1 US-MONGOLIA 'THIRD NEIGHBOR TRADE ACT' ON THE WAY WWW.THEDIPLOMAT.COM PUBLISHED:2018/11/17      2 CHINA'S FIGHT AGAINST SMOG MAKES PALLADIUM 2018'S BEST METAL WWW.MINING.COM PUBLISHED:2018/11/17      3 MILLENNIUM CHALLENGE CORPORATION PRESENTS GMS LICENSES WWW.MONTSAME.MN PUBLISHED:2018/11/17      4 MONGOLIA CALLS FOR GLOBAL ATTENTION ON CLIMATE CHANGE WWW.NEWS.MN PUBLISHED:2018/11/17      5 ADB OPENS A NEW WASTEWATER TREATMENT PLANT IN ARVAIKHEER, MONGOLIA WWW.AGENPARL.EU PUBLISHED:2018/11/17      6 CHINA TO BOOST COOPERATION WITH INDIA, MONGOLIA: DEFENSE MINISTER WWW.GLOBALTIMES.CN PUBLISHED:2018/11/17      7 DEATH ON MONGOLIA’S ‘COAL ROAD’ WWW.NEWS.MN PUBLISHED:2018/11/17      8 MONGOLIA SHAKEN BY WIDENING LOAN SCANDAL WWW.ASIA.NIKKEI.COM PUBLISHED:2018/11/17      9 MONGOLIA’S UNEMPLOYMENT FALLS BY 2.2 PERCENT WWW.NEWS.MN PUBLISHED:2018/11/16      10 MEETING MEAT DEMAND: MONGOLIA TO TRADE 17.9 PERCENT OF LIVESTOCK WWW.NEWS.MN PUBLISHED:2018/11/16      БНСУ-ЫН АЖ АХУЙН НЭГЖҮҮДИЙН АУТСОРСИНГ ЗАХИАЛГЫГ ГҮЙЦЭТГЭХ ЗАЛУУЧУУДЫГ СОНГОН, ШАЛГАРУУЛНА WWW.UNUUDUR.MN НИЙТЭЛСЭН:2018/11/17     НҮҮРСНИЙ ЭКСПОРТ 10 ХУВИАР ӨСӨЖ, 31.3 САЯ ТОНН БОЛОВ WWW.GOGO.MN НИЙТЭЛСЭН:2018/11/17     СУДАЛГААГААР ЖДҮ ЭРХЛЭГЧИД ЗЭЭЛИЙН ХҮҮНИЙ ЗАРДАЛ ХАМГИЙН ИХ ХҮНДРЭЛ УЧРУУЛДАГ ГЭЖ ХАРИУЛЖЭЭ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/11/17     ERDENE RESOURCE DEVELOPMENT: ХАЙГУУЛЫН ЗАРДАЛ III УЛИРАЛД 42 ХУВИАР БУУРСАН WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/11/17     ГОРХИ, ТЭРЭЛЖИЙН БАЙГАЛИЙН БОХИРДОЛД АНХААРАЛ ХАНДУУЛЖ ЭХЛЭВ WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/11/17     ИРЭХ БААСАН ГАРАГТ ХОТЫН ДАРГЫГ ОГЦРУУЛАХ ЭСЭХИЙГ ХЭЛЭЛЦЭНЭ WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/11/17     “АМГАЛАН” ХОТХОНД БАЙРЛАХ ГЭРТЭЭ КАННАБИС ТАРЬЖ, УРГУУЛЖ БАЙСАН ТУРК ИРГЭНИЙГ БАРИВЧИЛЖЭЭ WWW.MEDEE.MN НИЙТЭЛСЭН:2018/11/17     ӨНӨӨДӨР АВТОМАШИНЫ ДУГААРЫН ХЯЗГААРЛАЛТ ҮЙЛЧЛЭХГҮЙ WWW.EAGLE.MN НИЙТЭЛСЭН:2018/11/17     ГАШУУНСУХАЙТЫН НҮҮРСТЭЙ МАШИНЫ ЦУВАА 120 КМ БОЛЖЭЭ WWW.EAGLE.MN НИЙТЭЛСЭН:2018/11/16     ТАТВАРЫН ОРЛОГО 32.2 ХУВИАР ӨСӨЖ, ТӨСВИЙН ТЭНЦЭЛ 341.9 ТЭРБУМ ТӨГРӨГИЙН АШИГТАЙ ГАРЛАА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/11/16    

