Copper steadies, iron ore price climbs on blockbuster Chinese imports www.mining.com

The price of copper regained its footing and iron ore prices continued the climb on Thursday after customs data showed imports of raw materials by China stayed robust in January after a strong 2017.

Rio shareholders complain over failures to disclose Oyu Tolgoi’s risk profile www.gogo.mn

Later on Wednesday, Rio Tinto will release 2017 profit numbers that will fully underscore its emergence from a relatively penurious decade triggered by ill-starred ambition in aluminium and a concert of global financial crisis and a long post-resources boom bust.

According to Bloomberg, the balance sheet is buoyant and getting stronger courtesy of recovered pricing in bulk commodities markets and a strategy that sees Rio Tinto shrinking itself to further greatness through shareholder-enriching sales of unwanted legacy assets. But the road to recovery at Rio has, over recent times, been potholed by a succession of shocks, the best known of which is the self-reported governance issue in Guinea that cost two senior executives their jobs and has inspired formal investigation by a triptych of securities market regulators. Most recently there has been a succession of challenges on the Mongolian fringes of the Rio empire.

Twice in less than a year, problems on the Chinese border have stopped shipments from the Oyu Tolgoi copper and gold mine and on January 16, the Mongolian government (itself a shareholder in the mine) presented the project operator with a USD 155 million tax re-assessment for the years 2013 to 2015. It has been reported since in London that a major Rio shareholder has complained to UK authorities over failures to effectively disclose Oyu Tolgoi's heavy risk profile and just last week a Dutch anti-multinational lobby published a report into the relationship between the miner and Mongolia that alleged tax minimisation and evasion and described Rio's relationship with its sovereign host as abusive.

Now, given a succession of Mongolian calamities that stretches from the material to the spurious, it is remarkable to us that Rio could find itself accused of refusing to talk to the other really big investor in the Canadian- listed entity that owns Oyu Tolgoi, a project that will have soaked up USD 12 billion of development capital by the time it hits peak output sometime after 2025. Rio's place in Oyu Tolgoi is owned through Turquoise Hill. The Canadian listing owns 66 percent of the project and it, in turn, is 50.8 percent owned by Rio Tinto.

That leaves Rio with a 33.5 percent economic ownership of the mine. The arrangements also leave Rio Tinto as the operator of the mine and the management fees generated by that are shared equally by Rio and Turquoise Hill. The balance of Turquoise Hill is owned by long and short investors and the biggest of those minority shareholders is a San Francisco-based investment fund called SailingStone Capital Partners. It owns 12.16 percent of Turquoise Hill, a position that is presently worth USD 716 million. On Thursday last week, SailingStone went public with simmering frustration over the way Rio expresses control over Turquoise Hill and its mine.

For all that it is openly content with the progress at Oyu Tolgoi, Sailing- Stone is concerned that the management teams of the Canadian company and its mine are universally "bound to Rio Tinto". In a letter to the board of Turquoise Hill, SailingStone complained that management has "no job security, no ability to hire and, based on their tenure at Rio, has likely far more leverage to Rio Tinto's stock price than Turquoise Hill's". SailingStone noted that, until recently, long-term executive and management compensation was paid in Rio Tinto paper rather than that of the Canadian listing. That changed last year as a result of previous

SailingStone lobbying. SailingStone, which is, as we noted, content with outcomes at Oyu Tolgoi but not so much with the way they are being achieved. "We are pleased with the progress that has been made over the last few years in terms of the restart of underground development work, the execution of the project finance facility and the remarkable free cash flow stream generated by the open pit operations through the recent downturn in commodity prices," SailingStone said in opening its correspondence, "It's clear that all stakeholders, including the government and citizens of Mongolia, are benefiting from the activity and investments being made at site. However, we remain concerned about corporate governance, given the potential for conflicts of interest which exist between Rio Tinto, your majority shareholder and the operator of Oyu Tolgoi, and the minority shareholders of Turquoise Hill.

Specifically, we believe that basic corporate governance standards require an independent and informed management team and board of directors. These requirements are particularly acute given the unique relationship between TRQ and Rio, and yet today neither of these conditions is being met." It is worth noting here that the Turquoise Hill board already boasts a majority of independents, that decisions are taken on a majority basis and that all matters involving Rio are dealt with by the independents alone.

