The Monetary Policy Committee of the Bank of Mongolia (MPC) held its scheduled meetings on September 16 and 20, 2022. Taking into consideration current state of the economy and financial markets as well as outlook and risks to the domestic and external economic environment, the MPC decided to:

1. Raise the policy rate by 2 percentage points to 12 percent;

2. Widen the policy rate corridor to be set as 2 percentage points above and below the policy rate and;

3. Exclude certain bank liabilities with maturities of at least 360 days and more that are newly funded on international markets in the form of bonds or loans from required reserve liabilities.

Annual inflation reached 14.4 percent nationwide and 14.8 percent in Ulaanbaatar city as of August 2022. External factors have been largely contributing to headline inflation through its impact on prices of imported goods. The extent of such impact is expected to decline in the upcoming quarters, leading to lower inflation outlook.

Economic activities grew relatively high in the first half of 2022. Despite border restrictions being eased to a certain degree, its negative effect on mining and transportation sector persists. Non-mining production in trade, services, taxes and agriculture sectors intensified in the second quarter of 2022 and reached 2019 pre-pandemic levels in the first half of 2022. Household consumption has been rising consecutively in the last 3 quarters and supporting domestic demand. Recovery in non-mining sector activities is expected to continue this year, mainly contributing to economic growth.

Higher deposit dollarization in the banking system and elevated benchmark rates in international markets have necessitated increases in domestic currency yield. As such, the MPC decided to implement a set of policy measures to raise the policy rate, widen the policy rate corridor to its pre-pandemic level and exclude certain bank liabilities newly funded on international markets from reservable liabilities with the objective to stabilize inflation in the medium term and increase domestic currency yield. Raises in the policy rate would not only be effective in reducing inflation to its target level, but also is consistent with the policy of ensuring domestic and external economic balance.

The subsequent policy actions on whether to pursue further monetary tightening would be dependent on developments in external and domestic economy as well outlook changes in inflation and macroeconomic conditions. The MPC remains committed to implementing necessary policy actions until inflation returns to stabilizing around the target level.

Credit rating firm Moody’s Investors Service said on Thursday it had changed its outlook for the global metals and mining Industry from stable to negative as a global economic slowdown continues to soften demand.

The downturn is affecting prices, which consequently reflects a decreasing profitability for the largest Moody’s-rated companies in the industry during the upcoming 12 months, the firm said.

“[EBITDA and prices] will remain higher than in pre-pandemic years but below the record-high levels seen in early 2022,” says Moody’s senior vice president Barbara Mattos.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) will significantly decline for producers of base metals, including copper, nickel, aluminum and zinc, Moody’s financial research experts said.

Moody’s downgrades mining sector outlook to negative

Moody’s expects copper miners to face EBITDA declines due to lower production volumes

in certain regions, higher input costs and lower prices. At the same time, low inventory levels and supply challenges in main copper-producing regions such as Chile and Peru will limit copper-price declines, it says.

Aluminum producers re expected to be the worst hit as prices for the have fallen drastically from recent record highs, while energy and key raw material costs remain high, particularly in Europe. This combination will reduce companies’ margins and earnings, Moody’s says.

While gold is often seen as a hedge against inflation, the agency notes that prices for both the yellow metal and silver are declining due to higher interest rates and a stronger US dollar. Unlike other metals, market sentiment rather than fundamentals such as supply and demand, influences pricing in this industry, which will negatively affect precious metals miners’ EBITDA.

Today’s report follows one Moody’s published in early September, which lowered its 12-month price assumptions for certain metals and mining commodities.

Long lines of vehicles were seen at a border crossing between Mongolia and Russia on Sunday as people fled the Kremlin’s call-up of hundreds of thousands of reservists for the war in Ukraine.

The head of a checkpoint in the town of Altanbulag told AFP that more than 3,000 Russians had entered Mongolia via the crossing since Wednesday, most of them men.

