On January 25, Minister of Road and Transport L.Khaltar did a working visit at MIAT Mongolian Airlines.

The Minister of Road and Transport handed over a copy of the newly amended Law on Value Added Tax, Law on Customs and the Law on Customs Tariffs and Duties to MIAT CEO B.Munkhtamir. The amendments were approved by the parliament on December 30, 2021.

During the Minister’s visit, MIAT CEO B.Munkhtamir introduced the current state of the company’s operations, financial difficulties and measures being taken as well as future plans.

Minister of Road and Transport L.Khaltar also became acquainted with the progress of maintenance repairs being done for a B737-800 aircraft, and expressed his wish for the company’s engineers to have more success on the global market in the future.

Since 2014, MIAT’s Aircraft Maintenance and Repairs Department has conducted repairs for a total of 83 aircraft owned by foreign airlines.

At the regular meeting of the Cabinet today on January 26, Minister of Energy N.Tavinbekh was tasked to carry out the corresponding works to establish a power supply agreement with Oyu Tolgoi LLC.

As the draft of the agreement on supplying power for Oyu Tolgoi’s mining operations from the country’s central power grid has been completed, the Government has given the green light for the agreement to be signed. In connection, the two sides will be holding a meeting at the Ministry of Energy today.

Currently, the mining company imports an average of 170 MW or 1.3 billion kWh of electricity from China each year. By sourcing their power domestically through the agreement, it becomes possible to keep the funds in the country. This will serve as significant support for the financing of the project on constructing the Tavantolgoi thermal power plant, the Minister highlighted.

Minister of Energy N.Tavinbekh said, “The agreement will be established for 20 years, with a minimum of USD 120 million worth of power to be supplied annually. In order to supply electricity to Oyu Tolgoi, certain preparations are needed such as establishing a power plant at Tavantolgoi. The power plant’s construction will take four years at the very minimum. However, with the plant’s first block put into operation from 2024, it will become possible to supply power for the Oyu Tolgoi project.”

Until preparations are completed by the side of Mongolia, the mining company will continue to source its power from Inner Mongolia Power International Cooperation Company of China.

The feasibility study for the construction project on the natural gas pipeline connecting Russia and China through the territory of Mongolia was finalized on January 25. A protocol finalizing the feasibility study was signed between Mongolia and Russia in a ceremony at Shangri-La Hotel. About the event, we interviewed Deputy Prime Minister of Mongolia S.Amarsaikhan.

-What plans have been finalized with the approval of the feasibility study?

-The leaders of Russia’s Gazprom Company came to Mongolia on March 12, 2021, developing the project’s feasibility study and carrying out surveillance and design work. As a result, an action plan was approved and the feasibility study was completed by December 15, 2021. What was confirmed by the feasibility study is that firstly, the project is feasible and secondly, it is economically beneficial.

Thirdly, we have completed the feasibility study, agreeing that a 975 km pipeline could be constructed along railway lines across six aimags from Kyakhta, Russia to Altanbulag and from Altanbulag checkpoint to Zamyn-Uud, and approved it today. The project now enters the actualization phase, meaning we will now commence designing and detailed engineering studies.

Talks have gotten underway with the Russian side to take some from the natural gas to be transported through the territory of Mongolia to satisfy domestic need.

A number of matters including how much and what works to carry out and what technical works will be allocated here are arising in relation to the feasibility study. In accordance with the study, a total of over 7,000 individuals will be employed and five compressor stations will be used for the implementation of the project. It is a mega project that also entails the countries involved sourcing their energy from gas power stations. The feasibility study covered everything including the project size and environmental and safety aspects. A major project is beginning to build a gas pipeline with an annual capacity of 50 billion cubic meters.

-How many soums of what aimags will the pipeline go across?

-It will go across 20 soums of six aimags including Selenge, Tuv, Dornogobi, and Gobisumber, and Ulaanbaatar city.

-To what extent will Mongolia be involved in the pipeline project? Will it get gas?

-Talks have gotten underway with the Russian side to take some from the natural gas to be transported through the territory of Mongolia to satisfy domestic need. Moreover, we have set objectives to build one or two power stations for a natural gas source in Mongolia, build new residential areas along the pipeline, supply them with gas for further development, and gradually move to natural gas.

