Mongolia president appeals to US for trade to protect democracy www.channelnewsasia.com

ULAANBAATAR: Mongolia's president has appealed to U.S. President Donald Trump for more trade between their countries, saying an economic downturn has threatened to destabilise the young Asian democracy sandwiched between China and Russia.

As copper booms, miners take hunt to Mongolian dunes www.reuters.com

LONDON (Reuters) - When temperatures rise and winds drop in the coming weeks, a band of explorers will hunt for copper riches in Mongolia’s Gobi Desert.

For years Rio Tinto has been the sole international copper mine operator in Mongolia, bound closely to a country where it has bet billions of dollars on the giant Oyu Tolgoi project. Others have steered clear due to the risks of operating in a nation with an unpredictable and young democracy and judiciary, a frail economy and extreme weather.

Now rising global demand for a metal used in electric cars and renewable energy, at a time of increased costs and depleted deposits in the world’s biggest copper producer Chile, is driving miners to riskier locations.

Some are looking to Mongolia.

Geologists say deposits like Oyu Tolgoi - meaning Turquoise Hill because of the staining of the rocks by oxidized copper - rarely occur in isolation. That means, for some miners, the chances of finding another make the east Asian nation worth a calculated gamble, especially given its proximity to the world’s biggest copper consumer, China.

The new charge is led by a group of about half a dozen smaller players, including Australia’s Xanadu Mines (XAM.AX), Canada’s Kincora Copper (KCC.V) and U.S. company Wood Capital Partners, which have higher risk appetites and are seeking to steal a march on competitors.

Wood Capital Partners, set up by two former Citigroup bankers and specialized in acquiring distressed assets, told Reuters it had invested“several million dollars” in exploration territory in the Southern Gobi.

Co-CEO and Managing Partner Stephen Dizard said the firm bought the concession - which is 364 square km, or about six times the size of Manhattan - from a frontier markets fund which was in liquidation.

He wanted to get into Mongolia ahead of a rush driven by the global hunt for new copper. He said miners would become increasingly confident in buying assets in the country because the economy was slowly improving, aided by an International Monetary Fund bailout.

“It (Mongolia) was distressed financially and distressed across the sector,” Dizard added.“We took the view, the situation had to improve. It has.”

Beginning in March and April, he said the company’s drilling budget would be“a minimum of a seven-figure number”.

Sam Spring, CEO of Kincora, said it raised about $4.5 million last year to fund its Mongolian exploration. The company, which has licenses for more than 1,400 square km of land, drilled 6,000 meters last year and results were promising, and that it would step up activity in late March or early April.

“We’ve started to see a change of investor sentiment. There is increasing infrastructure and hopefully we are seeing tailwinds rather than headwinds,” added Spring, who describes Mongolia as one of the last frontiers for top-quality copper assets.

Andrew Stewart, CEO of Xanadu, thinks he will be able to gather enough information over the coming months to determine whether he can justify establishing a mine in the country.

He is planning drilling using four rigs compared with two last year.“Mongolia is very good because it has the prospectivity,” he said.

DESERT LABYRINTH
The dream is another discovery on the scale of Rio Tinto’s Oyu Tolgoi - a chain of deposits in the southern Gobi, about 550 km south of the capital Ulaanbaatar and 80 km north of the border with China.

But even Rio Tinto (RIO.L) (RIO.AX), which is relying on Mongolia to drive growth after committing about $12 billion to the project, only resumed exploration there last year after a five-year hiatus during the copper market downturn.

The Anglo-Australian miner says it has still to make any return on its investment, but in January it announced an exploration office in Ulaanbaatar, its first formal office in the capital.

This was a symbolic move intended to underline to the government its commitment to the country, according to industry sources. Rio Tinto says the office will employ 80 staff and cover technology as well as exploration.

To make up for dwindling output at the open pit mine Rio Tinto is building a labyrinth of underground tunnels that will increase annual output to 560,000 tonnes, about three times current production from the open pit. Ramping up the underground operations will begin around the start of the next decade.

As well as the market downturn, Rio Tinto has had to contend with wrangles with the Mongolian government over taxes and power supply. The mine is jointly owned by the government, with 34 percent, and Turquoise Hill Resources (TRQ.TO) with 66 percent. Turquoise Hill is in turn 51 percent-owned by Rio Tinto.

Rio Tinto CEO Jean-Sebastien Jacques said problems were inevitable but his company was there for the long haul.

