Mongolia to accelerate joint projects with China www.montsame.mn

Ulaanbaatar /MONTSAME/ Deputy Prime Minister U.Enkhtuvshin exchanged views on the Mongolia-China relations and cooperation with Xing Haiming, Ambassador Extraordinary and Plenipotentiary of the People’s Republic China to Mongolia, on October 30.

MSE share capital goes up www.montsame.mn

Ulaanbaatar /MONTSAME/ The Financial Regulatory Commission (FRC) has raised the share capital of the Mongolian Stock Exchange JSC by MNT20 billion and made changes to the securities registration.

IMF Reaches Staff-Level Agreement on the First and Second Reviews of Mongolia’s Extended Fund Facility www.imf.org

Mongolia’s economy is recovering and GDP growth is now projected at 3.3 percent this year and 4.2 percent in 2018, reflecting buoyant external conditions and improving confidence. Key targets have been achieved.

Important structural reforms are underway to lay the foundations for long-term growth and break the boom-bust cycle. The key near-term focus is supporting the authorities’ policies to strengthen the banking sector and enhance fiscal policy making.
The IMF welcomes the authorities’ commitment to continue the reform momentum to cement the long-term benefits.
An International Monetary Fund (IMF) staff team led by Mr. Geoff Gottlieb visited Ulaanbaatar from October 18-30, 2017 to conduct discussions on the first and second reviews of the three-year Extended Fund Facility (EFF) arrangement approved on May 24, 2017, in an amount equivalent to SDR 314.5054 million, or about US$434.3 million (see Press Release No. 17/193).

At the conclusion of the visit, Mr. Gottlieb made the following statement:

“The economy is growing more strongly than expected, with GDP growth likely to reach at least 3.3 percent this year on the back of strong coal exports, a robust recovery in services, and a return of confidence following the approval of the $5.5 billion IMF-supported package. Growth is expected to become more broad-based in 2018 as the domestic economy revives, but there are downside risks to the coal sector.

“Performance under the program has been positive, with all quantitative targets met. Fiscal results have been better than expected, supported by stronger revenues and tight expenditure control. The overall fiscal deficit is likely to be 7.5 percent of GDP this year compared to 17 percent in 2016. The authorities’ proposed 2018 budget is in line with the revised program that envisages a deficit of 6.5 percent of GDP. The authorities have committed to save half of any revenue overperformance should it materialize, thus helping to reduce borrowing and ensure debt sustainability. The remainder would be used to fund productive one-off spending in line with the government action plan. Both this year and next, the authorities have allocated a one-time bonus to civil servants. Net international reserves have improved, and the authorities have rolled over the sovereign bonds maturing in 2017 and 2018 at attractive interest rates, removing a key risk to the external position.

“The authorities have moved ahead with their ambitious structural reform agenda, which will help to sustain growth over the medium term, promote diversification and competitiveness, and mitigate the boom-bust cycle. The rehabilitation and strengthening of the banking system is underway: the results of the comprehensive Asset Quality Review are expected in mid-December; important legal reforms are being drafted to strengthen the financial system; and improvements to the regulatory and supervisory framework are under way.

“On the fiscal side, steady progress is being made in strengthening tax administration, tax policy, and budgetary controls, including through the establishment of a fiscal council and a high-level working group on tax policy. It is important that the reform momentum is maintained in 2018 to cement the long-term benefits of such policies on promoting inclusive and sustainable growth. In this regard, it is encouraging that the commitment of the new government to the program policies remains strong.

“The authorities and the team have reached staff-level agreement on the completion of the first and second reviews under the EFF arrangement, which is subject to the approval of the IMF Executive Board.

“The team thanks the authorities for their cooperation, constructive dialogue, and hospitality during its stay in Mongolia.”

Camel caravan embarked www.montsame.mn

A Mongolian woman B.Baigalmaa is ready to fulfill her life-time dream of an epic adventure. An opening of her camel caravan “Steppes to the West” was held on October 29 at Sukhbaatar Square.