-What documents will be signed next and how will the talks unfold? When will the construction begin? How long will the project be implemented and when will it finish?

-With the approval of the feasibility study, we are moving to detailed planning and actual designing, which are expected to take a year to year and a half. The construction is planned to begin by 2024 and preliminary estimates suggest the project will be completed in 2027-2028. The project costs have been covered in the feasibility study and are being estimated. Further, as the construction and technical plans are developed, it will become clear how much work and budget will be required.

-What responsibilities will Mongolia have? Will it be required to invest from the budget and other sources?

-A lot has been done in this regard and it will be discussed during the next round of talks. The project and talks involve three countries, Mongolia, Russia, and China. As the talks with Russia go on and necessary documents are developed, the efforts will continue with talks with China. The actions will be taken concurrently. They key principle is that we seek an opportunity for a fruitful partnership that benefits all three parties, which is why it will take a lot of effort.

Needless to say, all of this has to be economically beneficial to Mongolia. We are considering many aspects of this such as the amount of profit Mongolia gets and the cost of sourcing from the pipeline, project workforce, and maintenance. We reckon there will be more gains aside from the cost for constructing the pipeline through Mongolia. These will become clearer as the project is carried out.

-It is a project involving three countries. Has the Russian side informed of its talks with the Chinese side?

-We have been informed of talks between the other two countries, which will continue. The three countries will have concurrent talks.

-Have the sides settled on what percent of the project workforce will be from Mongolia?

-Mongolia has regulations for the workforce supply, in accordance with which, works will be carried out. They key workforce might arrive from Russia and other countries since the project is an elaborate one that has not been implemented in Mongolia before. We are also beginning the training of local workforce. Workforce will be recruited locally after having them study at Russian universities and colleges and do their training on-site, bringing teachers from abroad, and collaborating with the Mongolian University of Science and Technology and other technical universities. As I said earlier, a large skilled workforce will be in demand, as 1,500 to 7,000 people will work on the project.

In 2021, Mongolia’s coking coal exports to China fell by almost 41 percent to 12.74 million tonnes, and coking coal imports accounted for 25.7 percent.

The Fengkuang report outlines that there is still great uncertainty on the future of the coking coal import market in 2022.

This includes whether new Australian coal will be imported, and the impact on Mongolian coal customs clearance.

China imported 6.79 million tonnes of coking coal in December, a decrease of 3.28 percent from the previous month.

The cumulative import of coking coal for 2021 was 49.6 million tonnes, a decrease of 16.2 million from the same period last year or 24.6 percent.

Turquoise Hill Resources Ltd.'s shares rallied Tuesday after a deal was struck to allow the delayed expansion of the Oyu Tolgoi copper mine in Mongolia to push ahead.

In morning trading, the Toronto-listed shares were 16% higher at C$22.16, and are now up 6.5% in the new year. Rio Tinto's American depositary receipts were 1% lower at $72.50 on the New York Stock Exchange.

Majority-owner Rio Tinto said it had reached an agreement with Turquoise Hill, which owns most of the Oyu Tolgoi operation, and Mongolia's government that will see the start of underground operations at the mine in the South Gobi desert.

The agreement resolves a dispute between the partners on how to split the cost of an underground expansion, which is several years delayed.

Under the deal, Turquoise Hill will waive in full a $2.4 billion loan to Mongolia's Erdenes Oyu Tolgoi, and an updated funding plan has been agreed to address Turquoise Hill's estimated remaining funding requirement for the underground project. Turquoise Hill has agreed to an equity or rights offering of up to $1.5 billion, with an initial offering of at least $650 million no later than the end of August.

The country's parliament has approved a resolution that resolves the outstanding issues that have been subject to negotiations with the government of Mongolia over the last two years, Rio Tinto said.

Write to Robb M. Stewart at robb.stewart@wsj.com

Jan 25 (Reuters) - Rio Tinto Plc (RIO.AX), (RIO.L) and the Mongolian government said on Tuesday they have reached an agreement to end a long-running dispute over the $6.93 billion expansion project for the Oyu Tolgoi copper-gold mining project.

