛЫН БАЙРНЫ БҮРТГЭЛ ЭХЭЛЛЭЭ WWW.ZINDAA.MN НИЙТЭЛСЭН:2018/07/16     ОЛОН МЯНГАН НИСЭХ ОНГОЦ ШИНЭЭР ҮЙЛДВЭРЛЭХ ШААРДЛАГАТАЙ WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/07/16     КРИПТОВАЛЮТЫН ТАЛААРХ ХОРООНЫ БАЙР СУУРЬ ХЭВЭЭРЭЭ WWW.GOGO.MN НИЙТЭЛСЭН:2018/07/16     ОРОСЫН ЭДИЙН ЗАСГИЙН ӨСӨЛТӨД ДАШТ-2018 НӨЛӨӨЛӨХ НЬ WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/07/16     ЗҮҮН ӨМНӨД АЗИ ХАНШАА ХАМГААЛЖ ЭХЛЭВ WWW.ZGM.MN НИЙТЭЛСЭН:2018/07/16     АЯЛАЛ ЖУУЛЧЛАЛЫН САЛБАРААС 400 ГАРУЙ САЯ ДОЛЛАР ОЛЖЭЭ WWW.DNN.MN НИЙТЭЛСЭН:2018/07/16     МОНГОЛЫН ЭДИЙН ЗАСГИЙН БҮТЭЦ ЭМЗЭГ ХЭВЭЭР БАЙНА WWW.GOGO.MN НИЙТЭЛСЭН:2018/07/10     МОНГОЛ, ВЬЕТНАМЫН ГАДААД ХАРИЛЦААНЫ ЯАМ ХООРОНДЫН ЗӨВЛӨЛДӨХ УУЛЗАЛТ БОЛОВ WWW.NEWS.MN НИЙТЭЛСЭН:2018/07/10    

Events

Name organizer Where
"Open to Export" ICC WTO International business award ICC WTO London

NEWS

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WTO discusses Mongolia-Japan economic partnership agreement www.montsame.mn

Ulaanbaatar /MONTSAME/ Member States of the World Trade Organization (WTO) have discussed Economic Partnership Agreement (EPA) established between Mongolia and Japan.

Mongolian delegates to the discussion was headed by L.Purevsuren, Ambassador of Mongolia to the Swiss Confederation and Permanent Representative of Mongolia to the United Nations Office and other International Organizations in Geneva. Establishing the first Free Trade Agreement (FTA) with Japan is new for Mongolian trade policy and it is bringing marked changes. Purpose of the agreement is to increase trade and investment between the two countries, exchange technologies, diversify export and strengthen business relations, emphasized Ambassador, Permanent Representative L.Purevsuren in his speech, also informing that it will pay attention to implement the agreement mutually beneficial in future.

During the discussion, delegations from Mexico, the European Union, the United States, Taiwan and Canada expressed their views on the agreement. The EU and U.S part appreciated the reflection of online trade in the agreement considering it contributive to move forward issues in Multilateral Trade Agreements in the future. Moreover, they requested information on actions to improve business environment.

Negotiations on establishing the EPA commenced in June, 2012 and it came into effect on June 7, 2016, as signing the agreement on February, 2015.

 

B.Batchimeg

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Foreign trade turnover increased 25 percent www.gogo.mn

A result of foreign trade for the first 3 months 2018 has been based on 87946 export, and 43548 import customs declarations and other non customs resources of information. 1540 export and 724 import declarations belong to the goods crossed through seasonal ports.

A result of total turnover of foreign trade for the first 3 months 2018 amounted 2612.9 mln.USD which increased in 536.7 mln.USD or 25.9 percent against the same period of the last year. Export exceeded import in 351.9 mln.USD and foreign trade balance became positive.

The volume of export is 1482.4 mln.USD which means increase by 14.0 percent if compared with the same period of the last year.

99 percent of exported goods comes to transactions paid in hard currency.

In total export minerals amounted 1252.5 mln.USD or 84.5%; natutal or cultured pearls, precious or semi-precious stones amounted 124.5 mln.USD or 8.4%; export of raw hides and skins, leather, furskins and articles thereof equaled to 6.3 mln.USD or 0.4%, textiles and textile articles 26.7 mln.USD or 1.8% and in total 93.1% of export came to these goods.

