Mongolian Chess Federation named as best organizer federation of Asia - 2017 www.montsame.mn

Ulaanbaatar /MONTSAME/ The Mongolian Chess Federation received the award ‘Organizer of the Year’ at the 4th Annual Asian Chess Excellence Awards in Al Ain, the United Arab Emirates on December 23.

December 25, 2017 trading report www.mse.mn

On December 25, 2017, 1,194,522 shares of 29 firms listed as Tier I, II, and III were traded. 12 companies’ shares increased in price while those of 17 companies decreased. Nogoon Khogjil Undesnii Negdel /JLT +14.95%/, Jinst Uvs /JIV +14.94%/, and Remicon /RMC +13.49%/ were the top performers whereas Uvs Chatsargana JSC /CHR/ was the worst performer, decreasing 15.00 percent.

Centerra Gold Files Technical Report for Gatsuurt Project www.centerragold.com

Centerra Gold Inc. (TSX: CG) today announces that the Company has filed on SEDAR a Technical Report, entitled “Technical Report on the Gatsuurt Gold Project, Mongolia” dated December 22, 2017 with an effective date of October 31, 2017. The report was prepared in compliance with National Instrument 43-101 – Standards for Disclosure for Mineral Projects. The Technical Report supports the disclosure of the mineral reserves and resources for the Gatsuurt Project contained in Centerra’s news release issued on October 31, 2017. The report also provides further information on the project’s mineral reserve and mineral resource estimates, an updated life-of-mine plan, expected grades and recoveries, development plans, mining methods and metrics including strip ratio, recovery process and production expectations including expected cash flows, capital cost estimates and expected life-of-mine operating costs. The Technical Report was prepared for Centerra by Mr. Chris Sharpe, P.Eng., Kevin P.C.J. D’Souza, C.Eng. and Boris Kotlyar, P.Geo. (each of whom is an employee of Centerra or a subsidiary of Centerra), Mr. Tommaso Roberto Raponi, P.Eng. from T.R. Raponi Consulting Limited, Mr. Lars Weiershäuser , P.Geo. from Roscoe Postle Associates Inc., Mr. Igor Bojanic, from Runge Pincock Minarco, Mr. William Pitman, P.Eng. from Adiuvare Geology and Engineering Ltd. and Mr. Christopher Jacobs, C.Eng. from Micon-International, who are the qualified persons for the technical report for the purposes of NI 43-101, under the supervision of Gordon Reid, Professional Engineer and Centerra’s Vice President and Chief Operating Officer.

Parliament discusses key issues before the end of the year www.mongolia.gogo.mn

Parliament established a Budget Sustainability Council during its December 22 plenary session.

The council will mainly focus on researching and analyzing the coherence of the state budget and its amendments, drafting recommendations for legislators, reviewing mid-term budget announcements, and developing the economy and society with amendments to the Law on Fiscal Stability.
Amendments to the law will be focused on ensuring the sustainability of the state's budget and financing, as well as the efficacy of the state budget. The council will consist of chairman and eight staff members. Parliament supported proposed customs and value-added tax exemptions for certain energy imports upon their first review.
The exemptions will reduce import costs for state-owned Western Energy System's energy imports from China and Russia through January 1, 2021. During the session, the Governor of the Bank of Mongolia N. Bayartsaikhan spoke about reducing the foreign currency exchange rate and strengthening the purchasing power of the tugrug.
The BoM stated that it agreed with MP T. Ayursaikhan about disabling foreign exchange accounts except for those held by entities, individuals, banks, and non-banking financial institutions that have forex income, but the BoM noted that the process should be carried out through market mechanisms rather than a direct ban.

26,800 tons of meat exported in 2017 www.mongolia.gogo.mn

In 2017, 26,800 tons of Mongolian meat was exported at a value of 111 billion MNT.

Due to the spread of infectious livestock disease, China only imported horse meat from Mongolia. China's horse meat imports (18 tons out of 24 tons exported) increased the nation's overall meat export by three percent over 2016.
Beef export (560 tons) was only carried out with Russia. In total of 2,400 tons of lamb was exported to Iran and Qatar. Twelve companies had special permits for exporting meat to China renewed.
Chinese officials stated that new special permits will be granted in 2018 after the cancellation of quarantine procedures in three Mongolian provinces.

Legal status of Ulaanbaatar under review www.theubpost.mn

Parliament’s State Structure Standing Committee and the Ulaanbaatar Mayor’s Office hosted a discussion on the amendments to the capital’s legal status on December 20 at the State Palace.