The deal marks a positive development for the Anglo-Australian mining giant, which is reeling from Serbia's rejection last week of its proposed lithium mine as well as local opposition to projects in Guinea, the United States and elsewhere.

"It's a major relief. It's a huge step forward for us," Rio Chief Executive Jakob Stausholm told Reuters via phone from Ulaanbaatar ahead of a flight to the mine site for a ribbon-cutting ceremony later on Tuesday with Prime Minister Oyun-Erdene Luvsannamsrai.

"We are very comfortable with this outcome and, more than anything, achieving a full reset of the relationship," said Stausholm, who became CEO last year.

Stausholm visited Mongolia multiple times in recent months in an attempt to salvage the project amid mounting concerns that the economic benefits of the project for Mongolians were being eroded.

Mongolia owns 34% of Oyu Tolgoi, one of the world's largest-known copper and gold deposits. Rio controls the rest through its 51% stake in Toronto-listed Turquoise Hill Resources Ltd (TRQ.TO) and operates the mine.

As part of the deal, Turquoise Hill will waive $2.4 billion in debt owed to it by the Mongolian government. Additionally, operations will soon start on the underground portion of Oyu Tolgoi, with first production expected in the first half of 2023.

The expansion will be paid for with cash, the rescheduling of existing debt repayments, and prepaid sales of copper concentrate to Turquoise Hill.

The project also committed to buying electricity from the Mongolian grid once it is able to meet supply. Rio said it will work to help add renewable power to the grid. In the meantime, the government extended an agreement to import power from China through 2023.

Rio's original 2009 agreement on the mining project called for the construction of a new coal-fired power plant to supply electricity. The updated deal does not include that plant and instead Rio aims to source wind power, the company said.

Stausholm said the deal's multiple terms reflect "an elegant solution" to the complex issues that had strained relations with the government. "It is possible to do something for the benefit of the people of Mongolia and also for the benefit of our investors," he said.

Luvsannamsrai, Mongolia's prime minister, said the deal "demonstrates to the world that Mongolia can work together with investors in a sustainable manner and become a trusted partner."

Reporting by Ernest Scheyder in Houston and Praveen Menon in Wellington; Editing by Lisa Shumaker

Rio Tinto’s most important growth project could be back on track after the miner struck a settlement with the Mongolian government to resolve the major disputes that have hampered progress on a $US6.9 billion ($10 billion) expansion of the Oyu Tolgoi copper mine.

Rio and its subsidiaries have agreed to waive a $US2.4 billion debt the Mongolian government owed after Rio and its subsidiaries covered the developing nation’s share of construction costs over the past decade.

In exchange, Mongolia softened its stance on several matters, most notably its desire for the mine to get all of its power from a Mongolian generator by July 2023.

While a domestic power source will still be sought eventually, the Mongolian government will in the meantime allow Rio to extend the existing power contract with a Chinese power generator to at least 2026 and possibly 2030.

Importantly for progress on the mine, Rio has agreed to push ahead with a crucial and expensive mining move called the “undercut”, which triggers the controlled collapse of rock within the mining zone and is effectively the start of a continuous mining process.

Rio had refused to go ahead with the undercut until a swathe of financial, tax and mine planning disputes were resolved, using it as a bargaining chip in talks with the government.

Some of those disputes, including over tax, remain unresolved.

But Rio said on Tuesday that enough common ground had been found for the undercut to begin in “coming days”.

Sustainable production of copper and other metals will now occur in the first half of 2023, putting Oyu Tolgoi on track to be one of the world’s top five copper producers by 2030.

Stability and peace in the relationship between Rio and the Mongolian government has only ever been achieved temporarily, but if Tuesday’s settlement can stick in the longer term, it will be a coup for new chief executive Jakob Stausholm and his Mongolian-born copper boss Bold Baatar.

“This agreement represents a reset of our relationship and resolves historical issues between the Oyu Tolgoi project partners,” said Mr Stausholm on Tuesday.

“This is a massive step forward, it started a year ago when I appointed Bold to run the copper portfolio and it has been a lot of effort.”