Сrude oil, iron ores and concentrates, copper concentrate and zinc ores and concentrates were exported to China (100.0%), coal were exported to China (96.6%). Flouspar concentrates were exported to China (49.7%), the Russian Federation (50.3%); leather of bovine or equine animals were exported to China; (76.8%) of combed cashmere to China; most of exported raw hides and skins, washed cashmere comes to China, and gold were exported to United Kingdom (100.0%) and 91.3 percent of total export belong to these goods.

Mongolia has exported goods to 48 foreign countries including China (86.7%), United Kingdom (8.9%), the Russian Federation (1.2%) and 96.8% of whole export comes to these countries.

Goods and raw materials with value of 1130.5 mln.USD were imported and the volume of total import increased by 354.5 mln.USD or 45.6% in comparison with the same period of 2017.

Imported goods consist of transactions paid in hard currency (94.1%), goods supplied by foreign loan (0.9%), goods imported as foreign aid (0.4%), goods imported as foreign investment (3.8%), processed goods (0.7%).

In total import machinery, mechanic equipment and parts thereof, electric appliances, parts thereof amounted with value of 251.3 mln.USD (22.2%), minerals-278.8 mln.USD (24.7%) and among them oil products were 231.0 mln.USD (82.8%), products of animal or vegetable origin and foodstuff 155.0 mln.USD (13.7%), vehicles and aircraft, parts thereof-154.6 mln.USD (13.7%), plastics and rubber and articles thereof 41.7 mln.USD (3.7%), base metals and products thereof – 87.9 mln.USD (7.8%), chemical products – 69.5 mln.USD (6.2%) and 92.0% of the total import comes to these goods and products.

Goods with value of 4972.0 thous.USD have been imported as foreign aid from international financial and economic organizations and donor-countries. If we take into consideration the countries of origin Switzerland (41.3%), China (10.8%), Republic of Korea (16.8%), Japan (8.8%).

The goods, donated from donor countries, came from the Switzerland (32.9%), China (9.0%), Japan (14.1%), Republic of Korea (12.8%) and the USA (11.1%).

Goods worth 9870.8 thous.USD were imported as foreign loan by the international financial and economic organizations and donor-countries and these goods were originating from different countries such as Japan (42.8%), China (42.0%). (Appendix 10).

Total loan goods were imported as government loans. If we take into consideration the lenders, loan lent from Japan (54.2%) and from China (37.3%).

In total goods with value of 42.5 mln.USD were imported to the charter fund of joint ventures and companies with foreign investment and these goods were originating from different countries such as China (54.9%) and the Russian Federation (42.6%) (Appendix 12).

Mongolia has imported goods originating from 112 different countries including the Russian Federation (32.0%), China (31.6%), the USA (3.9%), Japan (8.7%), Republic of Korea (4.1%) and Federal Republic of Germany (2.9%) and goods from these countries are equal to 83.2% of total import.

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IMF expects three structural benchmarks to be approved in Spring session www.ubinfo.mn

As a part of USD 5.5 billion multi-donor financing package of Extended Fund Facility (EFF) program, the International Monetary Fund (IMF) has completed the third review and enabled Mongolia to draw about USD 30.55 million, bringing total disbursements under the arrangement to about USD 152.79 million. Earlier this week, the IMF staff team disclosed the report for the third review under the EFF.

The team foresees that growth is expected to remain strong in 2018 but, amid still high public debt, several risks remain including changes in global commodity demand and bottlenecks at the border. The report highlights that all end-December quantitative performance criteria were met, generally by large margins. “Of the 10 structural benchmarks for the review, five were met, three (tax administration legislation and a recapitalization law) will likely be passed in the Spring parliamentary session and two are unlikely to be implemented. In addition, the authorities reversed three fiscal measures considered during previous reviews,” assessed the IMF staff team on the program implementation.

Heenam Choi, Executive Director for Mongolia, remarked “The EFF program, official sector support and a favorable external environment wahave supported a strong economic recovery in Mongolia. The authorities undertook extensive economic reforms that have strengthened macroeconomic fundamentals. As a result, the fiscal deficit and public debt are decreasing at a much faster pace than projected at the time the EFF was approved. Inflation is within the target range; the exchange rate has stabilized and foreign reserves have continued to rise.

