An its regular meeting on March 17, the Cabinet decided to allocate MNT 5 billion from the Government’s reserve fund for the expansion of the area along the Mongolia-China border line to increase transportation.

24,700 sq.m area will be paved to expand a container area in the Mongolian side at Zamyn Uud-Erlian border checkpoint. In this regard, lifting equipment, forklift, and truck crane are required to buy. As a result, it will become possible to increase the number of containers to be transported through the Zamyn Uud-Erlian border checkpoint by 2-3 times, and create the condition to import large-scale freights.

Cabinet meeting in brief:

-Governor of the capital city and Mayor of Ulaanbaatar D.Sumiyabazar was assigned to commence major construction works in 2022, including the introduction of public transportation service /LRT/ to be implemented in the Ulaanbaatar city and the construction of new ring roads as outlined in the ‘New Revival Policy’, and ensure preparation to implement those projects within the framework of a public-private partnership, and report it to the Cabinet within this month.

-Corresponding ministries were tasked to introduce the progress of the construction of Zuunbayan-Khangi railway every two weeks, and take measures to import materials required for the railway construction from China in a short time.

‘Artssuuri-Nariinsukhait-Shiveekhuren Railway’ and ‘Choibalsan-Khuut-Bichigt Railway’ special purpose companies will be established to implement the Artssuuri-Nariinsukhait-Shiveekhuren, Khuut-Choibalsan, and Khuut-Bichigt railway projects with the involvement of ‘Mongolian Railway' state-owned shareholding company.

At its regular meeting on March 16, the Cabinet ordered Minister of Road and Transport Development L.Khaltar to meet with and select from foreign and domestic investors interested in cooperating on the projects to be implemented under ‘design-build-operate-transfer’ concession agreements.

The special purpose companies will be granted concessions, get relevant permissions to implement the projects and carry out the construction works in collaboration with the private sector with the selection of investors to fund and cooperate on the projects.

Mongolian Railway company will transport on the railway upon the completion of the construction and when the concession agreements expire, the ownership of the basic structure of the railway will be transferred to Mongolian Railway.

The average wages and salaries is calculated from the report of the General Authority for Social Insurance. According to this report, 719.3 thousand employees were working in 46.3 thousand enterprises in the fourth quarter of 2021.

The number of enterprises increased by 1.9 thousand (4.3 percent) from the same period of the previous year and increased by 315 (0.7 percent) enterprises from the previous quarter. The number of employees increased by 27.7 thousand (4.0 percent) from the same period of the previous year and by 6.8 thousand (1.0 percent) from the previous quarter.

In the fourth quarter of 2021, the median wage was MNT 1068.1 thousand among 719.3 thousand persons have paid social insurance. The median wage increased by MNT 75.1 thousand or 7.6 percent from the previous quarter. The monthly average wages and salaries per employee was MNT 1.4 million, increased by MNT 110.0 thousand or 8.3 percent from the same period of the previous year and increased by MNT 103.1 thousand or 7.7 percent from the previous quarter.

In terms of gender, the average salary in the fourth quarter of 2021 was MNT 1.5 million for men and MNT 1.3 million for women.

In terms of industrial classification of all economic activities, the monthly average wages and salaries of employees working in the mining and quarrying sector was the highest at MNT 3.2 million, whereas monthly average wages and salaries of employees working in the accommodation and food service activities was the lowest at MNT 967.9 thousand.

Compared to the 2015, the monthly nominal average wages and salaries increased by 65.6 percent, while the monthly real average wage and salary increased by 16.9 percent in the fourth quarter of 2021.

Source: National Statistics Office

Mongolia's Hunnu Air held an official inauguration of a new international flight en route Almaty-Ulaanbaatar, Kazinform cites the Telegram channel of the Kazakh Embassy in Ukraine.

The ceremony was attended by Ambassador Extraordinary and Plenipotentiary of Mongolia in Kazakhstan Dorzh Bayarkhuu, Hunnu Air CEO Munkhjargal Purevjal, Chairman of the Civil Aviation Committee of the Ministry of Industry and Infrastructure Development of Kazakhstan Talgat Lastayev, as well as the officials of the Mayor's Office of Almaty, Mongolian Directorate of Civil Aviation and Department of Civil Aviation.

