On March 9, the Governor of the Bank of Mongolia Mr. Lkhagvasuren presented on the current economic situation to the journalists.

-What measures are taken to reduce and cover the current account deficit by the Bank of Mongolia?

Last year, the current account and payment deficit reached about USD 720 million. According to the projection, it was supposed to be USD 1.8 billion but decreased to USD 700 million at the end of the year. This deficit reduction was mainly driven by coal export. As of the end of 2022, a total of 31 million tons of coal were exported and it resulted in a decrease in the payment deficit, especially in the current account deficit. Another way to reduce the current account deficit is improving the service sector, in particular transportation services. With the stagnation in the mining sector, the transportation sector tends to become stagnant as well. In this sense, even though the Mongolian economy increased by 4.8 percent, the mining and transportation sector showed a decline.

If the production and export of the mining sector improve, the transportation sector will revive. In particular, the current account deficit of the service sector can be reduced if domestic companies and enterprises carry out the mining transportation. To that extent, it will reduce the payment deficit. Another positive impact could be an increase in foreign exchange reserves which will be resulted in stabilizing the foreign exchange rate.

According to the Ministry of Economy and Development, Mongolia can export 40-45 million tons of coal this year. If coal is transported by domestic companies from the mine-mouth to the border port at the border price, there is a possibility of making a profit of USD 1.6-2.4 billion, gaining additional income, and maintaining a balance of payments without deficit.

- The exchange rate and inflation rate are still the main concerns of people. What are your expectations in this regard?

In this regard, the balance of the payment should be improved. Since the international geopolitical tension started in February 2022, we observed its most prominent impact in May. The price index reached a record-high 16.5% and the foreign exchange reserves dropped to USD 2.4 billion. Comparing that period with today, the inflation rate is 12.3% and the foreign exchange reserves have reached USD 3.4 billion. These are, indeed, good signs. We are expecting that the inflation rate would be within our targeted level or down to 8%. These are the outcomes of the raise in the policy rate of the Bank of Mongolia. If this positive trend in the economy continues, the foreign exchange reserves will increase and the exchange rate will become more stable. Enterprises and citizens still have expectations that the US dollar will rise against MNT. Therefore, they are still preferring dollar deposits over MNT deposits.

- Can all commercial banks complete their IPOs within this year?

According to the amended Code on Banks, five systematically important commercial banks are obliged to become public companies and offer their shares to the public. Last year, Golomt Bank and State Bank listed their shares, while Khan Bank received their approval. Now the IPOs of Khas bank and Trade and Development Bank are pending. The code amendment that is pushing Mongolia’s banks to go public requires all systemic banks to list 20% by June 30, 2023. Since there is deadline, we are expecting their IPO’s will complete within this year.

Rio Tinto Group has begun digging copper from the underground portion of its giant mine in Mongolia, an expansion that will turn the operation into one of the world’s largest, after years of delays, cost blow-outs and billion-dollar disputes with the country’s government.

The Oyu Tolgoi project is now producing ore from 1.3 kilometres below the surface of the Gobi Desert, Rio’s Chief Executive Officer Jakob Stausholm told reporters gathered at the site. The world’s No. 2 miner is spending $7 billion on the underground project that’s a cornerstone of the company’s growth plans.

“It’s not been a smooth ride, let’s be honest about that,” said Stausholm, referring to the mine’s long and troubled journey as lawmakers in the resource-dependent country repeatedly sought better terms. Mongolia had “very skilfully handled” negotiations, he said.

The prize for Rio is one of the world’s few large-scale new sources of a metal needed in vastly expanded volumes as the energy transition accelerates. At its peak in 2030, Rio says its Mongolian operation will be the world’s fourth-biggest source of copper, churning out half a million tons a year. That’s enough for around six million electric vehicles or 60 of the biggest wind farms.

But the difficult route to underground production at Oyu Tolgoi — the launch was once envisaged for 2015 — reflects the challenges in bringing on new supplies. One reason is mineral-rich nations like Mongolia increasingly demanding better terms from global mining companies. Oyu Tolgoi could add a third to the size of the Central Asian nation’s economy.

Rio became Mongolia’s biggest foreign investor in 2009, when it struck a 30-year deal to develop Oyu Tolgoi. Surface mining started in 2013, but the more lucrative underground project was log-jammed as lawmakers in the boisterous democracy repeatedly challenged Rio. Claims of foreigners pillaging the country’s mineral wealth dominated election campaigns. Swings in global commodity markets and the COVID-19 pandemic didn’t help either.