The authorities’ commitment to the program objectives, fiscal discipline and prudent monetary policy have played a key role in the economic revival of the country.” He underlined that quantitative targets for the end of 2017 were exceeded by considerable margins. “Most structural benchmarks were either met or, in the case of the revised taxation laws and bank recapitalization law, will be implemented with a short delay. Some policy measures were revised after widespread public objection. The authorities are aware that there is no room for complacency. They are committed to pursuing a tight fiscal policy and prudent monetary policy, together with implementation of reforms under the program to strengthen macroeconomic stability, build buffers and promote inclusive growth,” concluded Mr Heenom Choi.

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Canadian miner A-OK despite U.S. sanctions against Russian companies www.mining.com

Canadian miner Kinross Gold (TSX:G) (NYSE:KGC) issued a press release today stating that its mining operations in Russia continue to function according to plan and remain unaffected by the new sanctions announced by the United States on April 6, 2018.

Last Friday, the U.S. Treasury Department imposed sanctions on seven Russian oligarchs including metal magnate Oleg Deripaska, as well as 12 companies they own or control. Seventeen senior Russian government officials were also blacklisted. According to the Trump administration, all of them have been profiting from the Kremlin's “malign activities” around the world.

Deripaska, estimated by Forbes magazine to have a net worth of $6.7 billion, is the main owner of the conglomerate EN+, which in turn is the co-owner of some of the world’s biggest metals producers, Nornickel and Rusal, the latter being responsible for producing around 6 per cent of the world’s aluminium.

Despite analysts predicting that, given how wide his reach is, sanctions against Deripaska may cause a turmoil in the mining world, particularly for local and foreign firms operating in Russia, Kinross made an effort today to stand clear from such possibility. “Kinross has successfully operated in Russia for over 20 years and has proactively developed and diversified its procurement and logistics structures in the country. The Company continues to focus on responsibly operating its two mines and providing value to employees, host communities and shareholders,” the miner’s statement reads.

The Toronto-based company owns the Kupol high-grade underground mine, located in the far-eastern region of Chukotka and whose gold equivalent production reached 580,451 oz. in 2017; and the Dvoinoye mine, located approximately 100 kilometres north of our Kupol and whose gold equivalent production last year was of 580,451 oz. The two operations are responsible for almost 20 per cent of Kinross’ gold output.

“Kinross will continue to closely monitor sanction legislation in Canada, the U.S. and the European Union so that Kinross and its subsidiaries remain in compliance,” management added in today's communiqué.

Despite Kinross' statement, its shares fell today by 8.73%. "Basically, Kinross Gold shares were punished because it has mines in Russia, and Russia was an unpopular word in the market," trader Vladimir Zernov wrote on Seeking Alfa. "I don’t see any logic in such a move. If anything, gold and gold producers’ shares should be rising on increasing geopolitical tensions," he added.

 
 
 
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US-China trade: Xi warns against 'Cold War mentality' www.bbc.com

Chinese President Xi Jinping has warned against a "Cold War mentality" as he vowed to open up parts of the country's economy.

His speech at the Boao Forum for Asia - often referred to as Asia's Davos - appears to be an attempt to calm a trade row with the US.

He pledged to cut import tariffs on cars and relax requirements for foreign firms investing in China.

But there were few specifics on when the changes would happen.

Mr Xi made no specific references to the ongoing spat with the Washington which has seen both sides announce tit-for-tat plans to slap tariffs on imports.

But in a veiled swipe at US President Donald Trump's America First stance, Mr Xi called for openness.

"In today's world, the trend of peace and cooperation is moving forward and a Cold War mentality and zero-sum game thinking are outdated.

"Paying attention only to one's own community without thinking of others can only lead into a wall. And we can only achieve win-win results by insisting on peaceful development and working together."

President Trump, whose plan to hit hundreds of Chinese products with duties have stoked fears of a trade war, has yet to react.

Washington claims China has failed to fulfil earlier promises to open up the economy - including putting up barriers to international companies accessing markets and forcing investors to form joint ventures and hand over intellectual property.

China's President Xi Jinping likes to position himself as the champion of globalisation. He consistently does that when he's making speeches at international forums.

And what better time to do that than now, against the backdrop of the ongoing US-China trade row.

