Mongolia registered 10 new COVID-19 cases in the last 24 hours, bringing the nationwide tally to 801, the National Center for Communicable Diseases (NCCD) said Tuesday.

The latest confirmed cases were locally transmitted, said the NCCD in a statement. A total of 369 such cases have been reported so far across the country.

Domestically transmitted cases have been reported in the capital city of Ulan Bator and provinces of Selenge, Darkhan-Uul, Govisumber, Orkhon, Dornogovi and Arkhangai.

The first locally transmitted case was a woman whose 29-year-old husband, a transport driver, returned from Russia and tested positive for the virus four days after he was released from a 21-day mandatory isolation on Nov. 6.

Mongolia has imposed a nationwide lockdown until Dec. 1 to halt the virus's spread and identify all people who had contact with locally transmitted COVID-19 patients.

On Sunday, the Mongolian government decided to extend the lockdown in Ulan Bator and the provinces of Selenge and Arkhangai by 10 days until Dec. 11.

The Asian country has recorded 358 recoveries, with no deaths so far. Enditem

Ulaanbaatar /MONTSAME/. On November 30, President of Mongolia Battulga Khaltmaa held a meeting with officials from British-Swedish pharmaceutical company AstraZeneca via teleconference to exchange information on supplying coronavirus vaccine being developed by the company to Mongolia.

The AZD1222 coronavirus vaccine, under development by the University of Oxford and AstraZeneca, has shown 70 percent efficacy, as reported by the pharmaceutical company on November 23.

At the outset of the meeting, President Battulga commended the AstraZeneca for exerting great efforts in developing and supplying the vaccine that is crucial in the fight against COVID-19 global pandemic. He then noted that since more than half of Mongolia’s population lives in the capital city of Ulaanbaatar, posing an increased risk of spreading the virus, it is important to vaccinate the entire population within a short period of time when it becomes available.

The President expressed his eagerness to first purchase COVID-19 vaccines being developed by the company as soon as they start producing.

In turn, the AstraZeneca company expressed their delight with the fact that President of Mongolia is himself attaching significance to this issue, and also pledged to cooperate with Mongolia and include Mongolia among the first countries to receive vaccine shipments when they start selling.

At the meeting, President Battulga informed that he will be giving directions to the Government and the State Emergency Commission of Mongolia to ensure preparation for purchasing the AstraZeneca’s vaccine.

Ulaanbaatar /MONTSAME/. On November 30, Oyu Tolgoi Board of Directors resolved to establish a special committee to study the reasons behind the cost overrun and delay in the development of Oyu Tolgoi underground mine, and draw conclusion, according to the press release posted by the cabinet secretariat on its website.

The special committee will be made up of 4 members, including two members nominated from the Erdenes Oyu Tolgoi LLC and two members nominated by the Turquoise Hill Resources Ltd.

The committee will have key responsibilities to select and appoint external experts to review the reasons why costs for the Oyu Tolgoi underground mine development have increased and the development is running behind its schedule, and submit their own proposals based on the experts’ final conclusion for the Oyu Tolgoi Board’s discussions.

The experts’ conclusion on relevant matters, including but not limited to, project management, mine design and cost control, is expected to be made within a maximum of 6 months.

“In spite of the original estimates of USD 5.3 billion capital for the Oyu Tolgoi underground mine development, Rio Tinto announced on November 16, 2019, that development capital spend for the project was increased by USD 1.2 billion to USD 1.9 billion, and the estimated date of the first sustainable production was postponed by 16-20 months than initially planned” the press release reads.

“Around 80 percent of the total reserves of the Oyu Tolgoi copper-gold deposits is to be extracted from the underground and once the underground mine starts producing, Oyu Tolgoi is expected to become the world’s third-largest copper producer. Oyu Tolgoi is jointly owned by Erdenes Oyu Tolgoi LLC on behalf of the Government of Mongolia (34 percent) and Canadian-based Turquoise Hill Resources (66 percent), listed on the Toronto and New York Stock exchanges. Rio Tinto has a 50.8 percent controlling stake in Turquoise Hill and manages Oyu Tolgoi on behalf of the partnership. As a manager and mine operator of the Oyu Tolgoi project, Oyu Tolgoi LLC conducts management of the mine’s activities on a day-to-day basis.”

Concerning the decision, head of the Cabinet Secretariat and Minister of Mongolia L.Oyun-Erdene shared his views by saying “It is of significance that Oyu Tolgoi’s Board of Directors is taking a certain measure to hold examination by external experts on the reasons behind the more than 30-percent growth than originally planned in the investment costs for the Oyu Tolgoi’s underground development and around two-year of delay in its expected completion date. I am delighted to see that the Board has not relaxed its control over the company’s operations, and principles of good governance are in place.”

