Moody's affirms Mongolia's B3 rating and stable outlook www.moodys.com

Singapore, January 21, 2020 -- Moody's Investors Service ("Moody's") has today affirmed the Government of Mongolia's ("Mongolia") B3 long-term issuer ratings and senior unsecured ratings and the (P)B3 senior unsecured MTN program rating; and maintained the stable outlook. The short-term issuer ratings are affirmed at Not Prime.

The B3 rating incorporates Mongolia's still weak albeit improving debt and fiscal metrics and weak institutions and governance, balanced by strong growth potential.

The stable outlook indicates balanced risks in the near term, including greater financial buffers than seen during past episodes of financing stress against still significant external and government liquidity risks. Moody's expects foreign exchange reserves to be sufficient to meet external debt obligations and growth to remain relatively strong, notwithstanding a projected moderation. From 2021, the public sector debt refinancing needs will increase significantly. The stable outlook assumes that the government will be able to refinance its external debt obligations at affordable costs as they begin to come due.

Mongolia's country ceilings remain unchanged: the local-currency bond and deposit ceilings remain at Ba2, the long-term foreign currency deposit ceiling at Caa1, and the long-term foreign currency bond ceiling at B1; all short-term foreign currency ceilings also remain unchanged at Not Prime.

RATINGS RATIONALE

RATIONALE FOR B3 RATING

TIGHTER FISCAL POLICY TO KEEP DEBT, DEFICT METRICS IN-LINE WITH PEERS, ALBEIT AT WEAK LEVELS

Moody's expects government debt to continue to moderate to around 57.5% in 2020 and stabilize around these levels, from close to 80% of GDP in 2015-16, as sustained nominal GDP growth offsets ongoing fiscal deficits. This is in line with the B3-median of 57.2% of GDP.

Significant tightening since fiscal deficits spiked in 2016, has resulted in a marked narrowing in both deficits and the debt burden both through an improvement in revenue collection and sharp spending cuts. Together, these measures have contributed to a nearly balanced fiscal position, with deficits at less than 1% of GDP in 2019 and 2018, significantly narrower than deficits of over 13% and 5% of GDP in 2016 and 2017, respectively.

Moody's expects the budget deficit to widen in the next few years, to 4.8% and 6.4% of GDP in 2020 and 2021 respectively, as moderate commodity prices and uncertainty around copper production dampen revenue growth, while spending accelerates, in particular before elections due in June 2020.

However, the fiscal tightening of the last few years has changed the debt dynamics in a favourable direction, by contributing to lower the cost of debt well below nominal GDP growth. Unless fiscal slippage is much larger than Moody's currently expects, the projected deficits are consistent with a stable debt burden.

WEAK INSTITUTIONS AND GOVERNANCE ARE AN INHERENT RATING CONTRAINT

While fiscal and monetary policy tightening has improved Mongolia's fiscal buffers, the sovereign's institutions and governance remain weak, a significant rating constraint. The implementation of reforms that would reduce Mongolia's vulnerability to commodity price cycles has been partial and, at this stage, is not broadly embedded in the conduct of macroeconomic policy.

A key source of uncertainty to the future reform trajectory comes from the Extended Fund Facility with the IMF that began in May 2017. While the program has identified and anchored reforms thus far, delays to the disbursal of funding following the sixth review originally due in September 2018 raise the possibility of the program lapsing without achieving full completion. The review has been held up by issues surrounding the recapitalization of banks, following the 2018 asset quality review that identified capital shortfalls.

Beside the potential pressure on access to financing explained below, there is no clarity about the framework for further reform that the government would pursue in the absence of an IMF program.

Ahead of the parliamentary elections in June, government spending will likely increase as has occurred in the past, with no certainty as yet about the capacity of the elected government to rein in spending later or about the direction of fiscal and monetary policy in general. For instance, the government's budget targets for 2020 factor in a significant increase in spending, which will result in a wider fiscal deficit.

The electoral cycle could also precipitate changes to the Oyu Tolgoi mining agreement, which a government-affiliated parliamentary working group is currently calling for.

GROWTH WILL REMAIN ROBUST DESPITE SOFTENING COMMODITY PRICES

Strong growth will mitigate the risks related to persistent fiscal and institutional weaknesses.

Real GDP growth was over 6.0% in 2019 and Moody's projects robust growth to continue at 5.5% in 2020, one of the fastest rates among B3-rated sovereigns.

Moody's growth forecasts take into consideration moderate commodity prices, slower demand from China, and shifting demand and supply dynamics for Mongolia's key mining exports - coal and copper. Although demand for coal will soften as China moves towards greater reliance on renewable sources of energy, nearly all of Mongolia's coal exports to China are coking coal, used primarily for steel, the Chinese demand for which has remained relatively stable. Meanwhile, demand for copper will be supported by global moves toward battery electric vehicles.

