Mongolia reported 42 daily cases of coronavirus in the capital and 2 in Zavkhan aimag after PCR testing of 19,507 people nationwide yesterday, the Health Ministry said on March 4.

Mongolia has reported a total of 3,076 cases of coronavirus, including 2,415 recoveries (+55 for a day).

657 patients are treated in medical institutions, 2 patients are in extremely serious condition, 7 in serious condition, and the remaining patients have a mild form of the disease.

Ulaanbaatar /MONTSAME/ “Mongolian lamb grill” fast food restaurant was opened at “Saruul” trade center on March 3.

Generally, Mongolians do not use very young animals for their consumption, but this new service is being introduced within a “Mongolian eco lamb” project that aims to improve processing of Mongolian livestock meat, provide population with nutritious, eco food and make export. Specifically, “Mongolian eco lamb” project is a sub project being realized within the “Rich Herder” project.

"Putting young livestock into economic circulation gives various benefits including profiting herders, creating new consumption and Mongolian lamb meat brand and exporting quality meat. By gaining profit, herders’ livelihood will be raised," coordinator of “Rich Herder” project L.Odser said. Numerous works are being carried out in the scope of "Rich Herder” project beginning from breeding selection to involving herders in business training and making market research on meat processing and new meat products.

Product development of “Mongolian eco lamb” project is now underway and the project team has received orders from consumers to introduce the product in foreign and domestic market networks under franchising, noted 'Mongolian eco lamb' project coordinator B.Soyoltuya.

Ulaanbaatar /MONTSAME/. Minister of Agriculture, Food and Light Industry Z.Mendsaikhan met today with Ambassador Extraordinary and Plenipotentiary of Hungary to Mongolia Borbala Obrusanszky.

Minister Z.Mendsaikhan expressed his satisfaction with the start of the Biocombinat state-owned factory renovation project which is an important cooperation project between the two countries, while stressing the need for both sides to intensify the realization of the project and complete it on time.

Ambassador Borbala Obrusanzsky expressed readiness of Hungarian government to provide soft loans for the next phase of cooperation projects.

In his turn, Minister Z.Mendsaikhan said that the loan will be spent to rehabilitate and build wells and water points in Mongolia, to develop flood water management, and to establish potato and vegetable warehouses.

In addition, Minister Z.Mendsaikhan said that Mongolia is seeking to diversify its export products and become an agricultural exporter with using its resource of 71 million livestock. Moreover, he introduced the need to implement projects in line with Mongolia’s medium and long-term development policy document and the Government Action Plan for 2020-2024.

Expressing gratitude to the Hungarian side for supporting the education sector of Mongolia by extending its scholarship program until the end of 2023, the Minister expressed desire to include the sector’s professionals and personnel in the program.

Ulaanbaatar /MONTSAME/ ‘Economic freedom index 2021” released by Heritage Foundation ranks Mongolia 86th out of 178 countries and classifies it as “moderately free”.

Since 1995, the Heritage Foundation, headquarters in Washington, D.C. USA, has been measuring countries’ economy in four broad pillars - rule of law, government size, regulatory efficiency and open markets and dividing them into five categories namely free (80-100 scores), mostly free (70-79.9 scores), moderately free (60-69.9 scores), mostly unfree (50-59.9 scores) and repressed (0-49.9 scores).

Mongolia gained 62.4 scores and Its overall score has increased by 6.5 points, primarily because of an improvement in fiscal health. Mongolia is also ranked 14th among 40 countries in the Asia–Pacific region, and its overall score is above the regional and world averages.

Singapore led the countries for the second year with the highest score or 89.7 followed by New Zealand (83.9), Australia (82.4), Switzerland (81.9) and Ireland (81.4).

Ulaanbaatar /MONTSAME/. At today’s COVID-19 press briefing organized by the Ministry of Health, O.Dashpagma, Director of the Vaccination Department of the National Center for Communicable Diseases reported that since February 23, when the vaccination drive kicked off in Mongolia, a total of around 13,200 people have received the first dose of AztraZeneca vaccine against coronavirus until today, March 04.

Among them, 9500 people are healthcare personnel, including members of the teams administering COVID-19 vaccine, and 2,600 people are the first responders against CVOID-19, such as police, emergency management and professional inspection officials.

The vaccination is continuing at 18 locations in Ulaanbaatar city. In the past 24 hours, around 2,000 people have got inoculated with the first dose of the COVID-19 vaccine.

According to the Ministry of Health, people over 50s, people with disabilities, individuals with underlying medical conditions, such as those with cardiovascular diseases, diabetes and cancer, groups of individuals of ready reserve mobilization for COVID-19 vaccination and response measures, employees of strategically-important sectors, such as border employees and coal-hauling truck drivers and employees of all-levels of educational organizations are next in line to receive coronavirus vaccines.