Only 8 percent of workers will be affected by personal income tax increase says Minister of Finance www.theubpost.mn

Coming into effect on January 1, 2018 five new tax will be increased as agreed upon with the International Monetary Fund. The biggest and the most controversial tax increase is the personal income tax.

Starting in 2018, the personal income tax will increase to 15 percent for those earning above 1.5 million MNT. Business owners and miners alike have been opposed to the decision and have staged public protests. Finance Minister Ch.Khurelbaatar took questions from the media at a recent press conference leading up the tax increase.

The decision to increase the personal income tax for high-income individuals was made earlier this year. Many are opposed to this decision. Even some Parliament members are saying that we need to reconsider this issue. What is your stance on this issue?

There are two sides to the issue. In April of this year, Cabinet proposed to Parliament to increase taxes and Parliament ultimately decided. People are only focusing on the highest rates. The tax rate will vary from 10, 15, 20, and 25 percent depending on which tax bracket an individual falls into.

However, 92 percent of workers will pay the 10 percent they have been paying. Therefore, only eight percent of Mongolia’s workforce will be included in the tax increases. On the other hand, those that earn the lowest will have less burden. Depending on inflation and the fluctuations in the exchange rates, the group that earns the lowest suffers the most. This is why we have taken this measure.

The taxes were agreed to be increased as part of Mongolia’s enrollment into the extended fund facility with the International Monetary Fund (IMF). As some Parliament Members have brought up the issue, if we do not increase taxes, would it be a breach of agreement?

Mongolia enrolled into the IMF program in April of this year. Shortly after, the program came to a standstill due to the government providing 100 percent of the child money allowances. A week ago, the Executive Board of IMF reviewed Mongolia’s progress for the extended fund facility and said the program was being implemented successfully.

IMF told us that there was an opportunity to improve the economy and erase debt. If we amend the tax increases now, it will mean going back on what we agreed upon with IMF. Outside of the personal income tax, the tax on alcohol and tobacco is increasing also. I believe many would support this increase. Alcohol is the main cause of various crimes. I imagine very few would protest this increase. Only alcohol producers are protesting this decision.

Will a new type of tax be introduced in 2018? For example, there was a proposal to legislate a tax on livestock. Can you elaborate on this possibility?

We will not be creating any new taxes. In the 2016 election, the Mongolian People’s Party promised to not create any new taxes. It is possible for us to operate within the tax law we have in place right now. Preliminarily, we will focus on improving the fiscal discipline of Mongolia and spending the assets from the state budget wisely. We have the full opportunity to decrease the budget deficit while also improving the financial and fiscal management of Cabinet.

In the past, the government has stored its money and assets in commercial banks and has had to pay an exorbitant amount of money on interest rates for high interest loans to get it back. Since being appointed as Finance Minister, I have not decreed for loan from commercial banks. Funds from foreign aid and assistance that are being used for the implementation of projects will be transferred from commercial banks to the State Treasury Fund. It has not been easy; we have been receiving a lot of pushback. In addition to all of this, we have to monitor the budget spending.

There is a necessity to fully implement the glass account law. All transactions conducted from the state fund must be placed in the glass account. As of right now, all of the projects have been registered in the glass account. At this time, the government has not cut back on its wasteful spending and the financial and fiscal management of Cabinet has not reached a level where taxes can be feasibly increased. We are of the mindset of implementing all of the previously mentioned measures and then taking a look at Mongolia’s internal assets and opportunities.

As part of the budget amendment to the 2017 state budget, all civil servants will be provided with a one-time bonus of 300,000 MNT. At a time when this was being discussed, you said that the bonus would be tax-free. Yet now, civil servants will receive 250,000 to 270,000 after taxes. How did this situation come about?

In the amendment to the 2017 state budget, initially Cabinet proposed to provide a one-time 300,000 grant to all civil servants. When it went to Parliament, it was rebranded as a bonus, most likely due to the climate of Mongolia’s society at the time. The law states that bonuses are subject to a social insurance fee and the personal income tax of 10 percent must also be imposed.

The controversy surrounding Mongolia’s placement in the EU’s tax haven blacklist still hasn’t died down. Is this issue being discussed in Cabinet?

Cabinet will discuss this issue today (December 20). The Finance Ministry is working to improve transparency through reform in the General Law on Taxation, Law on Personal Income Tax, and Law on Corporate Income Tax. This will allow information regarding any foreign nationals registered at Mongolian banks to be reported through the taxation office.

In addition, we will also need to undertake legal reform regarding the shareholder information of foreign nationals in companies registered in Mongolia.