A key driver of Mongolia's longer-term growth trajectory remains prospects from the Oyu Tolgoi mining project. Challenges to the second phase implementation, including time and cost overruns, and potential changes to the original mining agreement present downside risks to the growth outlook. Moody's macroeconomic projections are premised on the assumption that production will continue notwithstanding some occasional delays.

Medium-term growth will also be supported by key infrastructure projects, particularly in the transport sector -- for instance, railways connecting the largest coal mine, Tavan Tolgoi, to the Chinese border -- that will reduce trade bottlenecks and improve efficiency. Similarly, the construction of new roads and a power and coal washing plant will raise productivity. The government also has plans to revamp and upgrade major ports, improving capacity and access.

RATIONALE FOR THE STABLE OUTLOOK

BUFFERS TO REMAIN ADEQUATE TO MANAGE UPCOMING EXTERNAL PAYMENTS

The financial buffers rebuilt over the past two years offer some time to the government to manage external vulnerabilities, which drive event risk for Mongolia. As external debt repayments rise, Mongolia's credit profile will be increasingly susceptible to a potential change in access to financing from international and bilateral creditors and financial markets.

Foreign exchange reserves increased to close to $4 billion (including gold) at the end of 2019 from $1 billion in February 2017. Though reserve accretion has slowed over the past year due to delays in donor financing, a narrower trade surplus, and sales by the central bank to limit exchange rate pressures, reserves will remain adequate to meet upcoming external obligations if bilateral support and access to financial markets at moderate costs are maintained.

In the near term, Moody's assessment that reserves will remain adequate is based on its projections of a broadly stable current account deficit and ongoing financing from bilateral creditors, while taking into account ongoing delays to disbursements by the IMF as well as a possible disruption to funding from some other multilateral institutions. In addition, Moody's expects the central bank's -- the Bank of Mongolia - swap line with the People's Bank of China, which expires in August 2020, will be renewed, given the two countries' continued bilateral relations.

Debt maturities will start to mount in 2021 and spike in 2023, when bonds worth $1.3 billion mature. The stable outlook assumes that bilateral funding remains available and anchors financial market confidence to allow Mongolia to refinance its debt at affordable costs. Disruptions to access to funding and investors' appetite for Mongolian assets would raise external vulnerability risks and weigh on the credit profile.

ENVIRONMENTAL SOCIAL AND GOVERNANCE CONSIDERATIONS

Environmental considerations are material for Mongolia, since moves towards renewable energy and electric vehicles will likely drive strong demand for some of its mineral products, particularly copper, significantly lifting its growth potential. However, Mongolia is also exposed to environmental risk. Agriculture, which is also an important sector for the Mongolian economy, is negatively affected by land degradation, which hurts the livestock industry and increases its vulnerability to extreme weather conditions and climate change.

Social considerations are not material for Mongolia. While income levels are low on average and the distribution of proceeds from the mining sector is uneven, macroeconomic measures of income inequality such as the Gini coefficient do not signal significant exposure.

Governance considerations are material to Mongolia's credit profile and primarily relate to low credibility of fiscal targets, the absence of a track record of adherence of major reforms, and past experience of pro-cyclical policies linked to electoral and commodity price cycles. High levels of corruption and factious politics also present broad governance risks.

FACTORS THAT COULD LEAD TO AN UPGRADE

Upward rating pressure would likely develop if sustained and effective implementation of structural reforms pointed to a significant increase in Mongolia's financial buffers and increased the likelihood that even in an adverse commodity price environment, macroeconomic volatility and fiscal pro-cyclicality would be reduced.

FACTORS THAT COULD LEAD TO A DOWNGRADE

Increasing risks to Mongolia's access to financing at affordable costs ahead of significant external debt maturities would put downward pressure on the rating.

Indications that the improvement in fiscal and debt metrics of the last few years was likely to reverse with a possible significant renewed increase in the debt burden would also weigh on Mongolia's credit profile.

GDP per capita (PPP basis, US$): 13,451 (2018 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 6.9% (2018 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 8.1% (2018 Actual)

Gen. Gov. Financial Balance/GDP: 0.9% (2018 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: -16.9% (2018 Actual) (also known as External Balance)

External debt/GDP: 220.0% (2018 Actual)

Economic resiliency: b1

Default history: No default events (on bonds or loans) have been recorded since 1983.

On 16 January 2020, a rating committee was called to discuss the rating of the Mongolia, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutions and governance strength, have not materially changed. The issuer's governance and/or management, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has not materially changed. The issuer has become less susceptible to event risks.

