Cabinet plans privatising MIAT and other key state assets www.news.mn

Earlier today, the Mongolian Cabinet discussed privatisation of certain key state entities.

Russia & other countries can demand $3.5bn in compensation from US over tariffs www.rt.com

Turkey, Japan and Russia have calculated how much US tariffs would add to the cost of steel and aluminum exports to America, and submitted their claims to the World Trade Organization.

IPTV accounts for 11.7 percent of telecommunications revenue www.ubinfo.mn

Communications Regulatory Commission of Mongolia informed that the total number of Internet Protocol television (IPTV) users increased to 241.7 thousand by the end of 2017, which is 27.7 percent higher than the previous year.

Mongolia – EU – ILO project on labor launched www.montsame.mn

Ulaanbaatar /MONTSAME/ The International Labor Organization (ILO), government agencies, Mongolian Employers’ Federation (MONEF), Confederation of Mongolian Trade Unions (CMTU) and labour right advocates gathered on May 22 to discuss their joint action on forced labour, child labour and trafficking in persons for labour exploitation.

Rio Tinto to Mongolia: Back Off if You Want More Investment www.investingnews.com

In a presentation at the Mongolia Economic Forum on Monday (May 21), Rio Tinto’s (ASX:RIO,LSE:RIO,NYSE:RIO) copper and diamond chief executive, Arnaud Soirat, handed out advice to Mongolia’s leaders on how to attract — and keep — foreign investment.

In short: stick to the rule of law and don’t meddle in projects, or investors and their money will flee.

Soirat described Rio Tinto’s multi-billion dollar Oyu Tolgoi copper mine as a “test case for future investment in Mongolia,” and noted that the world is watching what the government is doing.

The company has been experiencing difficulties in Mongolia over the last few months, with delays in the construction of an underground expansion weighing down profits. What’s more, it’s faced extra tax bills from the government and changing demands on power supplied to the mine.

The forum Soirat was presenting to was attended by the highest-ranking members of the government, including the president, the prime minister and members of parliament — which has been in dispute with mine operators this year.

Rio Tinto is the operator of Oyu Tolgoi through Turquoise Hill Resources (TSX:TRQ), and the Mongolian government owns a 34-percent stake in the mine.

Soirat was diplomatic in his presentation, schmoozing with Mongolia’s leadership, but delivering a sharp message: hands off.

“There is no doubt Oyu Tolgoi Underground is a complex and difficult project and it will require Rio Tinto’s balance sheet and technological competence to succeed,” he said.

“We are confident we can pull it off but we do need your trust, patience and support, please let us get on with the work of continuing to build a world class business,” Soirat added.

He used Chile as an example of what Mongolia could become in regards to copper production, saying that mining investment can act as a springboard for future diversification.

“Mongolia has all the ingredients to become a successful resource nation and to use her mineral revenue to fuel sustainable, long-term, diversified growth,” he commented.

He said that for Mongolia to maintain a course for success, it must become a stable investing environment with laws that the government abides by.

Further, he said that companies rely on “the sancity of key investment agreements” to ensure stability, and that “fair and consistent application of the law requires working with partners and investors so they have confidence in the system.”

The company will no doubt be hoping the message was heard loud and clear. Rio Tinto has so far invested US$7 billion in Mongolia, and Soirat said that by the end of the ongoing underground development works the company could have invested US$12 billion — more than Mongolia’s annual GDP.

Upon completion of the Oyu Tolgoi underground expansion, the mine is expected to produce 560,000 tonnes of copper a year.

Rio Tinto isn’t the only company Mongolia has been scuffling with; earlier in May, Mongolian Copper fended off more attempts by Ulaanbaatar to nationalize the 49 percent of the Erdenet copper mine that the government didn’t control.

Mongolian Copper Chairman Mukhbaatar Myagmar clearly feels the same way as his fellow miners, having warned previously that the government’s attempts to seize Erdenet could damage the country’s reputation as a place to invest.

Rio Tinto says investors to take stance on Oyu Tolgoi as ‘test case’ www.mining.com

Rio Tinto's copper and diamond chief executive Arnaud Soirat has put pressure on Mongolia to support its planned $5.3 billion Oyu Tolgoi mine underground expansion, saying foreign companies will be looking at it as a "test case" for future investment.

During his presentation at the Mongolia Economic Forum on Tuesday, the executive said the landlocked, mineral-rich country had all ingredients to become a “successful resource nation,” but only if it honoured agreements around issues such as tax and royalty payments.