“While we assure of our support to the decision made by the Oyu Tolgoi Board of Directors, we are convinced that making clear of causes of the investment cost increase in the underground mine development through the experts’ conclusion will serve the interest of the Oyu Tolgoi LLC and all of its stakeholders, and will help to maintain longstanding operations of the company, ensuring its effectiveness for a prolonged period of time.

The Government of Mongolia fully supports the Oyu Tolgoi’s underground mine development and is confident that the time will shortly arrive when the world-class underground mine is put into production, contributing accordingly to the economic and social development of Mongolia” says Oyun-Erdene.

The world’s second-largest miner, Rio Tinto, (ASX, LON, NYSE: RIO) is facing stronger headwinds over how to finance its massive Oyu Tolgoi underground copper project in Mongolia after a US hedge fund threatened the company with legal action.

Pentwater Capital, the second-largest shareholder in Rio-controlled Turquoise Hill (TSX, NYSE: TRQ), said on Monday it was ready to file an “oppression” order against the mining giant.

The move is a statutory right available to “burdened” shareholders, empowering them to bring an action against the corporation in which they own shares. They can do so when the conduct of the company has had an effect that is oppressive, unfairly prejudicial or disregards the interests of a shareholder.

The Naples, Florida-based fund said it would spare Rio Tinto the legal action if it allows its subsidiary to take on more debt to fund the $6.8 billion underground expansion.

“We do not undertake this lightly, but enough is enough,” Pentwater chief executive Matthew Halbower said in the open letter.

“This mine is a jewel. It will be the third-largest gold and copper mine in the world. It will produce tens of billions of dollars of free cash flow for decades. Its owners should be treated as business partners, not as puppets or pawns,” Halbower said.

The dispute over funding the expansion’s sudden cost increase started to heat up in early November when Turquoise Hill, which is Oyu Tolgoi’s operator, launched arbitration proceedings against Rio to get clarity on funding.

Rio Tinto has said it will not allow the Canadian miner to take on more than $500 million in additional debt, telling the company to fill up a funding gap of up to $3 billion by reprofiling loans and raising equity.

Pentwater Capital said it strongly opposes Rio’s attempts to force Turquoise Hill to conduct an equity raise, despite the fact that the current equity price “severely undervalues the company.”

The fund noted there are “much cheaper and more advantageous financing options” available to the Canadian company, such as streaming and bond financing.

This is not the first time Pentwater has taken issue with the way Oyu Tolgoi’s expansion is being handled. In April, it demanded a shakeup at operation over what it claimed was “a massive devaluation” of the asset.

Pentwater’s threat comes on the heels of a similar warning issued by Odey Asset Management, a London-based hedge fund. The firm accused Rio last week of holding the “people of Mongolia…accountable for Turquoise Hill’s failings” after it called the country’s government’s $7 billion-equity stake in the copper-gold mine “worthless.”

Mongolian muddles

Mounting investor activism is just one of the may headaches Rio Tinto has had while building what would rank as one of the world’s three largest copper mines when operating at full tilt – now expected to be by 2025 at the earliest.

In January 2018, Mongolia’s government served Oyu Tolgoi with a bill for $155 million in back taxes — the mine’s second tax dispute since 2014. The company said at the time the charge related to an audit on taxes imposed and paid by the mine operator between 2013 and 2015.

Shortly after, the mine had to declare force majeure after protests by Chinese coal haulers disrupted deliveries near the border.

The situation prompted Rio’s former chief executive Jean-Sebastien Jacques to visit Prime Minister Ukhnaagiin Khurelsuk to discuss how to build “win-win” partnerships. The trip was followed by the company’s announcement that it was opening a new office in the country, focused on exploration and building local relationships.

The issue resurfaced later, when a group of Mongolian legislators recommended a review of the 2009 deal that launched construction of the mine. It also advised revoking a 2015 agreement allowing for an underground expansion.

In December that year, Mongolia’s parliament unanimously approved a resolution that reconfirms the validity of all the Oyu Tolgoi mine-related agreement, bringing the 18-month review to a close.

Behind schedule and over budget

Mongolia has also complained about overruns in the past. Much of Oyu Tolgoi’s copper lies deep underground. When Rio finally kicked off the delayed project, profits from surface extraction were meant to pay for digging up more of the copper below.

With time, it became clear the underground mine alone would cost as much as a third more than the original $5.3 billion budget.

The copper-gold mine is located in the South Gobi region of Mongolia, about 550 km south of the capital Ulaanbaatar.

Rio Tinto cut estimated reserves at the project in July and confirmed it would face delays and higher costs after ground instability forced it to redesign the mine plan.