SailingStone's concern is that the direct relationship between Rio and Oyu Tolgoi makes it very difficult for the Turquoise Hill board to be fully informed of project progress and options. It is even more concerned that project management owes affiliation to Rio over Turqouise Hill's board. Now, these are patently very complex issues and the commitment by the board of Turquoise Hill to engage with SailingStone is necessary and sensible. The SailingStone letter complained that Rio had refused any and all invitation to discuss concerns over the nature of the global miner's relationship with Turquoise Hill and the risk that its approach oppresses minority owners.

SailingStone singled out Rio's recent decision to open its own office in Mongolia as "explicit acknowledgement of Rio's attitude towards minority shareholders". "They simply don't exist," SailingStone complained. With that, the other largest investor in Turquoise Hill complained that Rio had rejected "numerous requests for meetings, including offering to fly to their London headquarters at Rio's convenience". The fact that Rio is about to launch brand advertising across three of its most important constituencies (Australia, Canada and Mongolia) stands testimony to its acute appreciation of the importance of reputation to its social licence.

Matthew Stevens, Tugsbilig.B

Germany's Daimler issues 'full apology' to China over Dalai Lama www.bbc.com

Daimler has issued a second emphatic apology to China after its subsidiary, Mercedes Benz, quoted the Dalai Lama in an Instagram post on Monday.

IMF sees Mongolian economy as positive in 2018, 2019 www.xinhuanet.com

ULAN BATOR, Feb. 7 (Xinhua) -- The International Monetary Fund (IMF) sees Mongolia's economic outlook "positive" in 2018 and 2019 after its working group visited the Asian country to evaluate the economic bail-out program.

Selling seabuckthorn products on Russian market touched www.montsame.mn

Uvs /MONTSAME/ Representatives of Tyva Republic, the Russian Federation headed by the First Vice-Chairman of the Tyva Government A.V.Brokert worked in Uvs province.

Government struggles to avoid debt obligation over EMC www.gogo.mn

Cabinet held a closed discussion during its regular session last week. Sources claim that the discussion covered the issues concerning Erdenet Mining Corporation (EMC) in connection to the sanction of London Court of International Arbitration (LCIA) on EMC’s operations. According to some sources, the related officials of EMC were ordered to negotiate terms with the Standard Bank of South Africa and seekopportunities to avoid debt obligations.

China, Russia launch years of local cooperation, exchange www.xinhuanet.com

HARBIN, Feb. 7 (Xinhua) -- Chinese President Xi Jinping and his Russian counterpart Vladimir Putin on Wednesday sent congratulatory messages to the opening ceremony of the years of China-Russia local cooperation and exchange.

Jim Mee, 40, from York, completed the 85-mile crossing of Khovsgol Nuur, a lake in north west Mongolia www.dailymail.com.uk

A hardy British adventurer has become the first to ever ice skate across one of the world’s most barren and inhospitable landscapes - despite not having skated for about 20 years.

Jim Mee, 40, from York, said he meant to pack some skating in before Christmas in the run up to his epic challenge last week but he ran out of time.

Instead he blindly tackled an 85-mile crossing of Khovsgol Nuur in north-west Mongolia - the distance climbing to 100 miles when zig-zags to the edge of the lake to camp were taken into account - skating for nine hours a day for three days, in temperatures plunging to minus 47 degrees Celsius.

Last week, 40-year-old Jim Mee from York completed the 85-mile crossing of Khovsgol Nuur, a lake located 362 miles north west of Mongolia's capital Ulaanbaatar, which freezes solid in winter with the ice reaching up to one-metre-thick +15
Last week, 40-year-old Jim Mee from York completed the 85-mile crossing of Khovsgol Nuur, a lake located 362 miles north west of Mongolia's capital Ulaanbaatar, which freezes solid in winter with the ice reaching up to one-metre-thick

Braving bone-shattering winds and temperatures around minus 47 degrees Celsius, Mee skated for nine hours a day for three days with a support team on hand. He is now the first person ever to skate the lake¿s entire length +15
Braving bone-shattering winds and temperatures around minus 47 degrees Celsius, Mee skated for nine hours a day for three days with a support team on hand. He is now the first person ever to skate the lake’s entire length

Luckily his experience on skis served him well and he completed the frigid traverse unscathed.