Mongolian leader Oyun-Erdene Luvsannamsrai, speaking at the underground opening ceremony, acknowledged many “hiccups” for the project. Difficult negotiations with Rio were driven by a desire to maximize benefit for the country’s people, he said.

Big deal

A 2021 agreement for Rio to write off US$2.4 billion of state debt was crucial for Stausholm — chief financial officer until he was appointed to the top job in late 2020 — to get to today’s juncture. The company has already spent around US$15 billion in Mongolia, including US$4 billion of taxes or other payments to the state, Rio said.

The government retains a 36 per cent stake in Oyu Tolgoi, where some 80 per cent of the value lies underground. Many of the world’s open-pit mines are gradually expiring, while quality new resources like this one are getting harder to find.

Progress at Oyu Tolgoi is a coup for CEO Stausholm, who replaced Jean-Sebastien Jacques following the 2020 Juukan Gorge scandal in Australia, when Rio blew up ancient Aboriginal rock shelters. Big miners like Rio and rival BHP Group Ltd. are rushing to be part of the anticipated copper boom, and both were involved in multibillion dollar takeovers last year.

Oyu Tolgoi’s ore holds about 1.5 per cent copper, well above the global average of around 0.6 per cent for all copper mines, according to researcher Wood Mackenzie Ltd. Extracting the material from 1,300 meters or more below the surface offers a very different challenge from surface digging.

Rio is using a method called “block cave mining” that involves drilling spaces under the ore body, using controlled explosions to collapse the roof, then collecting the fragmented rock. This is much more costly and technically demanding than the open pits at Rio’s massive iron ore mines in Western Australia.

Despite its comparatively large size, Oyu Tolgoi will still only meet one per cent of global copper demand by 2035, according to demand estimates from S&P Global Commodity Insights, which put annual demand by then at around 50 million tons per annum. The mine also has a relatively short life, with peak production expected from 2028 to 2036.

“It’s been a tough journey so far” for Rio in Mongolia, said David Radclyffe, managing director of consultancy Global Mining Research. But “it fulfills a lot of what Rio and peers are trying to do at the moment, which is to maximize exposure to copper in the current market.”

—With assistance from Sanjit Das.

After hitting last year’s target, Türkiye and Mongolia are aiming to push their trade volume to at least $500 million (TL 9.49 billion) in the coming period before the two countries celebrate the 55th anniversary of diplomatic ties, according to their top diplomats.

“Next year, Türkiye and Mongolia will celebrate the 55th anniversary of their diplomatic relations, and therefore investment deals signed beforehand need to be revised and updated,” said Turkish Foreign Minister Mevlüt Çavuşoğlu at a joint presser with his Mongolian counterpart Batmunkh Battsetseg following a one-on-one meeting, notably the first of its kind 31 years, in the capital Ankara on Monday.

“We have discussed bilateral relations and underlined that these need to be improved by cooperating on many fields,” Çavuşoğlu informed, noting as steps to be taken include the increase of civilian and cargo flights, boosting quotas for land transports and eliminating obstacles in front of trade, as well as in education and culture, mainly due to historical and cultural ties between the two nations.

Türkiye offered Mongolia to elevate our bilateral ties from a comprehensive partnership to a strategic partnership, and we are waiting for their answer,” Çavuşoğlu revealed.

“We also inked three agreements today, which we will expand and deepen in the future,” he assured. “We discussed advancing defense industry cooperation, as well, and we are prepared to provide every support to Mongolia on this matter.”

Çavuşoğlu further thanked Mongolia for their support in the wake of the Feb. 6 earthquakes that left over 48,000 dead in Türkiye’s southeast.

“A 37-person team from Mongolia rescued eight people from the rubble in the Hatay province,” Çavuşoğlu informed, adding that the country supplied tents, including traditional Mongolian tents, for the victims.

“We are especially grateful to the Mongolian people who have continued their humanitarian support to Türkiye since day one,” he said.

The Turkish diplomat said he also thanked Battsetseg for Mongolia’s help in fighting the Gülenist Terror Group (FETÖ) and that Battsetseg confirmed no FETÖ member was left in the country.