Rio Tinto’s (ASX, LON, NYSE: RIO) chairman Simon Thompson became on Wednesday the latest high-profile executive to announce his departure amid backlash for the company’s destruction of two 46,000-year-old rock sacred shelters in Western Australia last year.

Thompson, a former geologist and investment banker, said he will not seek re-election as a director at the 2022 annual general meetings, as he was “ultimately accountable” for the blasting at Juukan Gorge to expand an iron ore mine.

He also regretted the fact that the destruction had “overshadowed” the company’s successes in 2020 – during which it paid a record dividend to investors as a result of booming iron ore prices.

Non-executive director Michael L’Estrange, who led the review into Rio’s handling of the incident, will retire in May. The company said he needed to reduce his workload after “significant surgery.”

L’Estrange’s internal examination of the caves disaster was later criticized by Australian politicians, including Senator Pat Dodson, who call it an “unsatisfactory piece of work” that was “full of mea culpas and corporate lingo.”

The review concluded in August that there was “no single root cause or error that directly resulted in the destruction of the rock shelters.”

But internal documents revealed in September that Rio Tinto had engaged a law firm before the blasting, in case the traditional owners applied for a court injunction to save the rock shelters.

Heads roll

In addition to Thompson and L’Estrange, former chief executive Jean-Sébastien Jacques is due to leave the company at the end of March. He has been replaced by Jakob Stausholm, who was chief financial officer.

Rio initially penalized Jacques by cutting his short-term bonuses, amounting to almost $5 million (£3.7m).

Last month, however, the company revealed that Jacques had finished 2020 with a substantial payout. Jacques received £13.3 million ($18.6 million) under Australian accounting rules, up from £7.1 million ($9.9 million) in 2019.

Two other senior executives, who were in charge of the iron ore division and the unit responsible for dealing with Indigenous communities, also received hefty remunerations. Both Chris Salisbury and Simone Niven left Rio last year.

The National Native Title Council (NNTC) welcomed the latest departures, adding that if Rio Tinto was serious about cultural change it would replace at least one of the outgoing executives or directors with at one Aboriginal person.

“They are signalling the right intent but the proof will be in the pudding, in the action that they deliver,” NNTC chief executive Jamie Lowe said in an emailed statement.

The Western Australian government has promised to update Indigenous heritage laws that allowed Rio Tinto to legally destroy the sacred sites.

While certain Mongolians are well-known in Japan, especially the sumo wrestlers who have come to dominate the sport in the past 20 years, Mongolia the country mostly draws a blank in the popular mind.

Kentaro, a multicultural actor who goes by one name and has Hollywood credits (“Rush Hour 3,” “Taxi 2”), did not exactly set out to educate the audience with his first film as a director, “Under the Turquoise Sky,” but he still offers an affectionate, visually sumptuous love letter to Mongolia’s land, people and culture. Whether it motivates more Japanese to visit Mongolia (about 22,500 did in 2017) I have no idea, though its beauty shots of the wide open Mongolian landscape, made with an 8K video camera, may prompt many a Google search.

Co-scripted by Kentaro and Amra Baljinnyam, a Mongolian actor who also stars in the film, the story is simplicity itself: A sickly corporate titan, Saburo (Akaji Maro), decides to send his spoiled grandson Takeshi (Yuya Yagira) to Mongolia to search for the daughter he fathered with a local woman 70 years ago, when he was a World War II prisoner of war.

The idea, Saburo says, is to give the kid “a purpose in life,” though how wandering about the Mongolian steppes will accomplish that he doesn’t say. Even more strangely, he hires as a guide Amaraa (Amra), a burly man who stole a horse from his stable and rode it through downtown Tokyo with the police in hot pursuit (a farcical, dream-like sequence that signals early on the film’s freeform mix of genres and moods).

Once in Mongolia, Takeshi and Amaraa head off into the backcountry in a rattletrap white minivan. Mishap after comic mishap follows, including the vehicle’s foredoomed breakdown. Meanwhile, Amaraa asks a succession of strangers for the whereabouts of the daughter. And predictably he comes up with exactly nothing.

Just when the film seems stuck in a repetitious rut, like the van’s wheels spinning in the mud, it begins to give us glimpses of another, more mysterious Mongolia. Takeshi and Amaraa encounter a chanting, drum-beating shaman atop a rocky hill and enjoy the infectiously rhythmic performance of traditional musicians around a roaring campfire.

And when the car gives out in a cloud of smoke, Amaraa successfully negotiates for a replacement — an aged motorcycle and sidecar — with its nomad owner using only gestures and glances. It’s a funny scene that is suggestive of an older, wilder world in which communication needs no words.