Speaking from the Mongolian capital of Ulaan Baatar before travelling to the mine site on Tuesday, Mr Stausholm confirmed that some disputes with the government remained unresolved.

“We have a few smaller issues which we, with a reset of relationships, for sure it will solve,” he said.

“We still have an outstanding tax dispute which I expect we will resolve in the course of the year.

“All the conditions for starting up the mine have been resolved, we have got a path forward on power and we don’t need to build a coal-fired power plant, that is a massive achievement in my view”

Complex ownership

Rio has mined copper, gold and silver from a small open pit mine at Oyu Tolgoi – located in the remote South Gobi Desert – since 2011, but the priority has always been to unlock the huge resource through a massive underground expansion of the mine.

A Mongolian company called Oyu Tolgoi LLC owns 100 per cent of the mine, and that company is 66 per cent owned by Toronto-listed company Turquoise Hill and 34 per cent owned by the Mongolian government.

Rio’s exposure to the mine comes through its 50.79 per cent stake in Turquoise Hill, and Rio’s power has been enhanced by the fact it is the main financier and technical manager of the expansion project.

Relations between Rio and the Mongolian government have always been fractious; Oyu Tolgoi is Mongolia’s largest private-sector employer, the biggest source of foreign investment and the prime bellwether for investor sentiment toward the developing nation.

Those facts have made Oyu Tolgoi a political football in Mongolia at the best of times, and relations with the government deteriorated when Rio’s management of the expansion project led to massive cost and schedule blowouts before the onset of the pandemic exacerbated those blowouts.

The blowouts were painful for the Mongolian government, which faced the prospect of stumping up more money to fund its 34 per cent share of construction costs and waiting longer for dividends from the mine to start flowing.

The Mongolian government wanted Rio, as the project manager that oversaw the blowouts, to bear the brunt of those costs, and the two parties have effectively been in a stand-off over the matter since mid-2019.

Tuesday’s agreement to waive the Mongolian government’s debt resolved those tensions.

The waiving of the debt had long been anticipated but not enthusiastically by some minority shareholders in Turquoise Hill.

Pentwater Capital has been the second biggest shareholder in Turquoise Hill in recent years and has previously suggested that Rio - as the manager of the cost blow outs - should provide financial compensation to the Mongolian government, rather than Turquoise Hill.

Pentwater spokesman Matt Halbower said Tuesday’s deal had confirmed his firm’s fears, with the Mongolian government debt to be waived by Turquoise Hill, meaning minority shareholders will take a hit as well as Rio.

“It was Rio Tinto’s concealment of the cost overruns and schedule delays which necessitated the large compensation package provided to the government of Mongolia. Turquoise Hill has now been left holding the bag by being forced to pay for Rio’s lies because Rio has steadfastly refused to allow minority shareholders to have a voice on Turquoise Hill’s board,” he said

Mr Stausholm said Ro’s contribution to the settlement was in the right proportion.

Turquoise Hill requires a further $US3.4 billion to complete the underground expansion and expects to be able to source more than half that amount by refinancing existing debt and taking on some new debt.

Turquoise Hill will also be compelled under the deal to raise funds through a share issue before August 31; the share issue must raise at least $US650 million with Rio set to take up its share of the raising.

The previous chief executive of Turquoise Hill, Ulf Quellman, had publicly pushed back against Rio over how to fund the shortfall.

Mr Quellmann was ousted soon after he took that stance and relations between Turquoise Hill and its parent have been more cordial ever since.

“We are very excited to be starting work on the undercut, which is critical to unlocking the immense potential of this world-class, high grade deposit for the benefit of all stakeholders,” said Turquoise Hill chief executive Steve Thibeault.

“Following the agreements with the Government of Mongolia and the Amended Heads of Agreement with Rio Tinto being put in place, we now have greater certainty and confidence to complete construction of this once-in-a-generation mine.”

Peter Ker covers resource companies, based in Melbourne. Connect with Peter on Twitter. Email Peter at pker@afr.com

Rio Tinto chief executive Jakob Stausholm says a deal to cancel $US2.4 billion ($3.3 billion) in debt owed by the Mongolian government will settle years of disputes and delays that have plagued the mining giant’s plans to enlarge the Oyu Tolgoi copper project.