South Korea's Lotte Corp soars in debut on investor hopes for better returns www.reuters.com

SEOUL (Reuters) - Shares in Lotte Corp, the new holding company for South Korea’s No. 5 conglomerate, soared some 45 percent on their debut above their issue price, bolstered by hopes for better corporate governance and shareholder returns.

Mongolia-EU relations enter new phase www.montsame.mn

Ulaanbaatar /MONTSAME/ EU-Mongolia relations are entering a new phase with the opening of a Delegation of the European Union (the equivalent of an embassy for the EU) in Ulaanbaatar, and the entry into force of the EU-Mongolia Partnership and Cooperation Agreement, said a press release issued by the EU on October 27.

Against this backdrop, the EU Ambassador to Mongolia Hans Dietmar Schweisgut will lead a group of more than twenty ambassadors and senior European diplomats from EU Member States to Mongolia to meet with the country's political leaders as well as representatives of civil society.

"This visit takes place at a timely moment: a new Government is in place, we open an EU Delegation, and the Partnership and Cooperation Agreement enters into force. I am looking forward to discuss with the new leadership of Mongolia how to take our relations to a new level. Now all conditions are in place to step up our political dialogue and cooperation, and to further strengthen our partnership.The EU and Mongolia share many common values: respect for human rights, democracy and the rule of law are the foundation of our relationship," Ambassador Schweisgut said.

The EU Ambassador, together with over 20 ambassadors and senior diplomats from EU Member States come to Ulaanbaatar for their annual meeting with the Mongolian leadership. The objective of these meetings is to take stock of relations between the EU and Mongolia, and to discuss how to strengthen, promote and extend the scope of cooperation between the parties. The visit will also offer an early opportunity to discuss how the EU and its Member States, together with Mongolia, start implementing the Partnership and Cooperation Agreement. We have already made some progress with the first EU-Mongolia Human Rights Dialogue held in March this year. The EU is also looking into possibilities to enhance trade relations, and will discuss Mongolian ideas on how best to assist Mongolia's businesses to better use the EU's GSP+ (Generalised Scheme of Preferences – an EU policy allowing developing countries to pay fewer or no duties on exports to the EU, giving them vital access to the EU market and contributing to their growth). The EU provides development assistance to support Mongolia's authorities in implementing structural economic reforms.

On 1 November 2017, the EU-Mongolia Partnership and Cooperation Agreement (PCA) will enter into force. It provides the EU and its Member States on the one hand and Mongolia on the other with a general framework for expanding their bilateral relations. Its implementation will strengthen political, economic and sectoral cooperation across a wide range of policy fields. It is an expression of our mutual commitment to enhance bilateral cooperation.

The EU Ambassador will also sign the Establishment Agreement that will allow the European Union to open its Delegation in Ulaanbaatar. The Delegation will strengthen the EU's relationship with Mongolia, and is a sign of the EU's long-term commitment to the people of the country.

Xanadu Mines drills high-grade copper below current resource in Mongolia www.proactiveinvestors.com.au

Xanadu Mines Ltd (ASX:XAM) has successfully drilled extensions of high-grade copper along strike and below the current resource at the Stockwork Hill deposit within the Kharmagtai project in Mongolia.

How Asia's Oil Hub Is Going Green www.bloomberg.com

Singapore plans to develop solar power and energy-storage technologies as the oil-trading hub of Asia pushes to generate more of its power from renewable sources.

Aspire Mining to lift cash to advance Mongolian assets www.proactiveinvestors.com.au

The halt will remain in place until Wednesday 1st November 2017. 

Everyone's a Metals Bull as the Global Economic Engine Fires Up www.bloomberg.com

Global growth is on a tear, and that can only be positive for metals prices.

