Aviation industry revenue drops 5 percent www.zgm.mn

In January, revenue from the aviation industry amounted to MNT 31.1 billion, a decrease of five percent from the same period of the previous year. This was mainly due to the restriction made under the prevention of coronavirus outbreak in Mongolia. However, rail revenue reached MNT 62.7 billion, up 15.2 percent from January 2019. This was mainly due to freight earnings and mining products, in particular, iron ore and zinc concentrates. During the same period, the number of passengers by air increased by 3.4 percent and the number of passengers by rail increased by 19.4 percent respectively.

Inflation reaches 5.6 percent in January www.zgm.mn

In January, inflation stood at 5.6 percent, which is lower than the central bank’s target. Thus, it has been fluctuating around 5 percent for the last three months in a row. The weakening effect of supply factors also triggered inflation to stabilize. Meat prices, which have been increasing by 30 percent and burdening the CPI, decreased by about 16 percent. On the other hand, this indicates a slowdown in economic growth. At the end of 2019, the Monetary Policy Committee of the Bank of Mongolia (BoM) proposed the central bank to reduce its interest rate and support the economy. However, the policy rate remained untouched at 11 percent. The inflation is likely to gradually slow down to around six percent under the influence of supply factors in the first three quarters of this year. In the fourth quarter of 2020, the central bank anticipates that the baseline effects will grow slightly and the inflation may stabilize around the target level.

MIAT selects Sabre for ambitious growth plan www.news.mn

National carrier ‘MIAT’ Mongolian airlines announced yesterday (18 February) a new alliance with the Sabre Corporation, which is a technology and software company powering the global travel industry. The long-term agreement to implement Sabre’s market intelligence global demand data solution will, it claims, “provide robust market insights as the airline moves forward with highly ambitious growth plans.”

Rio to build $98-million solar plant at Koodaideri www.mining.com

Rio Tinto (ASX, LON, NYSE: RIO) has approved a $98-million investment to build a solar plant, Western Australia’s first, which will power the company’s new Koodaideri iron ore mine, in the resource-rich Pilbara region.

83.2 percent of the sales of mining and quarrying production exported www.montsame.mn

Ulaanbaatar/MONTSAME/. By the preliminary results of January 2020, the gross industrial output reached MNT 1.1 trillion, showing a decrease of MNT 191.4 billion (14.5%) from the same period of the previous year. This decrease was mainly due to mining and quarrying gross output by MNT 219.0 billion (23.0%).

Out of the gross industrial output, 65.1% were produced in the mining and quarrying sector, 22.7% -- the manufacturing sector and 12.2% -- electricity, thermal energy and water supply sectors.

By preliminary results of January 2020, the mining and quarrying gross output reached MNT 732.2 billion, showing a decrease of MNT 219.0 billion (23.0%) from the same period of the previous year.

This decrease was mainly due to decreases in mining of coal and lignite by MNT 183.1 billion (43.9%), extraction of crude petroleum by MNT 18.1 billion (23.0%), mining of metal ores by MNT 17.4 billion (3.9%) and other mining and quarrying by MNT 452.0 million (5.4%).

Out of the mining and quarrying gross output, 58.7% were produced in the mining of metal ores, 31.9% --- mining and quarrying, 8.3% -- the extraction of crude petroleum, and 1.1% -- other mining and quarrying.

By the preliminary results of January 2020, in the mining and quarrying sector, the extraction of gold is increased by 13.3% compared to the same period of the previous year. In the manufacturing sector, the production of metal foundry, lime, concentrated coal and coal briquette are increased from 1.5% to 7.4 times more.

On the other hand, in the mining and quarrying sector, the extractions of iron ore, fluorspar, brown coal, copper concentrate, crude oil, and hard coal are decreased by 3.2-36.3%. In the manufacturing sector, productions of milk, pure water, soft drink, juice, alcoholic beverage, wheat flour, cashmere products, combed cashmere, metal steel, copper cathode, and meat are decreased by 2.4-71.5% compared to the same period of the previous year.

In January 2020, the seasonally adjusted industrial production index was 146.3 (2010=100), decreased by 17.5% from the same period of the previous year and by 4.1% from the end of the previous year.

By the preliminary results of January 2020, the sales of industrial production reached MNT 1.2 trillion, decreased by MNT 370.4 billion (23.3%) from the same period of the previous year. This decrease was mainly influenced by a decrease of MNT 524.4 billion (43.9%) in sales of mining and quarrying.

From the total sales of industrial production, MNT 730.2 billion (59.8%) were export, of which the export of mining and quarrying was MNT 557.0 billion (76.3%) and the export of manufacturing was MNT 173.2 billion (23.7%).

The sales of mining and quarrying production were decreased by MNT 524.4 billion (43.9%). It was mainly influenced by a decrease of MNT 245.6 billion (51.7%) in sales of coal mining, MNT25.2 billion (35.2%) in sales of extraction of crude oil, MNT 253.0 billion (40.0%) in sales of mining of metal ores and MNT 542.6 million (3.7%) in sales of other mining and quarrying from the same period of the previous year.