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“My personal experience over the last five years is, that you know, lots of issues as you would expect, but each time we have been able to work through them,” he said last month.

“I’m not saying it’s going to be easy.”

-40C TO 40C

Miners and political analysts say that, while the economy in Mongolia is gradually improving, the legal system is opaque and frequent changes in government since the country became a democracy three decades ago have created policy uncertainty, making investors wary.

The Mongolian mining ministry did not respond to Reuters requests for comment.

Miners must also deal with temperatures that can swing from -40C to 40C, and ferocious winds that can last for days. As a result, they tend to limit drilling programs in the Gobi to between late March and November.

By contrast, drilling can take place all year round in Chile and other Latin American countries.

Such considerations have deterred most miners for many years. BHP Chief Executive Andrew Mackenzie, for example, told Reuters his preference was for safe jurisdictions, namely the Americas. He described Mongolia as“potentially very prospective but not without security and geopolitical challenges”.

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But copper market conditions are slowly driving change.

Rio Tinto’s renewed activity and the exploration of rivals comes as demand increases for a metal needed in large quantities for the electric-vehicle and renewable energy industries.

Copper prices CMCU3 have rebounded to nearly $7,000 a tonne from lows around $4,300 a tonne hit in early 2016, which was their weakest since 2009.

At the same time, Chile’s long-exploited ore bodies are ageing and challenged by arsenic concentrations and proximity to large populations. Mine workers there have also been demanding higher wages, adding to costs.

Such is the draw of Mongolia - which has the same type of“porphyry” rock formations - that even Chile’s giant state copper company Codelco has said it is considering investing in the Asian nation.

An advantage of the porphyry formations is that the copper is often accompanied by gold, which can effectively subsidies the copper production.

“Mongolia represents a very prospective region for copper deposits of the porphyry type,” said Jamie Wilkinson, research leader in mineral deposits at London’s Natural History Museum.

“Oyu Tolgoi was found in 2001. There have been some small discoveries since then but nothing on the same scale. There is lots of potential for future discoveries.”

‘NOT FOR FAINT-HEARTED’

However, while there may be geological potential, there is no guarantee of unearthing commercial volumes of copper, and luck is always a significant factor.

The interest from overseas explorers, if sustained, could nonetheless prove crucial for Mongolia itself, which is heavily dependent on commodities and had to turn to the IMF last year following a collapse in foreign investment.

About 30 percent of its 3 million people live in poverty, according to 2016 figures from the World Bank and Mongolia’s national statistical office.

Moody’s raised the country’s sovereign debt rating by a notch in January, following the IMF bailout deal, but it is still deep in junk territory.

The deal has helped the country pay off its sovereign debt and stabilized the local currency, the tugrik, but required Ulaanbaatar to introduce measures such as higher taxes and cuts to social welfare.

Iain Watt, CEO of mining business IGI’s UK operations, said it too was exploring possibilities in Mongolia, as well as central Asia, and that there was clear potential for investors.

“Mongolia is definitely on the up - but it’s not for the faint-hearted.”

Reporting by Barbara Lewis in London; Additional reporting by Terrence Edwards in Ulaanbaatar and Karin Strohecker in London; Editing by Pravin Char

Ch.Khashchuluun: We must increase tax payers not tax rates www.theubpost.mn

The UB Post recently sat down with Dr. Ch.Khashchuluun to discuss in-depth Mongolia’s IMF program, woes in the taxation system, and the mining sector. Ch.Khashchuluun is a professor at the Department of Economics, a member of the Academic Council and the board of the National University of Mongolia. In addition to his teaching, Dr. Ch.Khashchuluun serves as an executive director of the Mongolia Oil Shale Association and is managing a number of non-governmental organizations and research consulting activities. From 2010 to 2011, he was appointed as the inaugural chairman of the board of directors to lead the establishment of Development Bank of Mongolia, and from 2006 to 2012, he was a member of the board of directors of the Central Bank of Mongolia.

It has been almost a year since Mongolia entered into the extended fund facility with the International Monetary Fund. There were a lot of expectations at first. Do you believe that those expectations were met and what is your evaluation of the program so far?