The Ulaanbaatar-Almaty-Ulaanbaatar flights are to run on Wednsedays on the E-190 aircraft. The flight is expected to facilitate the development of trade and economic cooperation and business partnership between Kazakhstan and Mongolia.

For China, Mongolia, and Japan, the fallout from the invasion is just starting to be felt. The long-term consequences will take longer to become clear.

Russia’s invasion of Ukraine is changing the post-Cold War status quo, with a direct link to European security and Russia-NATO relations. While the geopolitical pressure is mostly leaning to the west of Russia, Northeast Asia is also already feeling the economic and security impact.

Western sanctions against Russia have taken effect via multiple channels, crushing the country’s financial stability and creating disruption for international companies operating in Russia. Understandably, while these sanctions, including import and export restrictions, are strictly aimed at Russia, its eastern neighbors – including Mongolia, China, and Japan – are also being affected in different sectors, including food supply, energy, and defense.

On February 28, the United States passed a sanctions package targeting the Central Bank of Russia. The EU immediately followed suit. In addition, energy sanctions targeting Russia and the disruption of global supply chain will likely lead to economic recessions in Northeast Asia as countries began to depend on domestic substitutions –if they have that option – and energy prices continue to hike.

One of the many Western sanctions tools – the Foreign Direct Product Rule – and other aggressive measures to halt Russia’s import-export trade is creating a food security issue in China. Despite Xi Jinping’s ambitious goals for China to become self-reliant in grain production, China has long been dependent on other countries, including Russia, Ukraine, and Japan, for wheat and other consumer products. Now, with Ukraine having stopped wheat exports because of the war, China will be among the many countries scrambling to find alternative suppliers.

Since the beginning of the COVID-19 pandemic, China has imported more food from Japan ever. Nikkei reported that “Exports of food, farm, forestry and marine products to mainland China surged 35.2% to 222.4 billion yen ($1.93 billion) in 2021.”

Mongolia, on the other hand, has already experienced an energy price hike. For example, in Ulaanbaatar, the commonly used gasoline, AI-92, is now 2,390 Mongolian tugrik versus 1,434 tugrik in April last year, marking a 66 percent increase. Moreover, as Mongolia’s diesel fuel consumption is 100 percent dependent on Russia, the country is being squeezed by inflation and energy transition.

At the same time, if commodity prices continue to spike and Mongolia exports its natural resources such as coal, the Economic Revival Policy could actually benefit from such a fluctuation. However, there are external factors that prevent Mongolia from achieving such a golden opportunity. As the Chinese government continue to lockdown cities and border stations due to COVID-19, Mongolia’s exports to China are on hold, a recurring problem amid the pandemic.

Mongolia’s economy could also be hurt by a drop-off in Mongolia-Russia trade. If the Russian economy and financial system are crippled, air-based trade is likely to be affected. Mongolians abroad have already reported the inability to use credit cards offered by Mongolian banks due to the severing of Russia’s connection to SWIFT. On the other hand, since Mongolia and Russia are connected via railroad infrastructure, some trade is expected to continue as usual, but shipments of goods from Europe will be curtailed.

Besides the economic consequences, Russia’s recent actions are also changing the geopolitical environment in Northeast Asia. Countries such as Japan that do not have strong trust and confidence in Russia are wary of unexpected security issues.

On March 2, the Japanese defense ministry alleged that a Russian helicopter had violated Japan’s airspace near Hokkaido Island. In response, Japan scrambled fighter jets to intercept. To prevent escalation, the two sides have agreed to be more careful in the area. Any minor miscommunication or action could aggravate the already existing distrust.

Considering all these moving geopolitical developments, Russia’s invasion of Ukraine forced regional policymakers to reassess their strategies toward defense while seeking to maintain the status quo. According to Mordor Intelligence, the Asia-Pacific defense market was already increasing rapidly before 2022; the current situation will add fuel to that fire.

Moreover, for neighboring countries like Mongolia and China, Russia’s geopolitical move to thwart NATO’s influence in Eastern Europe presents multiple challenges.