President Xi says a cold war and zero sum mentality are out of place and that dialogue is the way to resolve disputes.

What he most likely means by that of course - although he never specifically says it - is that US President Trump's recent rhetoric on trade and unfair practices by China aren't in keeping with the way reasonable adults should behave.

In contrast to the bluster and fiery barbs evident in President Trump's tweets, President Xi put forward the face of a new China, and announced steps to make China's economy more open.

Amongst the things he talked about included lowering import tariffs for vehicles, and improving transparency, and intellectual property rights protection.

He also said China genuinely doesn't want a trade surplus.

But while on the surface the promises sound grand, some of this is stuff we've heard before. So it's hard to see just how much more access China will give foreign firms in reality.

But will President Trump see President Xi's conciliatory speech as a sign that he's won some concessions for the US side? Wait for his next tweet!

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The Trump-Kim summit could take place in Mongolia's Ulaanbaatar — here's what the coldest capital city on earth is like www.businessinsider.com

The summit between President Donald Trump and North Korea's leader Kim Jong Un may very well take place in Ulaanbaatar, the capital of Mongolia.

US officials familiar with the secret, high level planning talks for the bilateral meeting told CNN that Kim would prefer to host it in Pyongyang, but that Ulaanbaatar is being floated as neutral ground.

Former and current presidents of Mongolia also seem open to the plan. Mongolia has hosted meetings between North Korea and Japan in the past and is on friendly terms with most countries, including its neighbors Russia and China, as well as both the US and North Korea.

Take a look around the city that could soon play host to Trump and Kim.

http://www.businessinsider.com/photos-ulaanbaatar-city-coul…

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Mongolia and China agree to move major projects forward www.montsame.mn

Beijing /MONTSAME/ Mongolia and China agreed to mark the 70th anniversary of diplomatic relations, which will fall next year, with a grand celebration.

The matter was touched upon during the official talks between Prime Minister U.Khurelsukh and Chinese Premier Li Keqiang on April 9 in Beijing. The sides exchanged views on broadening bilateral cooperation in political, economic, trade and humanitarian spheres and international and regional matters.

While expressing mutual satisfaction with the development of bilateral relations in line with mutual respect of national independence, sovereignty and territorial integrity of the two countries, the Prime Ministers of Mongolia and China expressed their readiness to maintain the frequency of mutual high-level visits and intensify political and parliamentary exchange.

Within the objective to increase bilateral trade turnover to USD 10 billion by 2020, the dignitaries agreed to intensify operations of cooperation mechanisms, correlate development strategies, eradicate non-tariff barriers in bilateral trade, strengthen cooperation in industrial capacity and investment and reinforce the implementation of projects focusing on economic development and household livelihoods. For instance, the sides reached agreement on launching Chinese Government-funded projects in the nearest future, including on the Ulaanbaatar Wastewater Treatment Plant and ger area re-planning .

The sides also emphasized the potentials in bilateral cooperation on sectors such as agriculture, energy, mining and transit transport and backed the activation of relevant dialogue by corresponding bodies. Furthermore, the Prime Ministers expressed their commitment towards the development of trilateral cooperation with Russia and moving forward the priority projects between the three countries. 
Kh.Aminaa

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China, Mongolia to explore free trade agreement www.reuters.com

SHANGHAI (Reuters) - China and Mongolia should begin research into a free trade agreement and speed up the launch of a cross-border cooperation zone in a bid to make use of the two countries complimentary advantages, Chinese Premier Li Keqiang said Monday.

According to the official Xinhua news agency, Li told Mongolian Prime Minister Ukhnaa Khurelsukh in Beijing the two sides should work together more in industry, agriculture and animal husbandry, energy and minerals, transportation, pollution control and infrastructure construction.

Landlocked Mongolia sells the bulk of its exports to China, its southern neighbour, and it has also been trying to make greater use of China's transport network as well as its commodities exchanges in order to gain access to foreign markets.

Mongolia aims to become a "transit corridor" to facilitate trade, as well as oil and gas deliveries, between Russia and China, and has sought funding for transportation projects from the China-backed Asian Infrastructure Investment Bank.

But some nationalist politicians in Mongolia remain suspicious of Beijing's intentions, and have expressed concern that China's growing economic might could further enhance its political dominance in the region.