Queues of people holding Russian passports were also seen outside the immigration counter for the border crossing, according to an AFP reporter there.

“From September 21, the number of Russian citizens entering Mongolia has increased,” checkpoint head Major G. Byambasuren told AFP.

“As of 12:00 (noon) today, more than 3,000 Russian citizens have entered Mongolia.”

Russian President Vladimir Putin on Wednesday announced Russia’s first military call-up of fighting-age men since World War II.

It is designed to fill Russia’s army with hundreds of thousands of men after a string of setbacks that appears to have altered the tide in the seven-month Ukraine war.

Byambasuren said about 2,500 of the Russians crossing the border were men while more than 500 were women and children.

“Most of them are single young people who crossed the border with their parents,” he added.

Russian nationals can visit Mongolia and stay without a visa for 30 days, and extend their stay by another 30 days if needed, Byambasuren said.

Authorities on Saturday detained more than 700 people at protests across Russia against the partial military mobilization, according to an independent monitoring group.

Police monitor OVD-Info counted at least 726 people detained at rallies in 32 cities, nearly half of them in Moscow.

A stream of Russians were also seen flocking by air to Istanbul on Saturday where several expressed relief at escaping but also concern for the safety of loved ones left behind.

Mongolia's capital observed its Car-Free Day on Sunday to raise public awareness of air pollution and negative effects of traffic congestion and promote healthy lifestyle.

Both private cars and public transport vehicles were barred from all main roads of the Mongolian capital Ulan Bator on the Car-Free Day.

For many years, air pollution and traffic jam have been the most pressing issues in its capital, home to around half of the country's 3.4 million population.

Various events such as cultural concerts, running and walking races and employment promotion events are going on within the framework of the Car-Free Day under the motto of "Together for a safe and healthy environment."

Mongolia has observed Car-Free Day in its capital since 2009.

A hundred years later Mongolia witnessed a long line of motorists at its northern border post Kyakhta from a region with Buryats, who are attempting to flee the Ukraine war, as Putin declared a partial mobilization of Russian reservists to augment his war effort in Ukraine.

Cars standing in line to enter Mongolia

Russian motorists at the Russian border to enter Mongolia. Source: @batbayarlaw

According to Justice Minister Nyambaatar, the country will not bar Russian “tourists” from entering for a 30-day visa-free stay.

As Mongolia is becoming Russia’s primary gateway to China images of huge lines at the border revealed that Mongolia had unexpectedly become a safe haven for men, women and children escaping Russia.

So far, Mongolians’ initial attitude to Buryats has been cordial and favorable. Former President Elbegdorj, who is a staunch advocate of worldwide ethnic Mongolians, called citizens to embrace their brothers and sisters from Russia and urged Putin to end the brutal war.

Expat Buryats launched a Telegram channel and other online forums to help people cross the border, find rental homes in Ulaanbaatar and find out if physicians in hospitals speak Russian.

Businesses and entrepreneurs perceive the unexpected demand for shelter, food, and basic services as an opportunity to make good money as most “migrants” come with cash unable to use their Russian bank cards in Ulaanbaatar because of sanctions.

Also, Mongolia is a safe transit route for fleeing Russians to South Korea, the United States, and other destinations.

Many questions have arisen as a result of this sudden influx from the northern neighbor: whether Ulaanbaatar can accommodate thousands of these political migrants, whether Putin would press Mongolian leaders to return his military-capable citizens, what happens to legal status of Russians/Buryats who overstay their one-month visa, and so on.

"Tourists" from Russia are not yet considered refugees or asylum seekers. A small group of expats demonstrated in New York City, urging visiting President Khurelsukh to provide Buryats safe haven and to establish a "humanitarian corridor" for Russians fleeing the war.

Mongolia works with the UN and offers limited assistance to refugees and asylum seekers but they do not enjoy legal status in the country. The government does not provide them with work permits, health care or education.

In Russia, there are around 400,000 Buryats encircling Lake Baikal with the main city of Ulan-Ude.