Western sanctions against Russia have quickly turned into a double-edged sword for China, with U.S. officials threatening to consider sanctioning China if it shelters Russia from the financial consequences. At least for the short term, China is trying to keep its friendly relations with Russia without antagonizing Europe and the U.S., as shown by its abstention in the recent U.N. General Assembly resolution.

In addition, the past decade has been viewed as the height of China-Russia, Russia-Mongolia, and Mongolia-China relations. In 2014, Vladimir Graivoronsky from the Russian Academic of Sciences wrote that as “a triangle, Russia, Mongolia, and China, is a specific, relatively separate subregion of Northeast Asia as well as East Asia. Peoples of these countries belong to the three different civilizations – Russian, Mongolian, and Chinese. They have passed many centuries’ long history of inter-civilization political, trade, economic, cultural, and peaceful and wartime relations.” Russia’s recent move, although it will not abruptly compromise these trilateral links, in time, it may sow the seeds of mistrust.

In Northeast Asia, while there are already a number of lingering historical and contemporary security issues, Russia’s recent invasion of Ukraine will add to future tensions. From a security standpoint, governments will seek to prepare for significant security instability by increasing defense expenditures and investing in technology-based cyber and air defense systems, all while utilizing diplomacy to prevent escalation. All the Northeast Asia countries will be extremely vigilant and observant as the fallout continues to become clear.

By:Bolor Lkhaajav

Bolor Lkhaajav is a researcher specializing in Mongolia, China, Russia, Japan, East Asia, and the Americas. She holds an M.A. in Asia-Pacific Studies from the University of San Francisco.

March 17 (Xinhua) -- Mongolia registered 95 new COVID-19 local cases over the past 24 hours, raising the national tally to 468,418, the country's health ministry said Thursday.

Meanwhile, the country's COVID-19 death toll stands at 2,105, with no new deaths reported by Thursday for the seventh consecutive day.

Currently, Mongolia has a total of 3,154 active COVID-19 cases.

Mongolians have basically returned to everyday life due to high vaccination coverage and declining daily infections. Notably, the Asian country has resumed in-person classes for all levels of educational institutions and fully opened its borders to foreign tourists, who will not be required to have a PCR test or to quarantine.

So far, 66.8 percent of the country's total population of 3.4 million has received two COVID-19 vaccine doses, 1,029,416 people have received a third dose, and 111,036 have received a fourth dose voluntarily, which the country started to administer on Jan. 7.

Mongolia is possible to export products including medicinal plants and sea buckthorn to India.

Mongolia and India have been expanding cooperation since their establishment of diplomatic relations in 1964.The two countries are jointly implementing major projects and programs to further develop a comprehensive strategic partnership. In addition, meetings and consultations are planned to be organized to improve economic relations and increase trade turnover.

MNCCI Secretary General S.Bayasgalan said, “The MNCCI is working to co-organize a Mongolian-Indian Investment and Business Forum with the Embassy of India on March 25. In connection with the ‘New Revival Policy’ announced by the Government, new projects and investment opportunities will be introduced to investors.”

Executive Director of the Mongolian-Indian Business Council V. Gantulga noted, “India is one of the largest providers in the global medicine market, and its vaccine manufacturers supply the global market alone. Therefore, Mongolia is fully possible export semi-processed medicinal plants to India.”

Attaching much importance to the cooperation with Mongolia, India’s businessmen and investors held several meetings on establishing contacts with Mongolian businesses. The sides are focusing on further strengthening and expanding the trade and economic relations.

Mongolia will impose a one-year ban on collecting deer antlers, the country's Ministry of Environment and Tourism said Tuesday.

"In order to prevent ecological imbalance and damage to forest resources due to forest and grassland fires, citizens and legal entities have been prohibited from collecting and preparing deer antlers for a period of one year," the ministry said in a statement.

A total of 65 wildfires were reported across Mongolia in 2021, causing 3.1 billion Mongolian Tugriks (over 1 million U.S. dollars) in environmental damage, the ministry said.

One of the main causes of wildfires was human error, the ministry said, noting that many people who went to forests to collect cedar nuts and deer antler threw cigarette butts which caused fires.

Rio Tinto copper boss Bold Baatar sought to play down the company’s fractious relationship with its Canadian buyout target Turquoise Hill Resources, as the Toronto-listed company’s shares leapt to match the $US2.7 billion ($3.76 billion) offer.