The principal methodology used in these ratings was Sovereign Ratings Methodology published in November 2019. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

REGULATORY DISCLOSURES

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Anushka Shah
Vice President - Senior Analyst
Sovereign Risk Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Marie Diron
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Over 216 thousand households express requests to purchase apartment www.montsame.mn

Ulaanbaatar /MONTSAME/ The ‘Vision-2050’ is a policy document, which was formulated by a working group comprising of 1500 people, including scholars, experts and state secretaries of 13 ministries, heads of some government agencies, authorities of universities and representatives of non-government organizations. According to the Prime Minister's order No: 52 dated April 30, 2019, the working group analyzed development stages of the past 30 years of Mongolia and formulated the policy document that will define long and mid-term development policy until 2050. We are presenting 9 fundamental goals of the development policy in detail.

Mining sector contribution to budget reaches MNT 2.6 trillion www.montsame.mn

Ulaanbaatar /MONTSAME/. The Ministry of Mining and Heavy Industry held today, January 21, a monthly press briefing ‘Transparent and Accountable Mining’. At the conference, Minister of Mining and Heavy Industry D.Sumiyabazar delivered a report on the statistical review of the mining sector for 2019.

By a preliminary performance of 2019, the mining industry accounts for 25 percent of the country’s GDP, 72 percent of agricultural production and 90 percent of total exports.

The report shows that the mineral industry makes up 24.5 percent of the total revenue of 2019 state budget. The budget revenue amounted to around MNT 11.9 trillion, with an increase of MNT 1.9 trillion or 18.6 since the previous year’s revenue performance.

In the state budget revenue of 2019, revenues contributed by the mineral industry equaled to MNT 2.9 trillion, which grew by 25.4 percent or MNT 590.7 billion since the previous year’s performance. The revenues from mineral industry include:

MNT 2.6 trillion from mining sector (21.96%),

MNT 232.3 billion from oil industry (1.95%),

MNT 36.9 billion as royalty payment (0.31%),

MNT 29.3 billion as other revenues (0.25%)

In 2019, a total of MNT 2,621.56 billion was paid to the state budget as mining and extractive industry’s taxes and payments, which include:

Gold MNT 116.84 billion,

Coal MNT 1,210.57 billion,

Zinc MNT 66.27 billion,

Copper MNT 1,090.12 billion,

Iron MNT 25.42 billion,

Fluorspar MNT 34.82 billion,

Other MNT 77.53 billion.

The mining sector’s revenue to the state budget rose by MNT 570.05 billion 27.8 percent compared to that of the previous annual performance report.

The report also showed that the total production of the mining and extractive sectors amounted to MNT 12.47 trillion, showing an increase of MNT 1.24 trillion or 11.1 percent since the previous year. A significant amount of increase was noticed in the coal exploration, which totaled MNT 1.15 trillion or increased by 28.6 percent in 2019. The mining industry takes up 71.8 percent of the total output volume of agricultural industry.

Last year, 50.83 million tons of coal, 1.26 million tons of copper concentrate, 16.25 tons of gold, 5.30 thousand tons of molybdenum concentrate, 156.15 thousand tons of fluorite ore, 47.49 thousand tons of fluorspar concentrate, 8.57 million tons of iron ore, 3.39 million tons of iron ore concentrate and 83.09 thousand tons of zinc concentrate were produced in the Mongolia’s mining and extractive industry.

Compared to 2018 report on the mining industry's performance, production of coal, iron ore and fluorite ore increased whereas production of copper concentrate, gold, molybdenum concentrate, iron ore concentrate, fluorspar concentrate, and zinc concentrate each declined moderately. Also, gold and fluorspar concentrate production dropped by 4.40 tons or 21.3 percent and 33.24 thousand tons or 41.2 percent respectively.

Total sales of the agricultural industry in 2019 cost MNT 20.09 trillion and grew by MNT 1.79 trillion or 9.8 percent. The sales of mining and extractive industry reached MNT 13.66 trillion, with growth of MNT 970 billion, and MNT 11.32 trillion of which (82.9 percent) are sold to foreign markets abroad, the report shows.

The dynamic ‘Passive Housing Solution’ for Mongolia’s ger districts www.news.mn

The Capital City Housing Corporation of Mongolia has signed a Memorandum of Understanding with a company from Germany called Rongen Architekten to cooperate on introducing European ‘passive house standards’ to the country. The ‘passive house’ is the world’s leading benchmark in energy efficient construction. The memorandum focuses on infrastructure development in the challenging environments of the ger districts of Ulaanbaatar.