From the sales of mining and quarrying production, MNT 557.0 billion (83.2%) were export, of which 53.9% was the mining of metal ores, 35.8% was the mining of coal and lignite, 8.3% was the extraction of crude petroleum, 2.0% was other mining and quarrying.

Source: National Statistics Office

Rio Tinto in legal battle with former manager over giant copper mine www.ft.com

Global mining group Rio Tinto is embroiled in a legal battle with a former employee who says it was aware of problems at a key copper project months before they were disclosed to investors.

An’ unfair dismissal case against Richard Bowley, who worked for Rio’s copper business between 2017 and 2019 as head of strategic projects in Mongolia, threatens to expose Rio to accusations that it was slow to reveal key information on the underground expansion of the giant Oyu Tolgoi mine in the Gobi desert.

The Oyu Tolgoi expansion is Rio’s most important growth project and will increase its production of copper, at a time when the shift to renewable energy is driving growing demand for the metal for use in electric vehicles and wind turbines.

The project is closely associated with the company’s chief executive Jean-Sébastien Jacques, who put together financing for it when he ran the company’s copper business.

In documents filed with a UK employment tribunal, Mr Bowley claims he first alerted senior executives to problems at the mine in February 2018.

That was followed by a second warning — to an HR executive — in July 2018 that the mine was $300m over budget and a year behind schedule. Yet, in a presentation to US investors on October 2, 2018, the head of Rio’s copper business Arnaud Soirat said the project was “on budget and on schedule”.

Two weeks later in quarterly production update, Rio announced there would be a nine-month delay to its “first sustainable production” because of ground conditions and other operational problems but it said the project remained on budget.

Mr Bowley continued to express his concerns to senior executives about the project, which was being managed by Rio’s Growth & Innovation unit, rather than its copper division.

In one email, sent just weeks after Mr Soirat’s October 2018 presentation, Mr Bowley told his local manager there would be a “12-18 month delay in the underground project, with substantial cost implications”. He also outlined his concerns to board members at Rio.

Mr Bowley, whose job included assessing potential issues with the underground mine and suggesting solutions, continued to warn senior executives of problems at the project until January 2019, when Rio launched an investigation and compliance review.

In March 2019, Mr Bowley claims his contract was terminated with “immediate effect”. Four months later, Rio announced the project was between $1.2bn and $1.9bn over budget and running 16-30 months behind schedule.

In a statement, Rio said it had consistently complied with its disclosure obligations in relation to the Oyu Tolgoi underground development and “any claim otherwise is completely misleading”.

It added: “Rio Tinto retained Baker McKenzie to independently review these allegations, including that Rio Tinto had misled the market regarding cost overruns and delays, which were found to be unsubstantiated.”

“As to our former employee’s Employment Tribunal claim, Rio Tinto considers this to be entirely without merit and will vigorously defend it.”

In its court filings, Rio argued the UK Employment Tribunal did not have jurisdiction to consider Mr Bowley’s claim because he was based in Mongolia and employed by its Singapore business unit.

A judge will decide on March 31 whether the case can be heard in the UK.

Rio is also fighting civil fraud charges in the US over the timing of market disclosures relating to a coal deal in Mozambique.

Mongolia’s economy grows up by 5.1 percent in 2019 www.montsame.mn

Ulaanbaatar /MONTSME/ Mongolia’s economy grew up by 5.1 percent in 2019, reports the National Statistics Office. Economic growth has been weakened by 2.1 percentage point from the previous year.

Mongolia kicks off solar-plus-storage tender www.pv-magazine.com

The 5 MW Uliastai solar-plus-storage project will be located in the city of the same name in the western part of the country, around 1,100km from Ulaanbaatar. The facility is part of a plan to deploy 40 MW of solar and wind generation linked to energy storage in the nation’s western and Altai-Uliastai regions.

World Bank: Mongolia needs to continue strengthening fiscal policy www.zgm.mn

The World Bank announced Mongolia’s Economic Review Report on Friday. The country’s economic growth has moderated slightly in recent years, but the medium-term outlook remains positive, the report said. Considering the current situation of Mongolia’s economy, which is highly dependent on China, the impact of the new coronavirus may adversely affect the Mongolian economy, highlighted Andrei Mikhnov, World Bank Country Representative in Mongolia. He said, “The economic outlook is positive the medium-term, however, continuing to strengthen fiscal policy and maximizing foreign exchange reserves by keeping the FX interventions at a decent level remains the two most important policy goals for policymakers. Government’s economic reform in 2020 will play a significant role in market outlook and foreign direct investment of Mongolia.” Previously in April, it anticipated Mongolia’s economy to grow 6.9 percent in 2019 and 6.3 percent in 2020. The report cautions of the risks, namely the political uncertainty, commodity price fluctuations, cross-border bottlenecks, implementation delay mega projects, and slower implementation of banking sector reforms.In 2020-2021, the economy is expected to grow by an average of 5.6 percent, due to sustained growth in personal consumption and investment in the mining and industrial sectors. The Government of Mongolia also said that it would continue a unified fiscal policy aimed at continuing to reduce government debt in the medium term by increasing budget revenues and efficiently optimizing the spending. Highlights of the report include the banking sector’s credit process or dynamics, especially in light of recent developments, actions taken by the government and policymakers, and some policy recommendations. World Bank Senior Economist for Mongolia, Jean-Pascal N. Nganou said, “Strengthening the stability of the financial sector, in particular, lending policies and the stability of the banking sector is important in improving macroeconomic stability, increasing employment, and thereby reducing poverty. Monetary policymakers, who have tightened their monetary policy since the end of 2018, have been maintaining credit growth. In the future, it is crucial to prevent the risks that may arise through proper macro-policies.”