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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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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Mongolia's central bank purchases 7.1 tons of gold www.xinhuanet.com

ULAN BATOR, July 4 (Xinhua) -- The Bank of Mongolia said Wednesday that it had purchased 7.1 tons of gold from legal entities and individuals in the first half of this year, up 6.0 percent year on year.

As of June, the central bank's average gold purchase price was 100.041.97 tugrik (40.66 U.S. dollars) per gram, which corresponds to a low rate on the London Metal Exchange, according to experts from the Mongolian central bank.

The bank's gold purchase is expected to increase with the start of the peak of the gold mining season in August, September and October.

Local gold producers in cooperation with the government have moved to enrich the treasury fund and improve foreign exchange rates over past five years.

Gold miners submitted 20.01 tons of gold to the central bank in 2017, worth of over 800 million dollars.

The central bank launched a five-month campaign "National Gold to the Fund of Treasures" beginning last month.

The country's annual gold production has remained below 21 tons since 2005 when it reached its record high at 25 tons.

Editor: Shi Yinglun

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Mongolia sets out annual wind plan www.windpowermonthly.com

The government of Mongolia hopes to commission at least two wind power projects a year, as it moves to reduce its dependence from traditional energy sources.

The government is currently in talks with some Japanese banks, regarding with the provision of the needed funding for the implementation of these projects.

As part of these plans, a new 55MW site developed by Engie is expected to be commissioned near the city of Sainshand, which is the capital of the Mongolian province of Dornogov, by the end of this year.

The Engie site will become Mongolia’s third operational project.

In October 2017 another large wind plant, the 50MW Tsetsii site was launched in the South Gobi region of the country.

Project partners included Clean Energy Asia, a Mongolia-based renewable energy company established in 2012 as a joint venture between Japansese developer SB Energy and Mongolian infrastructure investor Newcomm.

Currently, Mongolia receives less than 5% of its energy from renewable sources.

However, according to state plans, it is aiming to increase these figures up to 20% by 2020 and by 30% by 2030.

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Agricultural machinery to be bought with loan from Development Bank www.montsame.mn

Ulaanbaatar /MONTSAME/ During the Cabinet’s regular meeting, Minister of Food, Agriculture and Light Industry B.Batzorig reported on progress of spring sowing.

The Cabinet assigned the Minister to buy equipment and machinery made in Russia, China, Belarus, Poland and Germany with loan from the Development Bank, to make cultivation of fallow within its planned period and to ensure preparation for harvest early.

As of today, sowing has been made on 494 thousand hectares of area including 342 thousand hectares for wheat, over 12 thousand hectares for potatoes, 8 thousand hectares for vegetable, 70 thousand hectares for oil plants, 37 thousand hectares for fodder plants, 947 hectares for medicine plants and 386 hectares for fruit and berries.

B.Batchimeg

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Former Rio Tinto exec jailed for corruption in China let free www.mining.com

Former Rio Tinto’s head of iron ore business in China, Stern Hu, has been released Wednesday after spending nearly nine years in prison in Shanghai, following a 2010 conviction for corruption and industrial espionage.

The Australian citizen and three of his Chinese colleagues were arrested in 2009 during contentious iron-ore contract talks between top Aussie miner and the steel industry in China.

Hu’s release comes at a sensitive time for China's business and political relationship with Australia.
The following year, they were convicted of accepting bribes totalling about A$14 million and stealing trade secrets. Fired by Rio Tinto in the aftermath, Hu is expected to return to Australia this week, the Australian Broadcasting Corporation reported.

Hu was originally sentenced to 10 years in prison, but his time was reduced for good behaviour by the Shanghai No. 1 Intermediate People's Court and consequently released more than a year early.