They speak Mongolian dialect, however Russian is the first language of most urban and younger Buryats. Another 40,000 Buryats live in northern Mongolia, with another 70,000 in northeastern China.

A delegation from the EBRD’s Board of Directors will visit Mongolia on 26 October 2022.

During their five-day stay the Directors will meet senior Mongolian officials to discuss reforms and priorities for the country’s economy. The visit will also present an opportunity to take stock of the EBRD’s assistance to Mongolia aimed at overcoming the negative impact of the Covid-19 pandemic and mitigating geopolitical adversities caused by Russia’s war on Ukraine.

Representatives from the EBRD Board of Directors visiting Mongolia will include:

Caspar Veldkamp representing the Netherlands, China, Mongolia, North Macedonia and Armenia

Eva Cassel representing Sweden, Iceland and Estonia

Cagatay Imirgi representing Turkey, Romania, Azerbaijan, Moldova and the Kyrgyz Republic

Philip Lindsay representing Australia, Korea, New Zealand and Egypt

Yann Pouezat representing France

Leander Treppel representing Austria, Israel, Cyprus, Malta, Kazakhstan, and Bosnia and Herzegovina

Enrique Alejo representing Spain and Mexico and the United Arab Emirates

Dimitris Metaxas-Trikardos representing Portugal, Greece, San Marino and India

Markus Schulte representing the European Union.

The EBRD is the largest foreign private sector investor in Mongolia with 93 per cent of its portfolio in the private sector. To date the Bank has invested almost €2.2 billion in the country’s economy through 122 projects.

The Ministry of Environment and Tourism of Mongolia (MET), Rio Tinto Mongolia, and the International Conservation Caucus Foundation (ICCF) have today signed a comprehensive three-year partnership agreement which aims to tackle and reverse the erosion of Mongolia’s forests caused by the rapid spread of forest defoliators – insects and other pests which feed on plant matter and can cause widespread and significant tree mortality.

The Healthy Forest Project is the first major component to be implemented within the framework of the Memorandum of Understanding on Cooperation to Combat Climate Change and Desertification signed between the MET and Rio Tinto Mongolia on June 24 this year.

This public-private partnership project will draw on international expertise to pilot and introduce new higher efficacy treatment techniques as well as build long-term national capacity to promote sustainable forest management. The Project aims to build on, and complement, existing efforts to restore Mongolia’s forest areas as part of the national One Billion Trees initiative.

Mongolia’s forest-covered area is currently 7.9 percent of its territory. According to research conducted by MET’s Forest Research and Development Centre in 2021, Mongolia’s forests are experiencing severe outbreaks of forest defoliators. This study estimated a total impacted area of 300,000 hectares in nine provinces, as well as the Bogd Khan Mountain National Park. Without immediate action, an estimated 1.1 billion trees will be lost and up to 126,000 hectares of forest area will be severely degraded.

Rio Tinto Mongolia will contribute MNT 7.4 billion (~US$ 2.3 million) funding to support the Project, which will be overseen by MET and implemented by ICCF’s internationally recognized forest practitioners. Over the duration of the partnership a total of 300,000 hectares of at-risk forest areas will be treated. The project will introduce innovative and efficient international techniques which will increase the efficacy of treatment to more than 90%.

Alongside this, the project will build national capacity to protect Mongolia forests, through:

Strengthening national academic research capability in entomology and related fields

Co-ordinated research efforts between MET, Mongolian Academy of Science and National University of Mongolia

Development of dedicated university programs to train forest pest and management specialists.

Sharing of international best practice on sustainable forest management.

Taken together, these measures will assist Mongolia in the development of long-term approach to support and conserve the country’s forests for future generations.

Launching the Partnership, Minister of Environment and Tourism B.Bat-Erdene said: “Under this partnership, we will aim to save a billion trees by reducing the growing spread of forest defoliators driven by climate change, develop the capacity of our human resource in forestry, and introduce innovative technologies.”