Third neighbor policy on Mongolian-Japanese relations (1) www.zgm.mn

(OPINION by Olkhonud Bayarkhuu)
Mongolia’s one of the important bases of foreign policy is to strengthen ties with leading countries around the world and ensure their economic interest in Mongolia; it has been implementing successfully. In the framework, Mongolia is working to level up foreign relations with Japan to the 21st century’s “Comprehensive relationship”. Since the establishment of diplomatic relations between Mongolia and Japan in 1972, cooperation has been continued to develop steadily. The 40-year history since the establishment of diplomatic relations between the two countries can be divided into two, each with 20 years. During the first 20 years, the two countries’ political system was different, but it was possible to begin a cultural relationship and maintain a normal atmosphere of communication. Since 1990, Mongolia mainly focused on economic cooperation as it began pursuing a multilateral independent foreign policy by choosing democracy and open market. In the last 30 years, in which bilateral relations between Mongolia and Japan had developed dramatically, Japan had continued a policy of supporting Mongolia’s democracy in bilateral relations and internationally since 1991. Mongolia had also set a goal of expanding relations and cooperation with Japan as one of its foreign policy priorities, and this has been implemented by the Government of Mongolia. In this regard, I would like to express my views on why Japan is important to Mongolia, why it should be a third neighbor, and how Japan perceives our interests. A little introduction. A neighbor is a country that is geographically has a common border. Russia and China are Mongolia’s direct neighbors. So the concept of expanded neighbor is geopolitical. There is another important point which is a strategic neighbor. Putting the these two together, we call it the third neighbor. The year 2019 will remain in history as the third-party strategic relationships has been balanced over the time. As with the new phase of Mongolia- U.S relations (signed strategic partnership agreement), the Mongolia-Japan relations have significantly moved ahead as well. The recent political high-level visits of Mongolia and Japan encouraged to maintain the frequency of official talks and make it more often. President Battulga Khaltmaa and Prime Minister Abe Shinzo hold summit meetings regularly. Prime Minister of Mongolia Kurelsukh Ukhnaa visited Japan in late 2018 and attended the enthronement ceremony of the new Emperor of Japan in 2019. After attending the ceremony, he also met Prime Minister Abe Shinzo. In a statement of Prime Minister Khurelsukh’s visit in 2018, “The sides evaluated the implementation of the “Mid-term Action Plan” and mentioned that the relationship has been growing stronger in a broad range of fields such as trade, economy, culture, and public exchange”. Expressing satisfaction with the strengthening relations within the framework, Mongolia notes the relationship with Japan as a “region of politics, security, and defense.” It proves that Japan is the third neighbor of Mongolia in terms of politics. Mongolia supported Japan’s efforts to consolidate the “Free and Open Indo-Pacific Strategy” proposed by Mr. Abe. Foreign Minister of Japan T. Kono visited our country in the summer of 2019. It has been 48 years since the establishment of the Mongolian-Japanese diplomatic relations. After Mongolia has transitioned to a democratic society, the relations between the two countries have been consistently developing. From third neighbor countries, Japan has established the Strategic Partnership with Mongolia first (2010) and also the first country to establish free trade agreements (the Economic Partnership Agreement or EPA). Implementation of the agreement is moving forward one step further as Mongolia successfully hosted the Japan-Mongolia Business Forum, “Invest in Mongolia” in Tokyo. Defense cooperation between Mongolia and Japan had improved significantly in 2019. Takayuki Onozuka, Vice Chief of Staff of Japan Ground Self Defense Force, paid a visit to our country. The defense cooperation between the two countries was further enhanced by the signing of a Memorandum of Understanding in 2012. It expanded the level and direction of cooperation. As part of Japan’s Capacity Building Assistance Program, we have successfully identified two main areas: military engineering and a military hospital. In 2014- 2016, the first phase had started to increase military engineering capabilities, and in 2017, the second stage commenced with joint training and internship. In the future, the two countries will work in many areas, including training military personnel and experience in peacekeeping. It would seem right to give some explanations on why relations with Japan are so important to our country. The following logic emerges when we consider the power balance in the world, the general atmosphere of international affairs, regional relations and cooperation, as well as the external environment around Mongolia. Mongolia is actively working with the United States, Japan, and Western Europe, which are considered to be third parties to prevent the country from becoming too close to Russia and China, not to be too dependent on its northern neighbor and to support the democratic process in Mongolia. In Mongolia, foreign policy can be considered a de facto neutral foreign policy. China, Russia, as well as Japan and the United States are intensifying their efforts to attract Mongolia. Mongolia classifies them as the two direct neighbors and the third strategic parties.