“We have cooperated in the fight against terrorism before, and there have been conflicts in the past because of this, but this group is a threat to everyone, not just Türkiye. It’s a threat for Mongolia, as well,” Çavuşoğlu said. “Some of their schools in Mongolia were taken over by a shell company in Germany. Therefore, we gave them a friendly warning to be always vigilant about FETÖ.”

In light of Mongolia’s potential of joining the Organization of Turkic States (OTS) as an observer member, Çavuşoğlu said the organization was working to reinforce ties with all Asian nations and institutions, including the Association of Southeast Asian Nations (ASEAN) and reinstate a holistic approach to the region with more than 1,000 concrete projects.

For her part, Battsetseg emphasized that the Mongolian people “stand in harmony with Türkiye” and affirmed she and Çavuşoğlu agreed on “working to achieve a strategic partnership and carry out mutual, high-level visits on the 55th anniversary of our diplomatic relations.”

“We also reached a consensus on collaborating for projects that could symbolize bilateral relations,” Battsetseg said.

“The contribution of Türkiye’s humanitarian, diplomatic activity to the global community has been proven, be it during the COVID-19 pandemic, be it in the Russia-Ukraine war,” she concluded.

In the fourth quarter of 2022, GDP per person employed (at 2015 constant prices) was MNT 6.6 million. In 2022, the GDP per person employed was MNT 23.2 million, which increased by MNT 473.4 thousand (2.1%) compared to the previous year.

Regarding the main four sectors, productivity increased in agriculture, industry, and construction and service sector, but mining and quarrying decreased compared to the previous year.

According to the National Statistics Office of Mongolia, the value added per person employed in the agriculture sector was MNT 14.6 million, the industry and construction sector was MNT 20.5 million, the service sectors were MNT 19.4 million, mining and quarrying sector was MNT 51.9 million.

The primary extraction of the underground mine, which uses block-caving mining techniques to extract the ore at a depth of 1.3 kilometers underground, has been officially commenced.

When this underground mine, located in Khanbogd soum, Umnugovi, is fully operational, Mongolia will have the fourth largest high-technology underground mine and become one of the biggest players in the international copper market.

The Prime Minister of Mongolia, Luvsannamsrain Oyun-Erdene, today joined Rio Tinto Chief Executive Jakob Stausholm 1.3 kilometers underground to celebrate the commencement of underground production from the Oyu Tolgoi copper mine in the Gobi Desert.

Prime Minister of Mongolia Oyun-Erdene said, “I am proud to celebrate this major milestone with our partner Rio Tinto as we look towards Mongolia becoming one of the world’s key copper producers. The start of underground production at Oyu Tolgoi demonstrates our ability to work together with investors in a sustainable manner and become a trusted partner. The next phase of the partnership will enable the continued successful delivery of Mongolia’s ‘New Recovery Policy’ and Vision 2050 economic diversification strategy. Mongolia stands ready to work actively and mutually beneficially with global investors and partners.”

Rio Tinto Chief Executive Jakob Stausholm said, “We would like to thank the Government of Mongolia for their commitment as our partner in achieving this remarkable milestone. We are starting underground production 1.3 kilometres beneath the remote Gobi Desert from an ore body that will be critical for global copper production and Mongolia’s ongoing economic development. The copper produced in this truly world class, high technology mine will help deliver the electrification needed for a net zero future and grow Rio Tinto’s copper business.”

Oyu Tolgoi is expected to produce around 500,000 ton/year of copper on average from 2028 to 2036 from the open pit and underground, enough to produce around 6 million electric vehicles annually, and an average of around 290,000 t over the reserve life of around 30 years.

In addition, a partnership between Rio Tinto and Mongolia, the Oyu Tolgoi open pit and concentrator have been successfully operating for over a decade. Over 80 per cent of Oyu Tolgoi’s total value lies deep underground and the depth of the deepest shaft is 1385 meters. The total workforce of Oyu Tolgoi is currently around 20,000 people, of which 97% are Mongolian. Oyu Tolgoi works with more than 500 national suppliers and has spent around $15 billion in Mongolia since 2010, including $4 billion of taxes, fees and other payments to the state budget, according to the mining company.

The Hu are planning to work with Babymetal again.

The Mongolian rockers got to play with the Japanese kawaii metal band – comprising Suzuka Nakamoto as Su-metal and Moa Kikuchi as Moametal – in 2019, and they’ve hinted at joining forces with them again in the future.