The extended fund facility is a program that is usually undertaken in countries that are in a very difficult place economically. The purpose of the program is not only to address the short-term problems but to implement long-term reform to treat the systematic issues that plague an economy. In late 2016, our economy was in a very difficult position and international confidence in Mongolia’s economy was very low. At that time, the balance of payments was in a deficit, the foreign exchange reserves were depleted with some reports even indicating that the reserve was in a deficit. To top it all off, the fiscal deficit was at a very high level. As a result of all this, confidence in Mongolia’s economy and its direction was at an all time low.

Therefore, my personal view is that the IMF program has had very good results in the one year it has been implemented. Firstly, the fiscal deficit was decreased significantly. Second, the reform of the taxation system has begun to be undertaken. Third, the foreign exchange reserve reached its highest levels in the past five years, surpassing three billion USD.

In addition, the tugrug has began appreciating for the first time in a few years, stopping a period where the tugrug depreciated consistently. Another positive has been the balance of payments, which has recovered significantly from a deficit to a surplus. Exports have also surged notably, helping to drive GDP growth above expectations. While it is true that the global and foreign market forces were a large factor to GDP growth, the Mongolian government was able to correct many aspects of the economy through policy, including the financial sector and the fiscal deficit.

Another positive change is the growth of the Mongolian securities market and most notably the twofold growth of the Top 20 Index on the Mongolian Stock Exchange.

Based on this, I think many would say that Mongolia was able to exceed the expectations that were there when the program began.

When the Mongolian government was in discussion to enroll into an IMF program, there was no shortage of criticism. Whether it was criticism of the IMF’s past experience in countries such as Greece or its role in the Asian Financial Crisis or the supposed neoliberal ideology of the organization. Would you say this criticism was or is warranted?

IMF’s policy nowadays is very different from its policy in the 1990’s. This is evident through IMF’s full-fledged support of the United Nation’s Sustainable Development Goals.

In fact, the countries that adopted the Sustainable Development Goals were provided a new credit line by IMF.

In the past, there was this notion that the foundational goals and policy of IMF and the UN were inherently different. On one hand, IMF touted a neo-liberalist policy while the UN prioritized economic growth and reducing poverty. This disconnect has essentially been eliminated and the policy of the UN and IMF is much more intertwined.

Now the UN, IMF, and most of the world has found common ground with three principals that include maintaining a low fiscal deficit for a country, creating or sustaining economic freedom, and reducing poverty through economic growth.

When criticizing IMF, many people like to bring up the example of Greece. But in reality, Greece did not fulfill its obligations to IMF. Another criticism of IMF is the Asian Financial Crisis, where supposedly several economies including the South Korean economy were hit significantly. Many fail to point out that because of this crisis, South Korea was able to undergo major economic reform and modernize its economy, becoming the economic power we know today. South Korea was able to become a global leader in the production of crystal LED screens and some of this can be attributed to IMF.

The aim of IMF is not to sabotage the economies of developing countries. The harsh truth is that countries must know their limits, meaning they cannot borrow too much and must keep their fiscal deficits low. This is not received well by many people, including politicians who want free reign to spend public money but are limited by an IMF program, this results in criticism that IMF is “dictating” Mongolia’s economy. Those who prioritize sustainable economic and financial growth understand that working together with IMF is crucial.

The results of the asset quality review that was undertaken on 14 commercial banks in Mongolia as part of the extended fund facility was recently revealed. The central bank reported that banks had a cumulative capital shortfall equivalent to two percent of GDP. This has been noted as relatively high but in line with Mongol Bank’s forecast before the review. How do you see the results of the review?

When taking into account the Mongolian economy, IMF had to focus a lot on the banking sector. This is because the banking system dominates the nation’s financial market with a 95 percent market share. The recent asset quality review went very in-depth compared to previous studies. The result of the review was considered in general to be satisfactory.

Of course, there are issues that need to be addressed and they will be in due time.

Mongolia has a lot of smaller banks and in some ways this has held back the development of the banking sector as a whole. I believe there will be mergers of banks to a certain extent in the near future. There is no need for a bank that is too small. Moving forward, the role of non-banking financial institutions will likely increase. In fact, some large non-banking financial institutions have outgrown some smaller banks.

Overall, the asset quality review was a very good thing for the banking sector. It helped clear up a lot of uncertainties including the effect of previous policies by the central bank. Moving forward, it is looking like the central bank will be maintaining a traditional monetary policy. The review revealed that the banking sector was stable overall, this allows Mongol Bank to set high standards such as requiring banks to implement the Basel III framework instead of the Basel II.

In addition, the size of banks will likely be increased in the future as the sector requires bigger players.