His trail strained relations between Australia and its biggest trading partner, China. It also ended with Rio walking away from a $19.5 billion tie-up with Aluminum Corp. of China, better known as Chinalco, which fuelled speculation that Hu and his colleagues were being targeted for retaliation.

His release also comes at a sensitive time as Prime Minister Malcolm Turnbull’s government has just introduced new laws aimed at curbing perceived Chinese interfering in national affairs. Beijing has denied meddling and even accused Australia of having a “Cold War mentality”.

Rio Tinto has made efforts this year to strengthen ties with China, offering training to leaders of state-run companies and even forming a joint venture with Minmetals, one of the country’s biggest mining companies, to explore for mineral deposits first in the Asian country and then in the rest of the world .

The company is also finalizing details with China’s government and others parties over the planned sale of its stake in the Simandou iron ore project in Guinea to Chinalco, for $1.3 billion.

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USD 460 million agreements signed with entities of Inner Mongolia www.montsame.mn

Ulaanbaatar /MONTSAME/ The Ministry of Foreign Affairs of Mongolia and the People’s Government of Inner Mongolia Autonomous Region jointly held Economic and Trade Cooperation Forum- 2018 today, on July 4. At the forum, 12 agreements worth USD 460 million were signed by bilateral entities, run operations in agriculture, tourism, road and transport and mining sectors.

The forum was participated by officials led by Minister of Foreign Affairs D.Tsogtbaatar, Secretary General of Party Committee of Inner Mongolia Autonomous Region Li Jiheng, Ambassador of China to Mongolia Xing Haiming and President of Mongolian National Chamber of Commerce and Industry B.Lkhagvajav.

Foreign Affairs Minister D.Tsogtbaatar said that trade turnover between the two countries is increasing intensively. Also the sides are intending to bring this growth to USD 10 billion. Trade turnover with China upped by about 30 percent in recent years. Implementation of these agreements signed today will take time to be fully realized, but it is impossible to change agreed cooperation and trade price. Thus this kind of forum has significant importance to Mongolia’s economic growth.”

The forum aimed to introduce investors and businessmen of Inner Mongolia Autonomous Region to Mongolia and to make progress in bilateral economic ties. Mongolia and Inner Mongolia Autonomous Region have common values regarding culture, customs and lifestyle and we consider that it creates favorable business condition. Therefore businesses of Inner Mongolia Autonomous Region make up some 50 percent of business cooperation between Mongolia and China. We intend to study Mongolia’s business trends in the next three years and support for foreign investors, said Setsen, Vice-Director of the Trade Chamber of Inner Mongolia Autonomous Region.

B.Batchimeg

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Russia ramps up yuan & gold share in its reserves www.rt.com

The Central Bank of Russia has boosted the share of Chinese currency and gold bullion in its reserves, diversifying from traditional holdings of foreign exchange assets like the US dollar.

The yuan’s share jumped to 2.8 percent in the last quarter of 2017 from one percent in the third quarter of last year, according to the Bank of Russia report published Monday. The Chinese currency, along with a 17.2 percent share of gold, now make up one fifth of Russia’s reserves.

Russia is buying more yuan assets than other global central banks. With the buying spree of almost $12 billion in the second half of 2018, the Bank of Russia made the yuan share in its holdings much higher than the global 1.4 percent.

Chinese currency has become a more desired asset for Russia since the introduction of sanctions against the country in 2014 by the US, the EU and their Western allies.

Since then Russia has made a pivot to China, signing yuan-ruble swap agreements to boost share of settlements between countries in national currencies.

The majority of the Bank of Russia’s assets are still in US dollars, but the greenback's role is gradually declining. The dollar's share in Russia's reserves fell to 45.8 percent in the fourth quarter from 46.5 percent in the previous three months.

“The rise in the share of yuan assets, albeit still relatively small, reflects Russia’s intentions to diversify away from major currencies,” Piotr Matys, an emerging-markets currency strategist at Rabobank told Bloomberg.

But “it will not be easy for Russia to significantly reduce the share of the dollar in its reserves given that the greenback is still one of the most liquid currencies,” he added.

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