In a fan Q+A published by Metal Hammer magazine, frontman Gala said: “Babymetal are incredible! The way they perform is inspirational, and the energy is unmatchable. There’s no doubt that we’ll work with Babymetal again, because not only they are amazing artists, they’re great touring company and we have fun together.”

He said: “We tour heavily, so game consoles have become a great friend to let off some steam. UFC and soccer are currently our favourite, but when ‘Fallen Order’ first came out, we played it non-stop, so we’re looking forward to hopefully doing more collaborations with the Star Wars games and universe.”

The HU are ambassadors of Mongolia, and while they are pleased to be promoting their country around the world, the group admit it is “a lot of responsibility”. They said previously: “We’re so honoured to be ambassadors of Mongolia to the world. But it’s a lot of responsibility.

The Prime Minister of Mongolia, Luvsannamsrain Oyun-Erdene, today joined Rio Tinto Chief Executive, Jakob Stausholm, 1.3 km underground to celebrate the commencement of underground production from the Oyu Tolgoi copper mine in the Gobi Desert.

This was followed by a ceremony with Oyu Tolgoi employees and leaders, Government of Mongolia representatives, Oyu Tolgoi Board members and local suppliers to mark this milestone towards Oyu Tolgoi ramping up to become one of the world’s leading copper suppliers.

Since the agreement between the Government of Mongolia and Rio Tinto in January 2022 to reset the relationship and move the Oyu Tolgoi underground project forward, 30 drawbells have been blasted and copper is now being produced from the underground mine. Oyu Tolgoi is expected to become the fourth-largest copper mine in the world by 2030, operating in the first quartile of the copper equivalent cost curve, Rio Tinto says. Ore is currently being processed from Panel Zero in Hugo North Lift 1 and production will ramp up over the coming years.

A partnership between Rio Tinto and Mongolia, the Oyu Tolgoi open pit and concentrator have been succesfully operating for over a decade. The total workforce of Oyu Tolgoi is currently around 20,000 people, of which 97% are Mongolian. Oyu Tolgoi works with more than 500 national suppliers and has spent around $15 billion in Mongolia since 2010, including $4 billion of taxes, fees and other payments to the state budget, according to the mining company.

Developing the underground mine is an investment of over $7 billion, unlocking the most valuable part of the copper resource for the benefit of all stakeholders. Oyu Tolgoi is expected to produce around 500,000 t/y of copper on average from 2028 to 2036 from the open pit and underground, enough to produce around 6 million electric vehicles annually, and an average of around 290,000 t over the reserve life of around 30 years.

Oyun-Erdene said: “I am proud to celebrate this major milestone with our partner Rio Tinto as we look towards Mongolia becoming one of the world’s key copper producers. The start of underground production at Oyu Tolgoi demonstrates our ability to work together with investors in a sustainable manner and become a trusted partner. The next phase of the partnership will enable the continued successful delivery of Mongolia’s ‘New Recovery Policy’ and Vision 2050 economic diversification strategy. Mongolia stands ready to work actively and mutually beneficially with global investors and partners.”

Stausholm said: “We would like to thank the Government of Mongolia for their commitment as our partner in achieving this remarkable milestone. We are starting underground production 1.3 km beneath the remote Gobi desert from an orebody that will be critical for global copper production and Mongolia’s ongoing economic development. The copper produced in this truly world class, high technology mine will help deliver the electrification needed for a net zero future and grow Rio Tinto’s copper business.”

Rio Tinto now has a 66% interest in Oyu Tolgoi LLC, the mine operating company, following its successful completion of the acquisition of Turquoise Hill Resources Ltd; with the Government of Mongolia retaining 34%.

In February 2023, the Bank of Mongolia (BoM) purchased 701.2 kg of precious metals.

BoM branches in Darkhan-Uul and Bayankhongor aimags bought 78.8 kg and 139.8 kg of precious metals, respectively.

The Bank of Mongolia sets the purchase price of precious metals based on the global market price. As of February, the average purchase price was MNT 209,784.

Mongolia defeated Iran 5-0 on the first day of the 2023 IIHF Ice Hockey U18 Asia and Oceania Championship.

The competition is being held at the Steppe Arena in Ulaanbaatar, Mongolia from 11-26 March.

The IIHF Asia and Oceania Championship is a series of international ice hockey tournaments in the continent of Asia.

The purpose of the tournament is to provide competitive opportunities for Asian and Oceania teams that are either in the lower divisions of the IIHF World Championships or did not compete in any IIHF World Championships.