The underground expansion of Oyu Tolgoi is Rio’s most important growth project. Once completed, it is expected to lift the mine’s production from 125,000–150,000 tonnes in 2019 to 560,000 tonnes at peak output, targeted for 2025.

The giant deposit, discovered in 2001, is one-third owned by Mongolia’s government and two-thirds by Turquoise Hill. Rio has a 51% stake in the Canadian miner.

Fruit and vegetable exports to Mongolia through the border port of Erenhot in north China’s Inner Mongolia Autonomous Region registered a two-digit growth in the first 10 months, local authorities said.

The total fruit and vegetable exports through the port reached 84,000 tonnes, with trade volume reaching more than 100 million yuan (about 15.14 million U.S. dollars) during the period, up 11.5 percent and 20.3 percent from the same period last year, respectively.

The Erenhot Port, the largest land port on the border between China and Mongolia, has opened a “green channel” for agricultural exports to Mongolia, which has cut the clearance time significantly, said Wang Lei, an official at the port.

With a population of about 3 million, Mongolia mainly relies on China for vegetables. Since the “green channel” was launched in September 2018, fruit and vegetable exports through the Erenhot port has seen double-digit growth.

In 2019, fruit and vegetable exports through the port reached 97,000 tonnes, with a total trade volume of 110 million yuan, up 18.4 percent and 7.5 percent year on year.

On 24 November 2020, the European Union and Mongolia confirmed their good bilateral relations, and the willingness to further strengthen the development cooperation agenda.

The discussion took place in the first Development Cooperation Working Group (informal) in the framework of the Partnership and Cooperation Agreement (PCA) between the EU and Mongolia, which entered into force in 2017.

On development cooperation, the Parties:

Discussed lessons learnt from the EU Multi-Annual Indicative Programme for Mongolia (2014-2020) covering governance of revenues and employment in the non-mining sector, as well as from positive interventions in other areas such as trade, technical and vocational education and training (TVET), agriculture, value chains development, environment, human rights.

Took note of the need to strengthen donors and sectors coordination mechanisms in Mongolia.

Reaffirmed their commitment to continue working together towards the reform process in the employment and Technical and vocational education and training (TVET) sector and public finance management in the context of Budget Support operations.

Agreed to continue sectoral policy dialogue with the line Ministries in identifying blending operations in the areas of climate change and green energy as well as in improving business environment and sectoral regulatory framework in Mongolia.

Remain engaged to cooperate closely in the context of the EU programming exercise for future cooperation with Mongolia for 2021-2027.

Next steps

The informal Development Cooperation Working Group will be followed by the EU-Mongolia Joint Committee on 3 December 2020 via videoconference. The Joint Committee (chaired alternately by the Minister of Foreign Affairs of Mongolia and the High Representative of the Union for Foreign Affairs and Security Policy) is entrusted to ensure the proper functioning of the PCA, set priorities in relation to its aims, and make recommendations for promoting the objectives of the agreement.

Background

In 2017 the Partnership and Cooperation Agreement (PCA) between the EU and Mongolia entered into force. On development cooperation, the PCA commits the Parties to cooperate on sustainable development (economic, social, and environmental) and hold a regular dialogue on development cooperation, in line with their respective priorities and areas of mutual interest.

In 2014-2020 a total of EUR 139 million of EU development assistance in the form of grants was allocated for Mongolia. From this amount EUR 65 million have been part of the EU Multi-Annual Indicative Programme for Mongolia (2014-2020) on two focal sectors: “Governance of Revenues for Sustainable and Inclusive Growth” and “Support for Better Employment Opportunities”.

Mongolia has benefited also from a range of thematic and regional EU programmes of a total of EUR 38 million in fields such as trade, sustainable consumption and production, as well as support to civil society and human rights. EUR 36 million grant support from the Asian Investment Facility for blended projects with European development banks in SMEs support, climate change and green energy.

Ulaanbaatar /MONTSAME/. Railway traffic at Zamiin-Uud - Erlian stations has resumed from November 27, highlighted the operative team working at Ulaanbaatar Railway during an online conference on November 28. Moreover, some cargo that were being transported on autoroad without electronic seals have begun to be loaded onto trains at Taltsi station of Ulan-Ude, Russia.

The operative team was established in order to ensure infection control measures are being followed, to limit its spread, and enhance readiness as according to the decision made by the Head of the State Emergency Commission in response to the COVID-19 outbreak in the staff of Ulaanbaatar Railway JSC.

During the conference, Deputy Head of Ulaanbaatar Railway JSC in charge of traffic safety Ch.Tsogtbayar reported that 15,875 staffs out of 15,956 have been tested for the coronavirus as of November 27, and 81 staffs have yet to be tested due to reasons such as being currently on annual leave, receiving medical treatment, and being unable to travel due to the lockdown.