Also, Takeshi’s change of heart — that is, his progress from self-centered playboy to considerate grown-up — may be as inevitable as the sunrise, but it comes from a real, elemental place, not just a plot device. Playing this scapegrace hero, Yagira seems to be hugely enjoying himself: Compared with his more serious work for Hirokazu Kore-eda (“Nobody Knows”) and other directors, this role is a walk in the park — or rather a stroll in the steppes. But he also completely embodies Takeshi’s transformation.

And his mission? For all its detours, from the ridiculous to the sublime, the film doesn’t forget Takeshi’s search for his long-lost aunt. But the real value of the film lies in its Mongolian characters, who amuse, impress and inspire with a naturalness that feels uncalculated — much like that endless turquoise sky.

Fitch Ratings - Hong Kong/Tokyo - 02 Mar 2021: Fitch Ratings has affirmed Mongolia-based coal producer Mongolian Mining Corporation's (MMC) Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B'. The Outlook is Stable. Fitch has also affirmed MMC's senior unsecured rating of 'B' with a Recovery Rating of 'RR4'.

MMC's rating is constrained by its small scale, single-product focus on hard coking coal and limited cost competitiveness outside of northern China, its main market. However, MMC has flexibility in capex, which should give it a sufficient buffer to continue generating free cash flow (FCF) during coal price downturns.

KEY RATING DRIVERS

Robust Market Fundamentals: The affirmation of MMC's ratings and Stable Outlook reflect our view that MMC's business and credit profiles remain solid. Fitch estimates MMC's leverage exceeded our negative guidance and FCF was mildly negative in 2020 due to Covid-19-related disruption of border throughput. The disruptions have been mostly resolved, and we expect earnings and cash flow to improve significantly in 2021 on strong market fundamentals driven by stable demand from China's steel sector and robust coking coal prices.

We believe MMC can achieve sales volume of around 4.9Mt as border throughput normalises, with potential to increase sales volumes by using inventory stockpiles if border traffic improves further.

Covid-19 Impact Manageable: Some tail risks from the pandemic remain as potential outbreaks in Mongolia could disrupt border throughput. However, preventive measures seem to be effective as evident from the uptick in border throughput. MMC expects throughput to recover to about 700 trucks per day, broadly in line with 2019, with room for further improvement as logistical bottlenecks have been removed. Therefore, we do not expect any major disruption of MMC's operations and export sales comparable to the instability in 2020.

Small Scale, Single Product: MMC is small compared with Fitch's global rated coal-mining companies in terms of revenue, which we estimate was down by more than 30% yoy in 2020 (2019: USD627 million). Hard coking coal accounted for over 90% of MMC's total revenue in 2019. The latest coal reserve statements show pro forma total run-of-mine coal reserves of 499 million tonnes, giving MMC a reserve life of 30-35 years. MMC's small scale and product concentration constrain its business profile to the 'B' rating category.

Cost Competitive in Limited Markets: MMC is cost competitive only in the northern parts of China due to the proximity of its mines to steel mills in that area. MMC's mine gate-cash cost is low compared with that of global peers at roughly USD30 per tonne, but MMC's transportation cost by land to its Chinese customers is around USD20 per tonne, which limits its cost competitiveness. Delivery beyond northern China would further increase costs, leaving MMC with customers that are mainly in northern China.

Neutral Regulatory Environment: The Mongolian tax and royalty stabilisation certificate granted to MMC for 24 years in 2015 outlines the tax and royalty rates that apply to the company. The certificate helps mitigate risks of sudden shifts in Mongolia's royalty and tax policies. Management said previous bottleneck issues at the China-Mongolia border have been mostly resolved with newly installed gates and systems that will enable MMC to increase its sales to Chinese customers over the next few years.

Capex Flexibility: The company estimates its minimum sustaining capex, most of which is for regular maintenance of its mines, mining fleets and coal-hauling trucks, will be around USD5 million per year. MMC capitalises some of its stripping cost, where stripping of the mine results in long-term benefits. The capitalised stripping cost and minimum sustaining capex are likely to be between USD60 million-83 million per annum in 2021-2023. MMC can decrease its capitalised stripping cost and reduce capex should there be a significant coal price decline.

Moderate Financial Profile: MMC's financial and liquidity profile is in line with that of peers with similar ratings. MMC's funds from operations (FFO) net leverage likely exceeded our negative guidance in 2020. However, increasing export sales against the backdrop of the strong recovery in China, MMC's main market, should lead to a notable improvement in leverage.

MMC's credit profile is also supported by positive FCF due to sustained profit generation based on a stable metallurgical coal-price environment and steady levels of capex. In addition, MMC benefits from ample maturity headroom, with the USD440 million notes only coming due in 2024. We also expect MMC to be able to maintain its FFO fixed-charge coverage above 3x in the near future.