Is it true that a special ambassador will be appointed to resolve this issue?

From what I know, the Foreign Minister is discussing this issue and will be appointing a special ambassador. Ambassadors from various countries, the World Bank and IMF have all expressed regret at Mongolia’s placement in the blacklist. They have expressed that Mongolia is a developing country and it is unfortunate for Mongolia to be included in the blacklist at a time when the Ministry of Finance is taking measures to alleviate the issue. There is now the issue of why the possibility of a blacklist was not mentioned to the Finance Minister at the time or an ambassador at the very least. However, I concede that we do need to improve our legal environment.

'Chinggis Khaan' - the opera to be performed in Seoul www.news.mn

Yo.Baatarbileg, head of the parliamentary standing committee on social policy, education, culture and science received South Korean honoured director Pae Gyong Hwang on 22 December at the State House in Ulaanbaatar.

Capacity of wastewater treatment plant in Darkhan to be increased 2.5 times www.montsame.mn

Ulaanbaatar /MONTSAME/ Inaugural ceremony of a project to renovate wastewater treatment Plant in Darkhan city was held on December 21. 

Oil discoveries at lowest point since the 1940s www.rt.com

The oil industry discovered the least amount of oil in 2017 in almost eight decades, breaking the previous record low set in 2016.

The global oil industry has discovered less than seven billion barrels of oil equivalent so far this year—a drop-off from the eight billion boe discovered last year. Last year’s total was the lowest since the 1940s. The 2017 figure is down by more than half from the 15 billion boe discovered in 2014-2015, and down sharply from the 30 billion boe discovered in 2012.

The plunge is the result of a third consecutive year of relatively low upstream exploration budgets. So many oil companies slashed their spending on exploration when the market downturn began in 2014, and they have yet to restore that spending to anything close to pre-2014 levels.

“We haven’t seen anything like this since the 1940s,” Sonia Mladá Passos, Senior Analyst at Rystad Energy, said in a statement. “The discovered volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined)—compared to over 50 percent in 2012.”

The reserve-replacement ratio measures the volume of oil that is discovered relative to what is produced in a given year. The idea being, the industry needs to discover 100 percent of what it produces in order to avoid a decline in reserves.

Rystad Energy says that 2006 was the last year in which the industry posted a reserve-replacement ratio above 100 percent. The implication is that the world is burning through oil at a faster rate than the industry is discovering new reserves.

Moreover, Rystad says that the volume of resources per discovered field also declined in 2017. For instance, the average offshore discovery in 2012 held roughly 150 million boe in 2012, a figure that fell significantly to just 100 million boe this year. That matters because smaller fields tend to be less economic, and may not be enticing enough to be developed at all. “Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over one billion boe discovered during 2017 might never be developed,” Rystad’s Passos said.

In terms of location, the top three countries for discoveries in 2017 were Senegal, Mexico and Guyana. Kosmos Energy discovered the Yakaar gas field in Senegal, which could transform West Africa into a notable LNG exporting region. Talos Energy discovered the Zama field, adding roughly one billion boe in recoverable resources in Mexico. Meanwhile, ExxonMobil added another one billion boe to its resource base in Guyana this year, the latest in a string of discoveries in the South American nation.

Still, there wasn’t too much else to write home about. The massive cuts to upstream spending could leave a gaping hole in supply in the future.

Because large conventional discoveries typically take years to develop, it is not as if the shortfall will be felt immediately. Even the past several years of paltry discoveries probably won’t lead to supply problems for quite a while.

There are still large stocks of crude oil in storage, and US shale will continue to grow at a blistering pace into 2018. Beyond that, OPEC has quite a bit of surplus capacity sitting on the sidelines. It might not be until the 2020s until the lack of discoveries starts translating into supply issues.

“While there have been some notable successes this year, we have to face the fact that the low discovered volumes on global level represent a serious threat to the supply levels some ten years down the road,” Rystad’s Passos said.

“Global exploration expenditures have decreased year-over-year for three consecutive years now, falling by over 60 percent from 2014 to 2017. We need to see a turnaround in this trend if a significant supply deficit is to be avoided in the future.”

That echoes the repeated warnings from the IEA, which recently predicted that despite the expected massive growth from US shale over the next decade or so, shale won’t be able to carry the load all on its own.

Shale “cannot increase indefinitely,” the IEA said in its 2017 World Energy Outlook. The IEA also noted that about 2.5 mb/d of supply is lost each year due to depletion, a gap that must be made up with new projects. And the impact of “near-record lows of new conventional oil projects receiving approval in recent years has yet to be fully seen.”