Cabinet recently introduced a tax reform bill that intends to offset the pressure on businesses and attract foreign investment. You have been a notable critic of Mongolia’s current tax system, specifically the uneven collection of taxes. How do you see the most recent proposed changes? Is it a step in the right direction?

Mongolia’s tax system has been reformed and changed a lot over the years. The current one in place is what has been dubbed the four tens system, which has been in place since 2006. This system has been successful in its own right, helping to increase tax revenue beyond expectations and contributing to the decrease of the fiscal deficit.

The VAT reform also helped reveal a lot of the hidden economy.

With all of that being said, the tax system must inevitably be reformed in the future. That reform needs to be based on several principals. The first is to be more business friendly and that is being discussed to a certain extent in the most recent bill by Cabinet. The prime minister and finance minister have done a good job to get feedback from businesses and making appropriate changes based upon that feedback. Previous negotiations with IMF resulted in changes to taxes that put a lot of tax pressure on an individual. This was corrected and it is a good thing that it was corrected.

One of the most important aspects of tax reform that must be taken into account is the issue of even distribution of taxes. We must look to not increase the rates of tax but to increase the number of taxpayers.

There are three groups of people whose income is not being taxed adequately. The first group of people are merchants who mainly resell goods. There is a perception in Mongolia that merchants are just an individual selling goods but in reality those merchants have operations on the same levels as some companies.

There are several official automobile distributors such as Munkhada operating in Mongolia. On the other hand, there are merchants that are able to sell 300 Toyota Priuses in a year, which is probably not much less than Munkhada’s sales. The difference is that Munkhada is paying all of its taxes including its employee’s social insurance fee, its income tax, and a variety of other taxes.

Meanwhile, the merchant is only subject to customs tax and the government is not able to get much else from them tax wise. This system has to change and I would imagine it is not too difficult to bring that change. Unfortunately, this issue does not only pertain to automobiles.

The second issue in the tax system is the Immovable Property Tax. Currently, a lot of land and immovable property is not in circulation or being maximized to its potential as people are keeping hold of it in hopes to sell it at a high price in the future.

Third and finally, we must talk about livestock. It is said that livestock is Mongolia’s wealth. All livestock is privately owned by herders. These herders can be classified into two groups, the poor herders and the herders with high income.

Since 2008, herders that have less than 200 livestock are considered poor. As the number of livestock increases, the income of the herders increase. Those who own more than a thousand livestock, called “myangat malchin” in Mongolian, now tend to have a higher annual revenue than an average Mongolian company, this is the reality. This is a big error that needs to be corrected in the system.

For example, let’s say a doctor makes 800,000 MNT per month, they probably will only receive 70 percent of that after various taxes. A household of a myangat malchin makes probably around 10 times more than that, but the difference is that it is not taxed.

In addition to not having to pay taxes, many myangat malchin receive subsidies and tax breaks while also receiving pension. This is an unfair system. In terms of poor herders, it is right for the government to support and aid them.

However, regarding herders that own more than one thousand livestock are using state-owned pasture, roads, and water to profit. It is only right that the government receives a portion of that profit.

All mining companies pay royalties to the government. Do you propose that herders have one as well?

Yes, much like the royalty in the mining sector. Herders should have to pay a certain percentage to the government for using state-owned resources for profit.

Through reforms in the tax we could correct this error in the system and help to monetize land better in addition to helping slow down desertification. Studies show that 99 percent of the environmental damage in Mongolia is caused by livestock. The number of goats in the country has increased significantly and goats cause a lot of desertification through overgrazing. The current agricultural sector prioritizes quantity over quality when it comes to livestock.

But we saw how susceptible Mongolian livestock is to diseases such as foot and mouth disease. This cannot be left alone as a herders’ issue. If left alone, herders are not incentivized to vaccinate or install chips in their livestock. This in turn makes Mongolian meat impossible to export as international standards require the genealogy of animals to ensure that livestock is disease-free.

Livestock products are Mongolia’s second largest export but let’s shift topics and discuss Mongolia’s biggest export, mining products. For the most part, Mongolia exports raw natural resources that have not been processed and as a result are relatively cheap. How do you think this issue can be addressed? What is the government’s role in changing this?

The mining sector is in many ways similar to a lot of other sectors. One unique aspect is that it is a sector based on natural resources that are extracted. The issue is simple, Mongolia has two choices, either export those extracted resources immediately without processing or to refine the products and sell them at an added value.