DERIVATION SUMMARY

MMC has a much smaller scale in terms of revenue and EBITDA than other rated coal producers, such as Yanzhou Coal Mining Company Limited (BB-/Rating Watch Positive) and PT Golden Energy Mines Tbk (B+/Stable).

MMC has a single product, similar to its peers. MMC has slightly better margins than PT Golden Energy Mines. MMC's operational profile in terms of mine life is strong compared with that of Geo Energy Resources (CCC), which has a mining life of less than five years, and at a similar level as that of PT Golden Energy Mines, which has a mining life of over 25 years.

MMC's financial and liquidity profile is similar to its 'B' rated peers, with FFO net leverage expected to be less than 3.5x by 2022 and FFO fixed charge cover of above 3x from 2021. MMC's rating however remains constrained by its lack of geographical diversification and scale.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Our Rating Case for the Issuer:

- Hard coking coal average selling price of USD121/tonne from 2021-2023;

- Capex of up to USD83 million per annum from 2021-2023.

Key Recovery Rating Assumptions

The recovery analysis for MMC is on a going-concern basis in case of bankruptcy and assumes that the company would be reorganised and not liquidated. We have assumed a 10% discount to enterprise value to account for bankruptcy-related administrative claims.

Going-Concern (GC) Approach

The GC EBITDA estimate of USD160 million (2019: USD242 million) reflects Fitch's view of a sustainable, post-reorganisation EBITDA level upon which we base the enterprise valuation. We have taken a lower sustainable EBITDA because a restructuring would most likely be a result of a coal-market downturn.

An enterprise value (EV) multiple of 4x EBITDA is applied to the GC EBITDA to calculate a post-reorganisation EV. The choice of this multiple considers the EV/EBITDA multiple that we use for several rated Indonesian coal company peers that also adopt the GC approach for recovery analysis.

The recovery waterfall results in a 100% recovery estimate corresponding to a 'RR1' Recovery Rating for offshore senior unsecured debt. However, MMC's Recovery Rating is capped at 'RR4' because Mongolia is subject to a soft cap of 'RR4', as it falls under the Group D of countries in terms of creditor-friendliness under Fitch's Country-Specific Treatment of Recovery Ratings Criteria.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

- Positive rating action is not envisaged in light of MMC's small scale and lack of cost competitiveness beyond northern China.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

- Generation of negative FCF;

- FFO net leverage sustained above 3.5x;

- Any negative regulatory changes.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

LIQUIDITY AND DEBT STRUCTURE

Liquidity Dependent on FCF: MMC has no liquidity issues for now as it does not rely on bank loans, but rather on notes financing with the nearest upcoming US dollar notes due in 2022 of around USD15 million as of 31 December 2019. MMC had no short-term debt as of 31 December 2019, with cash on hand of USD41 million. It also has limited undrawn committed bank facilities. However, failure to continually accumulate FCF may lead to a liquidity crunch in a downturn. In addition, the company will likely need to refinance at least part of its notes maturing in 2024, as we do not expect cumulative FCF generation to be sufficient to redeem the full amount.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Deputy Minister S.Amarsaikhan announced today that the Cabinet at its meeting earlier today issued instruction to make preparations to reopen the country’s border from May 1.

During his meeting with representatives of tourism industry last week, the Prime Minister undertook to make every effort so that the industry operates normally. The Deputy Prime Minister underlined that the border will reopen by May 1 as long as the vaccination program speeds up and businesses and public sector organizations stick to COVID-19 control measures. Emphasizing that the working group, which was set up by the State Emergency Commission to ensure the readiness of border checkpoints, worked at Altanbulag and Zamyn-Uud border checkpoints and western and eastern border areas to improve disinfection practices, the Deputy PM said all necessary preparations are underway to reopen the border when there are no risks.

Deputy PM S.Amarsaikhan also noted that the State Emergency Commission, Ministries, and relevant departments should further intensify their efforts as per the Cabinet’s instruction to reopen the border from May 1.

Ulaanbaatar /MONTSAME/. The Financial Regulatory Commission of Mongolia has developed a draft regulation for the ‘Regulatory Sandbox’ mechanism with a view to establish legislative framework in the country to keep up with the fast pace of technological innovation and support introduction of new technology-based products, services and business models of financial service markets into the domestic market.

The Financial Stability Council, responsible for safeguarding the financial stability of the markets by determining any kind of financial risks and managing them within the current laws and regulations, has conducted discussions on the draft regulation at its regular meeting.

On March 01, the Financial Stability Council, consisting of heads of the Bank of Mongolia, Ministry of Finance, Financial Regulatory Commission and Deposit Insurance Corporation, approved the ‘Regulation for Regulatory Sandbox’.

The regulation sets out to enable testing environment designed for experimenting new technology-based products, services and business models under regulations and guidelines provided by the Financial Regulatory Commission and the Bank of Mongolia, identify criteria for participants and relationship between regulators and participants.