(Reporting by David Stanway; Editing by Michael Perry)

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China, Mongolia to promote synergy of development strategies www.xinhuanet.com

BEIJING, April 9 (Xinhua) -- China and Mongolia on Monday agreed to link the Belt and Road Initiative and Mongolia's Prairie Road development initiative to benefit the two peoples.

Chinese Premier Li Keqiang made the remarks while holding talks with Mongolian Prime Minister Ukhnaa Khurelsukh in Beijing.

Li said China and Mongolia are important neighboring countries, good friends and partners, and China appreciates the Mongolian government for reiterating its firm adherence to the one-China policy.

China is willing to work with Mongolia to set the direction of bilateral ties in a strategic height and from a long-term perspective, consolidate political mutual trust, respect each others' core interests and major concerns, maintain high-level exchanges, strengthen parliamentary exchanges, enhance party-to-party exchanges, and communicate more in regional and international affairs, Li said.

Li said he hopes that the development of China-Mongolia ties will benefit both countries and regional peace, stability, and prosperity.

Both China and Mongolia face an important mission to develop their economies and improve peoples' well-being, Li said, noting that China is ready to work with Mongolia to make use of the complementary advantages of their economy.

Li called for initiating feasibility research on a China-Mongolia free trade agreement and speed up the building of a cross-border economic cooperation zone.

Li called on both sides to cooperate more in industrial capacity, investment, agriculture and animal husbandry, energy and minerals, transit transport, shantytown renovation, pollution control, and urban and port infrastructure construction.

Next year will mark the 70th anniversary of establishing diplomatic ties, Li said, calling on both sides to strengthen people-to-people exchanges in youth, culture, media, and tourism to consolidate the social and public opinion foundation for China-Mongolia friendship.

Khurelsukh said Mongolia gives priority to the friendly relationship with China in its foreign policy, and the Mongolian government firmly adheres to the one-China policy.

Mongolia agrees that Tibet and Taiwan are inalienable parts of the Chinese territory, and issues concerning Tibet and Taiwan are China's internal affairs, Khurelsukh said.

Khurelsukh said Mongolia is willing to work with China to enhance political mutual trust, maintain high-level visits, deepen economic cooperation, integrate their development strategies, and have more pragmatic cooperation.

Prior to the talks, Li held a welcome ceremony for Khurelsukh.

After the talks, they jointly witnessed the signing of several bilateral cooperation documents in fields such as economy and trade, people-to-people exchanges, industrial capacity, and environmental protection.

China's top legislator Li Zhanshu also met with Khurelsukh on Monday afternoon, and both sides agreed to share experience in governance and hold more legislative exchanges.

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Rio Tinto's Mongolian comfort zone is shaken www.afr.com

Confirmation that Mongolia's anti-corruption authority has opened an "investigation" of the historic 2015 $US4.4 billion project financing deal for the Oyu Tolgoi copper mine has sucked Rio Tinto into the vortex of a controversy that started with a Swiss investigation into the contents of a bank account connected to a former Mongolian finance minister.

Ever since it became clear last month that Swiss authorities were taking serious interest in Bayartsogt Sangajav and how he came to fill a Swiss bank account with $US10 million back in September 2008, Rio has been able to take public comfort in the fact that whatever the circumstances were, they occurred at a time before the multinational miner had the capacity to influence negotiations between the government of Mongolia and Oyu Tolgoi's Canadian-listed developer, Ivanhoe Mines.

At the time the claimed payment was made, Rio owned about 10 per cent of Ivanhoe. The Anglo-Australia stepped its way to control by 2012 and, to announce the changed circumstances, it changed Ivanhoe's name to Turquoise Hill.

Confirmation on March 27 from Swiss authorities that neither Rio nor any of its employees was "currently" subject to the continuing corruption investigation appeared to endorse the security of Rio's preferred comfort zone.

Because it now appears that Mongolia's Independent Authority Against Corruption (IAAC) is attempting to link government approvals of a landmark 2015 Oyu Tolgoi refinancing deal with the Swiss investigation into the circumstances that delivered $US10 million to an account connected with Bayartsogt.

There are some that choose to believe that the IAAC's sudden concern over the 2015 agreement is a political confection more than a matter of substance. This view is born from the fact that the activities of the IAAC are formally overseen by the President rather than the parliament.