Rio Tinto Mongolia Executive Director Kh. Amarjargal said: "Caring for our environment and communities is a core priority for Rio Tinto and we are proud to co-design and fund this innovative project which will help protect Mongolian forests and create a green future together. We are delighted to be working in partnership with the Ministry, and with the assistance of ICCF’s international recognized experts to deliver on our joint goal to tackle climate change and desertification.

International Conservation Corps Executive Director Todd Koenings said: “The ICCF Group will bring in world class experts to support Mongolia in improving the health of national forests. This strategic public-private partnership promises to develop proven methods to combat forest pests and build domestic capability within Mongolia to take control as responsible stewards of healthy forests.”

Contact

Media Relations at Rio Tinto Mongolia

Dashnyam Bayarjargal

dashnyam.bayarjargal@riotinto.com

+976 94042241

Category: Oyu Tolgoi

Chinese energy imports from Russia have continued to grow, with the nation spending a record $8.3 billion last month, Bloomberg reported on Tuesday, citing customs data. The spending on energy in August made up 83% of China’s total imports from Russia.

According to the report, Beijing has expanded its reliance on Moscow for overseas supplies of crude oil, petroleum products, natural gas and coal.

The haul for August was reportedly 68% higher than a year ago and included a record amount of coal. It brought the total over a period of six months to nearly $44 billion, an increase of 74%.

Statistics showed that Russian oil exports to China grew to 8.34 million tons last month, from 7.15 million tons in July and 6.53 million tons a year ago. Imports of Russian coal by Beijing hit a new high of 8.5 million tons, up 57% on the year, with coking coal for the steel industry totaling 1.9 million tons. Purchases of liquefied natural gas (LNG) amounted to 671,000 tons, the most since 2020 and a 37% increase year-on-year.

The report noted that the volumes exclude imports via pipelines, which are the main channel to transport Russian fuel to China. The customs service hasn’t reported on those supplies since the start of the year.

“Russia is likely to ship more crude and products to destinations including China in the coming months as Europe tightens sanctions,” Bloomberg wrote, noting that some of those supplies come at discounted rates.

Are you a high school/college student, young entrepreneur or a career professional who’s pursuing the field of STEM: Science, Technology, Engineering and Mathematics? Then do not miss the opportunity to meet a Silicon Valley investor here in Mongolia! Rekha Pai Kamath is an angel investor and managing director at Kamath Family Foundation who has over 20 years of experience in working with companies such as Symantec Corp, Applied Materials, Sun Microsystems, and Procket Networks (acquired by CISCO).

Check out the full schedule of open-to-public programs featuring Rekha throughout next week below.

Monday, September 26 (UB)

14:30 – 16:00 Rekha Empowering Women in STEM Talk

Facebook event: https://fb.me/e/28MOenBtO

Venue: MPM Event Center, 4th Floor

Speakers: Rekha Pai Kamath

Theme: Rekha’s personal experience as a woman in STEM and her journey to a stellar career in Silicon Valley, empowering women in STEM

16:15 – 18:15 Small Panel Discussion

Venue: MPM Event Center, 4th Floor

Speakers: Rekha Pai Kamath and other panel members

Theme: Global and domestic perspective of the STEM and technology industry from leading women in the field

Tuesday, September 27 (UB)

18:00 – 19:00 Rekha Empowering Women in STEM Talk

Venue: American Corner Ulaanbaatar

Speakers: Rekha Pai Kamath

Theme: Rekha’s personal experience as a woman in STEM and her journey to a stellar career in Silicon Valley

Wednesday, September 28 (Darkhan)

18:00 – 20:00 Rekha Empowering Women in STEM Talk

Venue: American Corner Darkhan

Speakers: Rekha Pai Kamath

Theme: Rekha’s personal experience as a woman in STEM and her journey to a stellar career in Silicon Valley

Friday, September 30 (Erdenet)

16:30 – 18:30 Public talk