Looking at Mongolia’s current tax and export policy, there is nothing to support refinement over exporting raw resources.

Since there is no measure that requires or supports refining mining products, it is both easier and cheaper to export raw resources. The value-added production is then left to China, who gets the profit of the value added after refining the product. There are only a few mining companies that refine their products before export, that is Oyu Tolgoi and Erdenet for copper and Energy Resources LLC for coal.

In terms of coal, Mongolia has the capacity to refine the extracted product before export, but beginning from the state-owned coal companies to the private coal companies, none of them process their coal.

In order to address this issue, an export tax could be imposed to economically incentivize value-added production. For instance, a 10 USD export tax could be imposed on every ton of raw coal exported.

Currently, only 1,000 MNT is imposed for every ton of coal exported. This will make refining the product more profitable than just exporting raw coal. Moving forward, an export tax will need to be imposed on iron ore, coal, and possibly even petroleum.

Tomsk regions boost oats exports to Mongolia www.rusexporter.com

Tomsk, Siberia, producers of oats boosted their exports to Mongolia 20 times in January and February 2018 from the first two months of 2017, the Russian Agriculture Supervision Directorate for Tomsk Region said.

Mongolia can make MNT 2.2-4.3 trillion by implementing 'Cashmere' program www.montsame.mn

Ulaanbaatar /MONTSAME/ Mongolia will implement 'Cashmere' program for 4 years with two stages.

Biocombinat expansion project expected to commence this June www.montsame.mn

Ulaanbaatar /MONTSAME/ Mongolia and Hungary have agreed to make active efforts to launch the Biocombinat expansion project in June this year.

Nariin Sukhait railway- on track for 2018 completion www.news.mn

The Mongolian government is planning to conclude some major infrastructure construction projects during 2018. Among them are the 45.3 km railway from the Nariin Sukhait mine to the Shivee Khuren border crossing and airport extension projects in Khovd, Dornod and South Gobi (Umnugobi). The current status of work has been discussed by parliament.

Russia and China to work on joint uranium mining project www.mining.com

Rosatom announced on Monday that the Russia-China Investment Fund for Regional Development will kickstart the financing for a uranium mining project in Russia’s Zabaikalsky Territory.

Mongolia Strengthens Cooperation With Russia in Fields From Nuclear Research to Transit Rail www.jamestown.org

When Khaltmaa Battulga assumed the presidency of Mongolia in July 2017, most foreign and domestic observers believed he would pursue a much more pro-Russian policy than his globalist-minded predecessor, Tsakhia Elbegdorj. Battulga’s anti-Chinese rhetoric buttressed this prediction during the political campaign, followed by his first trips abroad to meet Putin at the Hungarian 2017 World Judo Championships (Kremlin.ru, August 28, 2017) and in Vladivostok, Russia, later in September. Among his “Mongolia First” principles was the promise of stronger ties with Moscow to alleviate Mongolia’s overwhelming economic dependency on China (UB Post, September 12, 2017). In the last few months, further concrete steps toward a closer Russo-Mongolian relationship have become evident.

During the 21st Meeting of the Mongolia-Russia Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation, held in Moscow, on February 26–28, Mongolia and Russia agreed to expand cooperation in trade, economy, education, health, social protection and sports. One of the major agreements that emerged was a Memorandum of Understanding to establish a Nuclear Science and Technology Center (CNST) in Mongolia. Mongolia’s Nuclear Energy Commission Secretary Gun-Aajav Manlaijav and Rosatom’s (Russia’s State Atomic Energy Corporation) Deputy Director General for International Relations Nikolay Spassky signed the document (Xinhua Net, March 1). The center’s primary focus will be civil nuclear energy use, with Russian specialists assisting their Mongolian partners to establish the CNST facilities, as the two sides design a preliminary roadmap for the CNST project via specialized expert groups (Rosatom, February 28). Mongolian physicists for the past 50 years have been trained at Russia’s Joint Institute for Nuclear Research (JINR). The Nuclear Energy Agency of Mongolia, along with the Center of Nuclear Research at the Mongolian State University and the Institute of Physics and Technology at the Academy of Sciences are traditional JINR partners in Mongolia (Jinr.ru, March 7).