Mee is now the first person to ever to skate the lake’s entire length. Talking about his accomplishment, the gutsy globetrotter said: 'Skating across the lake posed [lots of] unique difficulties.

'I was nervous it couldn’t be done. I wasn’t sure if the surface of the lake would be smooth enough to accommodate skating. But this method actually proved to be something of a revelation.

'I skated from dawn ’til dusk, nine hours a day, for three days. It’s a very similar motion to cross-country skiing, where you hit a rhythm and just keep going.

But Mee said the pain was all worth it, as the rewards were immense.

He continued: 'There’s no precipitation in this region so the skies are always clear, meaning the sunrises and sunsets were incredible spectacles.

'And just spending so long in such a bizarre, otherworldly landscape was surreal.

Talking about his accomplishment, Mee said: 'Skating across the lake posed [lots of] unique difficulties. I was nervous it couldn¿t be done. I wasn¿t sure if the surface of the lake would be smooth enough to accommodate skating. But this method actually proved to be something of a revelation' +15
Talking about his accomplishment, Mee said: 'Skating across the lake posed [lots of] unique difficulties. I was nervous it couldn’t be done. I wasn’t sure if the surface of the lake would be smooth enough to accommodate skating. But this method actually proved to be something of a revelation'

Rio Tinto pays biggest divvy in history as profit hits three-year high www.mining.com

Rio Tinto (ASX, LON, NYSE:RIO), the world’s No.2 mining company, showed investors Wednesday how well it has ridden the wave of higher commodity prices by announcing a record dividend on the back of a big surge in annual profit and its cost cutting drive.

The company, which admitted is hunting for acquisitions, including in new commodities such as lithium, handed shareholders $1.80 per stock, taking its payout for 2017 to $2.90. The figure is the highest in Rio’s history and almost 71% more than the one it paid last year. As a result, cash returns to investors for 2017 totalled $9.7 billion.

Net profit for the year rose 90% (you read that right) to $8.8 billion, compared to the $4.6bn recorded in 2016. Underlying net profit after tax, in turn, was $8.62bn, up from $5.1bn in 2016, slightly ahead of market forecasts. Analysts expected the company to report $8.5bn.

Rio's largest division, iron ore, delivered the lion's share of revenue, as prices have recovered and remained relatively stable — trading around $75 a tonne — in the past year.

The record results are the first annual report for chief executive Jean-Sébastien Jacques, who took over from former boss Sam Walsh in July 2016.

Under Jacques, Rio has focused on cutting costs, generating cash and returning as much of it as possible to investors through dividends and share buybacks.

"I'm very proud of what the team has achieved. Biggest dividend ever in the 125-year history of the company and we believe that we’ll be able to generate a lot of cash again this year,”Jacques told reporters on an earnings call.

With net debt below $4 billion, Rio Tinto is once again in a position to look for fresh opportunities and projects. But analysts, including Investec’s mining expert Hunter Hillcoat, believe Rio is unlikely to embark on any “multibillion-dollar expansions” to chase mergers and acquisitions or pay a premium for other commodities, such as copper, given the industry’s history of overspending.

“The only way to rebalance their portfolio is to take on additional growth in other commodities like copper, either through acquisitions where they’ll have to pay a premium or through expansion, but they don’t really have too many meaningful growth options there,” Hillcoat told Bloomberg News.

Tainted reputation
Despite the positive results, the company is still battling reputational damage brought by a series of incidents, including a probe into a questionable payment made to an external consultant over the Simandou iron ore project in Guinea.

It is also facing fraud charges from the US Securities and Exchange Commission (SEC), the country’s top securities regulator, related to the miner's and two former executive’s alleged covered-up of multi-billion-dollar losses on a coal investment in Mozambique, allegations which the two men and the company deny.

Rio has also been recently accused of dodging $700 million in taxes at its massive Oyu Tolgoi copper and gold mine in Mongolia.

Government approves cashmere program www.news.mn

The Mongolian government has approved a new cashmere programme to be implemented in two stages over four years. It will help keep the exisiting 5500 jobs in the cashmere sector and to create over 3600 new ones. Regarding the manufacturing capacity of fully processed cashmere, this will be increased final by 5.7 times.