Speaking to MINING.com earlier this month, Soirat drew a comparison between Mongolia and Chile, the world's top copper producing country whose economy was spurred by foreign mining investment.

The company, which in the last two years has stepped up efforts to find new copper deposits worth of being developed into mines, applied last year for exploration permits in the South American country’s northern region of Arica.

Soirat's comments come after five months of tensions between Rio and Mongolia, which has included a $155 million tax dispute and a corruption probe.
And while Soirat said that given the nature of very early stage exploration there, he couldn’t provide an update on that work, he noted that Chile continued to be a promising area for exploration. He attributed that not only to the country’s proven track record of discoveries, but also to its business-friendly environment — a characteristic Mongolia seems to be lacking.

Rio's board of directors approved an expansion of the massive Mongolian copper, gold and silver mine in the Gobi desert two years ago, but progress has been held back this year amid series of disagreements with the Mongolian government, including differences over taxes owed and a power contract.

In an effort to strengthen up ties with Asian country’s authorities, Rio announced in February the opening of the new office in Ulaanbaatar. Soirat told MINING.com that the team, which will expand to 80 people over the course of this year, has also been given the task to conduct fresh exploration aimed at finding the “next Oyu Tolgoi.”

He noted that the company is currently Mongolia’s largest foreign investor, having ploughed so far more than $7 billion into the first phase of its Oyu Tolgoi mine. Soirat said the company will continue to invest over $5 billion in the country, tied to the underground expansion of the giant project, at a rate of $1 billion per year.

Plans under threat
Those plans, however, risk being hindered as a result of a string of issues Rio Tinto has been facing in Mongolia in the last five months.

First, the country’s government served Oyu Tolgoi in January with a new bill for $155 million in back taxes — the mine's second tax dispute since 2014. Operator Turquoise Hill said at the time the charge related to an audit on taxes imposed and paid by the mine operator between 2013 and 2015. It added it's disputing the assessment.

Shortly after, the southern Gobi Desert-based mine had to declare force majeure after protests by Chinese coal haulers disrupted deliveries near the border.

In February, the government reinstated a decade-old agreement ordering the company to source power for Oyu Tolgoi domestically, a move could raise the costs of the ongoing expansion of mine, a strategic partnership between Mongolia’s government (34%) and Turquoise Hill (66%), of which Rio Tinto owns 51%.

A month later, the Mongolian Anti-Corruption Authority (ACA) asked it to provide financial data related to the mine, in relation to a probe about possible abuse of power by authorized officials during negotiation of the 2009 Oyu Tolgoi investment agreement.

The mining giant is also facing increasing pressure from shareholders about its alleged lack of transparency about pledges to the Mongolian government and escalating costs for the expansion. It has also been questioned about its treatment of minority shareholders at Turquoise Hill.

Oyu Tolgoi was discovered in 2001 and Rio gained control of it in 2012. Soirat noted that, as part of the underground expansion of Oyu Tolgoi, Rio has just finished the Avarga Chamber, one of the world’s largest underground excavations. “It’s as big as five Olympic swimming pools and 1,300 metres underground,” he told MINING.com.

Once finished, the extension is expected to lift Oyu Tolgoi’s production from 125–150kt this year to 560kt of copper concentrate at full tilt from 2025, making it the biggest new copper mine to come on stream in several years.

Millennium Challenge Corporation to grant USD 350 million to Mongolia www.news.mn

The Millennium Challenge Corporation (MCC) of the United States of America will grant non-refundable aid of USD 350 million to Mongolia under the Second Compact Agreement. The agreement was discussed during an official visit by the Mongolian Foreign Minister to the United States.

Public engagement in the stock market intensifies www.ubinfo.mn

In according with the IPOs of the last few months, the number of people engaged in the stock market is increasing. Companies including And-Energy, iTools, and LendMN recently issued an IPO. The majority of the investors were Mongolians, accounting for 98 percent of And-Energy’s IPO, 88 percent of iTools’s IPO, and 44 percent of LendMN’s IPO. Also, Mongolians took part in 82 percent of the secondary market trade.

IMF completes Fourth Review of Mongolia’s Extended Fund Facility www.ubinfo.mn

An International Monetary Fund (IMF) staff team led by Mr. Geoff Gottlieb visited Ulaanbaatar from May 2-17 to conduct discussions on the fourth review of the three-year Extended Fund Facility (EFF).

China Baby Stocks Surge as Government Considers Lifting Birth Limit www.bloomberg.com

Chinese formula and maternity-care stocks jumped after the country was said to be close to ending limits on the number of children a family can have, though the gains could be short-lived as a baby boom seems unlikely.