The Anglo-Australian miner and its subsidiary Turquoise Hill Resources on Tuesday announced they had formalised an agreement that would “reset” their strained relationship with the developing nation’s government by increasing the financial benefits for the people of Mongolia. The deal has enabled the $US6.9 billion expansion, one of Rio Tinto’s most important growth projects, to begin underground mining operations in coming days.

The deal marks a positive development for Rio Tinto’s efforts to expand its output of commodities that will be needed in increasingly vast quantities to build green energy technology as the world decarbonises after the Serbian government last week revoked its licences to build Europe’s biggest lithium mine.

Mr Stausholm, who was elevated to chief executive after Rio Tinto’s destruction of Aboriginal rock shelters in Western Australia forced the resignation of his predecessor, has made a top priority of forging closer ties with governments and stakeholders around the world. He has visited Mongolia twice in recent months in a bid to address deepening concerns in the country that the economic benefits of the project for Mongolians were being eroded.

Under the deal ratified by the Mongolian parliament, Rio Tinto will wipe the government’s debt owed for the nation’s share of the mine’s construction costs, plus interest, and will begin underground operations imminently with a mining method known as the “undercut”. The Oyu Tolgoi project has also agreed to buy electricity from the Mongolian grid, while Rio Tinto will help expand renewable energy generation.

“It’s been a lot of work, but we are very happy with the outcome,” Mr Stausholm told The Age and the Herald.

“I think with this agreement we have found a way where there is the right benefits for the people of Mongolia.”

Mongolia’s Oyu Tolgoi deposit is one of the world’s biggest-known copper and gold deposits. The Mongolian government holds a 34 per cent stake in Oyu Tolgoi and Rio Tinto’s majority-owned Turquoise Hill Resources owns 66 per cent.

Rio Tinto’s Oyu Tolgoi expansion is seen as one of its most important growth projects and a key plank of its ambition to diversify away from iron ore and push deeper into minerals that will be increasingly needed to build clean-energy infrastructure such as copper and lithium. But the project has been beset by a series of long delays and cost blowouts since construction began in 2019. The mine’s expansion was first anticipated to cost $US5.3 billion but is now forecast at $US6.92 billion.

The company on Tuesday said the “undercut” would begin in coming days, unlocking the most valuable part of the mine and putting Oyu Tolgoi on track to deliver first production of copper by 2023. It is expected to become the fourth-largest copper mine worldwide by 2030.

Mongolian Prime Minister Luvsannamsrain Oyun-Erdene said the commencement of underground mining operations demonstrated that Mongolia could “work together with investors in a sustainable manner and become a trusted partner”. “I am happy to express Mongolia’s readiness to work actively and mutually beneficially with global investors and partners,” he said.

Rio Tinto’s progress in growing its exposure to copper comes after its push into lithium, another of the key raw materials needed to build electric cars, faced a setback last week. The Serbian government revoked its licences to develop the $US2.4 billion Jadar lithium mine following months of large-scale public protests over the project’s potential environmental impacts.

“We are listening to our people and it is our job to protect their interests even when we think differently,” Serbian Prime Minister Ana Brnabic said last week.

The decision to revoke Rio Tinto’s licences comes with the Serbian government under significant public pressure ahead of a general election in April. Relations between Serbia and Australia have also deteriorated since the deportation of unvaccinated tennis star Novak Djokovic.

It’s been a ten-year-long and difficult gestation, but Rio Tinto has finally given birth to a workable agreement with the Mongolian government to progress the massive $9.7 billion copper project, Oyu Tolgoi.

Glib as this might be, Rio can only be thankful that Mongolia is not home to an unvaccinated tennis star who was denied the opportunity to play in the Australian Open.

Last week and just days after Novak Djokovic was deported from Australia the Serbian government tore up Rio Tinto’s licences for a $3.3 billion lithium project.

The tennis star’s deportation seemed to be a straw for the Serbian government which is facing an election and a tide of public opposition to the lithium project’s environmental risks. The Serbian public appeared equally outraged by the Australian government’s treatment of its national tennis treasure.