During the same timeframe, an interbank lending agreement between the Development Bank of Mongolia (DBM) and the International Investment Bank (IIB), headquartered in Moscow, was also concluded. The deal raised the IIB’s lending limit for the DBM to 50 million euros ($62 million) for a period of up to seven years to implement socially and economically significant projects in Mongolia. Since 2012, the total volume of IIB investments in the Mongolian economy has amounted to over $650 million. Starting from November 2016, the DBM has executed 24 trade finance deals to supply 8.6 million euros’ ($10.6 million) worth of products from the Czech Republic, Japan, Oman, Switzerland, Russia, Belgium, Spain and Germany to Mongolia. The IIB’s loan portfolio in Mongolia includes syndicated loans with the International Finance Corporation and the Dutch Development Institution FMO (Iib.int, February 28).

On the eve of the intergovernmental commission meeting, Russia and Mongolia agreed to a plan to create three trans-boundary protected areas in the Trans-Baikal region, Buryatia and the Altai Republic. This plan is a positive step toward deescalating a variety of trans-water disputes in the Baikal region, which led to Russia labeling Mongolia an “eco-threat” (Siberiantimes.com, May 13, 2016). According to Sergey Donskoy, the Russian minister of natural resources and ecology, the first cross-border reserve of Istoki Amura would connect more than 318,000 hectares of the Zabaykalsky Krai’s security zone, the Sokhondinskii reserve, with the Mongolian National Onon-Balwinski Park. The second cross-border territory would be in Buryatia, located within the Russian Tunkinsky National Park and the Mongolian Khubsugul Park. The third border area would stretch from the Saylyugemskiy Park in the Altai Republic to the Selham reserve in Mongolia. The establishment of joint protected areas will enable the two countries to conduct long-term ecological monitoring of certain species of migrating animals across the borders and to protect flora and fauna (RIA Novosti, February 28).

Just a week earlier, Russian Prime Minister Dmitry Medvedev authorized his minister of transport to sign a railway transit transportation agreement with Mongolia to promote flexible tariff policy over the next 25 years with the purpose of enhancing cooperation on freight transportation trade. The objectives of this new agreement include easing border checkpoint procedures on transit freight, increasing freight volumes, stimulating infrastructure development of railway transport and assisting Mongolian exporters to overcome maritime transport obstacles (Ubinfo, February 28). One of the clauses covers modernization the infrastructure of the Ulaanbaatar Railway (UBR), a Russian-Mongolian governmental 50/50 joint venture, which is Mongolia’s sole north-south railroad connecting Siberian Russia to North China. Freight turnover in 2017 for the UBR was 23 million tons, a 16 percent increase from 2016 (UB Post, February 5). The Russians reported that the draft agreement on renovating the UBR was prepared by the Mongolian side and presented to them at the end of 2017. Early in February, Oleg Belozyorov, the president of Russian Railways (RZD), met in Ulaanbaatar with President Battulga and his cabinet to discuss the draft document on reforming the UBR as part of Mongolia’s goal to become a cost-effective economic transit corridor, especially for its two border neighbors, Russia and China. During the meeting with Belozyorov, Battulga said that railways development was of great significance for Mongolia’s economic growth and proposed to advance the talks on renovating the Ulaanbaatar Railway JSC (Montsame.mn, February 5).

The railroad transportation agreement was the culmination of September 2017 discussions between Battulga and Putin at the third annual Eastern Economic Forum in Vladivostok. Although the economic corridor was the policy of President Elbegdorj (see EDM, January 24, 2014), Battulga enthusiastically embraced it and promised to export coal from Mongolia’s largest coal deposit of Tavan Tolgoi to third markets over Russian Railways. In Vladivostok, the Mongolian president also put forward a proposal to establish a free trade agreement with countries of the Eurasian Economic Union to maximize trade turnover with Russia and abolish tariffs and non-tariff obstacles (Mongol Messenger, September 8, 2017). In May 2017, the UBR restarted its transport of Russian oil from Rosneft and Transoil from Russia to Chinese customers. The two oil companies had suspended the transportation since 2005. The revival is connected to China’s One Belt One Road initiative, which promises to include Mongolia in its economic network linking Asia and Europe, as well as developing Mongolian transit infrastructure to Russian Siberia with Chinese loans (Ubinfo, February 28).

China to become co-owner of Russia's biggest oil company www.rt.com

Chinese state-controlled Huarong Asset Management has bought a 36.2 percent stake in the unit of CEFC China Energy through which CEFC is acquiring a $9.1 billion stake in Russian oil giant Rosneft.