Investors and analysts said the move to buy out the 49 per cent of the Canadian company that it did not already own – which would streamline its ownership of Mongolia’s Oyu Tolgoi copper and gold mine – made sense.

However, they said there was no certainty that the deal would go ahead at this price, and the target’s shares jumped 32.5 per cent to $C34.02 ($36.98) on Monday Canadian time to just pip Rio’s $C34 bid price.

Argo Investments chief executive Jason Beddow, whose fund is one of the 20 largest investors in Rio Tinto, noted that the first bid was not always the last. He said simplifying the ownership structure of the troubled Mongolian mine was a good move, particularly as miners sought more exposure to copper.

Turquoise Hill owns 66 per cent of Oyu Tolgoi and the Mongolian government owns the rest.

“A joint venture is always a messy structure at the best of times,” he said. “Buying something you own half of already, you know it pretty well.”

Oyu Tolgoi, one of the largest copper projects in the world, has been a challenging project for Rio Tinto.

The project has spent $US13.4 billion in Mongolia since 2010, including operating costs and other items not directly associated with development. Rio itself has spent a little more than $US6 billion the project.

Government deal

However, in late January, Rio struck a deal with the Mongolian government that included writing off the government debt. The deal allowed the miner to develop plans to turn the open cut mine into an underground one more quickly, as the government softened its requirement to use a Mongolian energy generator.

The push to develop the project comes amid moves from miners to increase exposure to the raw materials that will be needed in the shift to a low-carbon economy. Copper is used in electric vehicles and wind turbines.

Macquarie analysts noted that if Rio Tinto acquired the remaining 49 per cent of Turquoise Hill, the company would boost its copper production by 10 per cent over the next five years and 17 per cent on average for the next 10 years.

Mr Baatar on Monday night dismissed views that Turquoise Hill shareholders were being held over a barrel by the prospect of a large equity raising if they did not accept the offer.

He refuted that the timing of the bid was “hostile” and said: “I don’t think it’s a massive threat with the rights offering.”

Mr Baatar said the group had the option of rescheduling loan payments, raising new loans, as well as issuing new equity. He also acknowledged that credit markets were not facing ideal conditions at the moment.

“Obviously, they’re subject to the credit market conditions and considering what’s happening in Russia, Ukraine, not an easy one,” he said.

One of Turquoise Hill’s largest shareholders, Pentwater Capital Management, has already accused Rio Tinto of “oppressive” behaviour towards its smaller shareholders. The fund manager threatened legal action if Rio Tinto forced a dilutive, multibillion-dollar equity raising.

Turquoise Hill needs to raise between $US1.7 billion ($2.3 billion) and $US3.6 billion to cover massive cost and schedule blowouts on Oyu Tolgoi.

‘Friendly approach’

In relation to equity financing as an option, Mr Baatar said that Rio had committed its own to help with bridging funding for the mine.

“So it’s actually a pretty reasonable and quite friendly approach on this,” he said.

In its note following Rio Tinto’s offer, Morgan Stanley analysts listed four reasons that it made sense for the mining giant to try and acquire Turquoise Hill now.

This included de-risking of the project after Rio’s agreement with the Mongolian government; a better operating and management structure as the mine transitions to underground; and a scarcity of copper asset to build or acquire. The broker also noted “a clean structure could enable Rio Tinto to carry through its culture/governance/sustainability objectives at Oyu Tolgoi”.

Merrill Lynch analysts noted that an alternative to the bid – for which it said Rio was paying a premium without a change of control, as it already owns 51 per cent of Turquoise Hill – would probably have been an equity raise and more project financing, leading to a “complicated” situation.

On Monday’s call, Mr Baatar said Rio would be disciplined about acquiring Turquoise Hill.

“I think it’s a fair offer. Obviously, it’s for shareholders to decide. We’re going to be disciplined,” he said.

“And obviously, if investors choose to stay in the project and, you know, over time, reject the offer, then at least ... we’re on the same page in terms of our long-term commitment to development of the project.”

BY: Jemima Whyte writes on business, specialising in companies, capital markets and innovation. Jemima has reported on business for The Australian Financial Review for more than 13 years. Email Jemima at jemima.whyte@afr.com