No amount of Rio diplomacy or generous concessions could save its current relationship with Serbia - despite the fact that Rio chief executive Jakob Stausholm told the Sydney Morning Herald and The Age on Tuesday that he ‘remained hopeful’.

But Stausholm has plied his diplomatic skills and Rio’s hefty balance sheet to make peace with Mongolia.

This previously toxic relationship between Rio and the Mongolian government required serious concessions to convince the Mongolian parliament of its sovereign benefit.

Rio needed to either fire the money gun or risk the stalemate lasting for years.

This was achieved by Rio waiving the $3.3 billion loan it extended to the government and agreeing to ultimately have Mongolia supply the power to the project. (For its part Mongolia will allow Rio to continue its power supply deal with the Chinese in the short term.)

Stausholm clearly took the view that the negative impact these concessions will have on the returns from Oyu Tolgoi would be of lesser concern than abandoning the crucial underground stage of the project.

It’s a project that has been riven with discord, has experienced time and cost blowouts and geological issues and has been weeping sore for successive Rio managements.

Only a year ago Rio was threatening to pull out of the important underground mining element of the project unless concessions were granted by the Mongolian government.

But on Tuesday morning Stausholm was notching up one year in the job at Rio by sitting at Ulaanbaatar airport in Mongolia on his way to the Oyu Tolgoi site to meet with the prime minister, Oyun-Erdene Luvsannamsrai, for a ribbon cutting ceremony about which he said he was ‘super excited’.

While not all the bows have been tied on this deal – the most notable of which is tax treatment – the major obstacles have been overcome.

It wasn’t a one-man deal. It certainly helped that the chief executive of Rio’s copper division, Bold Baatar, is Mongolian born.

The deal ushers in a first major win for Stausholm whose more diplomatic and collegiate style sits in stark contrast to that of his predecessor, Jean Sebastien Jacques who left the company in the wake of Rio’s destruction of the culturally significant Juukan Gorge in Western Australia.

Although Juukan is a mess made by previous Rio regimes it will test Stausholm’s negotiation and compromise skills – and there is plenty left to do.

Sorting out Mongolia will be a welcome win for Rio Tinto – which has been battered by numerous issues – the most significant of which is weak annual output from its West Australian iron ore operations.

Greater focus on the management of Indigenous heritage issues has played into production, but Rio, like other West Australian producers, have also needed to deal with a COVID-19 related skills shortage and rain.

However, both BHP and Fortescue appear to have handled the pandemic’s challenges better and with less impact on production in their December quarters.

MINSK, 24 January (BelTA) – Belarusian President Aleksandr Lukashenko sent greetings to Mongolian President Ukhnaagiin Khurelsukh and the Mongolian people on the occassion of the 30th anniversary of the establishment of diplomatic relations between Belarus and Mongolia, BelTA learned from the press service of the Belarusian leader.

The head of state stated that the dialogue between the two countries has strong historical roots, imbued with warmth and respect. "Mongolia was one of the first to recognize the sovereignty and independence of Belarus. We are sincerely grateful for the support, which played an important role at the stage of formation of the young Belarusian state," the message of greetings reads.

The president welcomed the intensification of contacts with Ulaanbaatar in recent years in various fields.

"I am convinced that the successful implementation of the plans and projects, the joint search for promising areas of cooperation will significantly advance bilateral cooperation, expand its horizons and raise it to a qualitatively new level," the Belarusian leader stressed.

Aleksandr Lukashenko wished strong health and implementation of all his plans to Ukhnaagiin Khurelsukh, and peace and prosperity to the people of Mongolia.

In turn, the president of Mongolia said in his message of greetings to the Belarusian head of state that over the past 30 years the two countries have been successfully developing traditionally friendly relations in many areas such as trade, economy, agriculture and education, contributing to the prosperity of the states and well-being of the peoples.

“I am confident that our bilateral relations and cooperation will continue to expand and strengthen in order to overcome global challenges, such as ensuring sustainable development, combating pandemics, climate change and desertification, as well as to achieve the social and economic goals and objectives of our countries,” Ukhnaagiin Khurelsukh stressed.

The president of Mongolia wished Aleksandr Lukashenko and the Belarusian people good health, well-being and prosperity.