That’s the message coming from the industry ahead of LME Week. For the first time in years, optimism is widespread among traders, smelters, miners and brokers gathering in London, buoyed by a combination of strong growth across the world’s key demand centers, supply curbs in China and a return of investor interest.

"The global economy looks much better than it has done probably since the crisis, maybe before that," said Saad Rahim, chief economist at Trafigura Group Pte, the second-largest metals trader. "I’m pretty bullish."

The upbeat mood shows how much has changed in two years, when the commodities collapse brought the titans of mining to their knees. In September 2015, Glencore Plc was forced to raise money when its stock was cratering, an effort to sooth investors frightened by a staggering debt load. Now, the mining giant has regained its swagger, reaping profits and inking deals worth billions for natural resource assets around the world.

Industrial metals have rallied sharply since the middle of the year. Copper is approaching $7,000 a metric ton, zinc topped a decade high and aluminum has jumped almost 30 percent this year. With that backdrop, macro hedge funds -- once major players on the London Metal Exchange -- are beginning to look again at metals markets, according to brokers.

Metals Demand

“Investor appetite has been increasing for metals since late summer," said Sid Tipples, co-head of metals at JPMorgan Chase & Co.

Volumes on the LME have picked up, hitting the highest level since 2015 in September. Matthew Chamberlain, chief executive of the exchange, suggested there’s further room for growth.

"Before the funds are actually in the markets, they’re working out the best entry strategy and getting ready, and that certainly seems to be the mood music in the market," he said in an interview.

For the first time in years, the outlook for global metals demand doesn’t hinge solely on China. Manufacturing in the euro-area is growing at its fastest pace since at least 2014. This month, the International Monetary Fund upgraded its growth outlook for the U.S., the euro area, Japan and China and said the global economy’s performing at its best pace in the last 10 years.

Metals demand in Europe is picking up on the back of rising demand from the construction and automotive sectors. Codelco, the world’s largest copper producer, raised the premium it charges to deliver metal to European customers for the first time in four years. Forecasters including Bank of China International see further gains for base metals in a period of synchronized global growth.

“The economic outlook is stronger than it has been for a while across the major economies with more consistent growth in Europe, the U.S. and China,” said Tipples at JPMorgan.

While strong global demand is underpinning the optimism, supply issues are also creating pockets of tightness. Glencore’s output cuts helped fuel the zinc rally and Chinese capacity cutbacks have spurred higher aluminum prices.

The supply issues are being felt in corners of the physical metals industry that are largely inaccessible to financial speculators.

For example, the price of alumina, used to make aluminum, has jumped 56 percent since August, according to data from consultancy CRU Group, amid Chinese production cuts that fueled a wave of buying by aluminum smelters.

Lead ore treatment charges, which miners pay smelters to convert the ore to metal, are moving negative. Cargoes of lead concentrates have changed hands at treatment charges of minus $40 a metric ton, traders said, an unusual situation that implies traders are paying more for lead ore than the value of the metal.

On the LME, overall inventories are being drawn down. Stocks of metal in the exchange’s warehousing system have dropped to the lowest since 2008.

"We’ve seen inventory draws across the board on the LME, and the underlying demand picture would suggest those draws are real," said Ingrid Sternby, senior research analyst at Blenheim Capital Management LLP, a commodities hedge fund in London. "The market now is at a point where fundamentals are playing a more important role."

Still, global growth can’t continue at a fast pace forever, said Mark Hansen, chief executive of mid-sized metals trader Concord Resources Ltd.

"I’m concerned we have got into this zone where people think everything is just going to get better and better," he said. "China has just done its Party Congress. We’ve probably reached peak credit creation for this cycle in China."

He warned that miners could respond to the recent rally by adding new production, especially in zinc where prices are trading far above the cost of production.

"Two years ago, things were pretty dreadful for the mining industry. Things are pretty good now. The supply discipline that kicked this rally off can dissipate in the next six to 12 months," he said.