Praising the resumption of railway traffic at Zamiin-Uud - Erlian station and the loading of cargo at Taltsi station in Ulan-Ude, Russia, Head of the Operative Team, Minister of Road and Transport Development L.Khaltar obliged the railway officials with the following:

-to pay special attention to the increase in suspicious cases at Darkhan, Sukhbaatar, and Choir stations,

- to have the watchmen and engineers newly appointed to stations and junctions carefully study the technical guidelines for the specific station, and to provide them with additional instructions for operational health and safety

-to re-test staffs that have been put under home isolation, and issue decisions regarding their isolation by discussing the matter with the General Agency for Specialized Inspection,

-to provide healthcare services to railway staff working at railway construction sites and involve them in medical checkups, and acquire assistance from the hospital in Sainshand or the central railway hospital if necessary.

Ulaanbaatar/MONTSAME/. At the regular press briefing of the Ministry of Health today, updates on the latest coronavirus tests results carried out within the past 24 hours have been provided.

According to a Head of Surveillance Department of the National Center for Communicable Diseases (NCCD) A.Ambaselmaa, the coronavirus was detected in seven people after testing 10308 people in total.

Two new cases were recorded in Ulaanbaatar city and five -- in Selenge aimag. “The two cases in Ulaanbaatar are the people who were in isolation as they are close contacts of the previous cases. As of today, the number of confirmed cases of COVID-19 in Ulaanbaatar has reached 77. The confirmed five cases in Selenge aimag were also close contacts to previous cases,” stressed Ms. Ambaselmaa.

Therefore, total confirmed cases of COVID-19 in Mongolia are now 791, with 348 local transmission cases and 354 recoveries. 428 people are undergoing the treatment at the NCCD, of whom six are in very critical and four in critical and 76 in moderate and 342 in mild health conditions.

Rio Tinto is facing a new front in an escalating dispute over how to finance its biggest project after a US hedge fund threatened the miner with legal action.

Pentwater Capital Management, which has a large minority stake in Rio-controlled Turquoise Hill Resources, said it was prepared to file an “oppression” order unless the company allowed the subsidiary to take on more debt to fund the $6.8bn underground expansion of the Oyu Tolgoi mine in Mongolia’s Gobi Desert.

“We do not undertake this lightly, but enough is enough,” Pentwater chief executive Matthew Halbower said in an open letter sent on Monday to Rio’s board of directors.

“This mine is a jewel. It will be the third-largest gold and copper mine in the world. It will produce tens of billions of dollars of free cash flow for decades. Its owners should be treated as business partners, not as puppets or pawns.”

Pentwater’s warning came days after Odey Asset Management, a London-based hedge fund, also called on Rio to change the way it was funding the project.

Odey, which has made a bearish bet against TRQ, said Rio should seek to refinance the entire project but through a massive rights issue. It has asked the company whether it will try to do so.

Rio could not be immediately reached for comment. TRQ declined to comment.

The underground expansion of Oyu Tolgoi is Rio’s most important project.

When finished, the mine will be capable of producing more than 500,000 tonnes of copper a year.

However, it has been dogged by problems and is running more than a year behind schedule and more than $1bn over budget. Its first sustainable production is now expected around October 2022.

While Rio operates Oyu Tolgoi it does not have a direct stake. Instead it owns 50.8 per cent of TRQ, which in turn owns 66 per cent of the project, with the rest owned by the Mongolian government.

The row over funding of the cost blowout started to heat up in early November when TRQ launched arbitration proceedings against Rio in an effort to get clarity on funding.

Rio has said it will not allow TRQ to take on more than $500m in additional debt, telling the company to plug a funding gap of up to $3bn by reprofiling loans and raising equity.

That move has alarmed minority TRQ shareholders including Pentwater, which owns almost 10 per cent of the company. They fear being diluted if the company is not allowed to issue more debt or raise cash by selling the rights to future gold production from Oyu Tolgoi.

Pentwater said TRQ’s current financing agreements with Rio were written to allow for $1.6bn of supplemental debt financing.

“Rio is attempting to force Turquoise Hill to conduct an equity raise despite the fact that the current equity price severely undervalues the company, and despite the fact that there are much cheaper and more advantageous financing options available,” said Mr Halbower.

Separately, one of the frontrunners to replace Rio’s outgoing chief executive Jean-Sébastien Jacques ruled himself out of the running for the job on Monday.

Newcrest Mining chief executive Sandeep Biswas said in an email to staff that he was not “interested in any other CEO role outside Newcrest”.

After four years at the helm of Rio, Mr Jacques stepped down in September following an investor backlash over the destruction of a sacred Aboriginal site to make way for the expansion of the mine. Rio has appointed MWM Consulting to help find its next chief executive.