The presidential incumbent, who was elected in a seemingly chaotic succession of ballots in June 2017, is the Democrat Party's Khaltmaagiin Battulga. But the Prime Minister elected by the parliament last October is Ukhnaagiin Khurelsukh. A well as being a colourful chap whose nick-name has been "The Fist" ever since he punched a colleague in 2012, he is a leading member of Mongolia's People Party.

But if this is politics then they sure do play a hard game in Ulaanbaatar.

On March 31, Bayartsogt was detained by Mongolia's IAAC, apparently as the next logical step in the criminal investigation by the Swiss Office of the Attorney that has seen it take control of the bank account that has been the focus of its inquiries.

But, as they say, there is more.

At the same time as IAAC moved on the man who formally signed of on the 2009 deal that delivered Ivanhoe 66 per cent of Oyu Tolgoi, it also made two more arrests.

The IAAC arrested and detained a former high-level official of the Mongolian tax department, Ariunsan Baldanjav. And it did the same to B. Byambasaikhan, the former chief executive of Erdenes Mongolia LLC, which is the Mongolian sovereign wealth fund that owns the state's 34 per cent of the mine.

Mongolian state television has reported that the prosecutor's office has also submitted a request to interrogate ex-prime minister Saikhanbileg Chimed on his return from the US and it has flagged requests to arrest "several other" officials involved in either or both of the 2009 and 2015 deals.

The IAAC's reported intent is to test whether the authorities involved in those deals had "abused their power".

Now, among many jobs of standing that include running the Mongolian Archery Association, B. Byambasaikhan is also the chairman of the Business Council of Mongolia. Last week the council issued a strongly worded defence of its chairman, who has temporarily stepped down from his official duties.

A statement released in the name of the council's executive committee expressed deep concern on the way the IAAC matters were being reported in the media, "where it appears there is a linkage between the Swiss Bank account matter of 2009 and the signing of the Oyu Tolgoi Underground Development Plan (so-called Dubai Agreement)".

The background here is important.

Having taken control of Ivanhoe and the operation of the Oyu Tolgoi project that flowed from the Canadian's 66 per cent stake in the project, Rio became the primary source of development finance for Mongolia's biggest ever foreign investment.

Then, in May 2015, Rio and the government agreed on the planned underground expansion that will see Oyu Tolgoi become one of the world's biggest copper mines. With the security that came of that agreement, Rio was finally able to lock down a long-based project financing agreement in December 2015. That deal was worth $US4.4 billion.

The facility was supported by a broad syndicate of international financiers that included export credit agencies from Australia, Canada and the United States and 15 commercial banks. Along with EFIC's contribution, the Australian contributors to the funding package were ANZ and NAB.

And who was the Rio executive that was the ultimate overseer for the project finance negotiations? Well, that task fell to the then head of Rio's copper division. His name? Jean Sebastien Jacques.

Jacques, of course, is now Rio's chief executive.

Jacques has made a wonderful fist of the business he took over from Sam Walsh in March 2016. The financials look ever better and the prices achieved in the retreat from coal have been, frankly, pretty staggering. But not all of the winds Jacques inherited have been as kind.

Regulators in Britain, the US and Australia are investigating a $US10.5 million success fee that was paid to the French investment banker that led negotiations with the government of Guinea over the two disputed iron ore leases that host Rio's rich but isolated Simandou project. And that same troika has reviewed the path Rio took to impairing the $US3.7 billion acquisition of coal mines in Mozambique in 2011-12.

Rio paid a $US35 million settlement with the Serious Fraud Office to end the matter in Britain. But the Mozambique matter has left Rio and two senior executives accused of fraud by the US SEC and of misleading and deceptive conduct by the Australian Securities and Investments Commission.

And, even if we discount its latest dramas in Mongolia, things have been tough for Rio there too over the past six months or so. A January blockade on the Chinese side of the border resulted in Oyu Tolgoi seeking protection of force majeure from contracted customers.

Then, just as that situation was resolved, the government confirmed a $US150 million tax dispute with Oyu Tolgoi and its decision to trigger a call in the original investment agreement that requires the miner to build its own power station by 2021. Rio says that could cost up to $US1 billion.
by Matthew Stevens

 
 
 
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