BoM: External demand may slow growth in mining sector www.zgm.mn

The Bank of Mongolia (BoM) anticipated the Mongolian economy to increase by 5.6 percent in 2020. This figure is around the previous projection. Slowing external demand and trade conditions in the next year may decrease the mining sector growth, the central bank said. However, non-mining sectors are likely to be activated as a result of budget expansion. These uncertain situations, namely trade dispute acceleration, whether China’s coal import limitation would continue, exiting the FATF’s grey list, and the potential decrease in the Oyu Tolgoi underground investment could affect the economic growth in 2020. The economic growth was comparatively lower than its expected level in the first three quarters. This was mainly due to the poor performance of the mining industry, emphasized in an inflation outlook report. Thus, the report includes labor market performance. Reducing employment and soaring unemployment shows that labor market activity has been slowed in recent quarters. It reported that the unemployment rate has been slowing down since 2016, and it increased 10 percent in the last quarter. Central bank emphasized that inflation will gradually decrease to six percent due to supply factors, it may slightly increase in the fourth quarter of 2020, and stabilized around the central bank’s target level. As of December 2019, the inflation rate stands at 5.2 percent. BoM believes that inflation has been slowed down as the supply factors of meat and fuel decreases.

Mining and the making of a sacrifice zone in Mongolia www.towardfreedom.org

Over the last decade, Mongolia’s Oyu Tolgoi mine has become synonymous with abusive business and mining practices that have displaced Mongolian herders, causing outrage among environmentalists and rights organizations in the South Gobi desert.

A massive underground expansion that will make Oyu Tolgoi one of the largest copper and gold mines in the world is underway, despite Rio Tinto’s announcement over the summer that the mine would require redesign. With over eighty percent of the mine’s value found underground, and over 200km of planned underground roads and infrastructure, the mine is now entering its most profitable phase.

Oyu Tolgoi’s majority owners, British-Australian company Rio Tinto, and Rio Tinto’s Canadian subsidiary Turquoise Hill Resources, have long exploited Mongolia’s lax environmental and economic regulations. Access to water and land, resource colonialism, and government corruption are ongoing issues that have led to sustained conflict. Despite ongoing criticism of the mine’s contracts and claims of corporate tax evasion, Mongolia’s government has persisted in granting dangerous concessions to the company.

Mongolian nomadic herders continue to struggle against Oyu Tolgoi’s disregard of their traditional rights to free-flowing rivers and pastures in the Khanbogd soum, the region in the southeastern Ömnögovi Province most directly affected by the mine.

A coalition of herders, represented by the Mongolian NGOs Gobi Soil and Oyu Tolgoi Watch, submitted a complaint to the International Finance Corporation (IFC) in 2012, during the mine’s open-pit phase.

The complaint describes the mine’s destructive impacts, including the forced relocation of herding communities. Herders raised the alarm that diversion of the Undai River and the sacred Bor Ovoo spring would “deplete local water sources, deteriorate pastureland, and threaten the community’s spiritual practices.” Access to fresh water in Khanbogd remains limited, as much of it is prioritized for use by the mine.

Oyu Tolgoi’s expropriation of land and construction of fences for the mining license area has forced herders onto one another’s pastures, which are now tight and overpopulated. Soil and vegetation are covered by dust from the mine, and are no longer able to naturally regenerate with the healthy migration of herds. This has also caused horses, camels, goats and sheep on which the herders rely to become sick, creating a vicious cycle of intergenerational impacts for families.

Since the 2012 complaint to Oyu Tolgoi’s lenders, the mine’s owners have failed to deliver on promises of remediation, despite negotiating two agreements in March 2019 with the IFC’s Compliance Advisor Ombudsman. Sukhgerel Dugersuren, the head of Oyu Tolgoi Watch, described the early negotiation process as tainted by conflicts of interest, with local business owners acting as “elected herder representatives.”

A report published last year by the Accountability Council found that only about a third of the mine’s commitments can be considered “complete or well underway.”

“Oyu Tolgoi [OT] and its lenders continue to resist [carrying] out an environmental and social impact assessment of the underground mine phase,” said Sukhgerel in an email interview with Toward Freedom. “Herders continue to demand that OT carry out an environmental and, most importantly, a social impact assessment of underground mine and take control of its sub-contractor’s non-compliant actions on the ground.”

Paul Robinson, a researcher with BankWatch who is the director of the Southwest Institute, has been working with Oyu Tolgoi Watch and Mongolian herders for over ten years. In a Skype interview, Robinson described how the mine initially lacked a land reclamation plan, which, along with the financial assurance to guarantee the plan’s completion, should be standard process.

“They have an environmental social impact assessment that was published in 2012,” said Robinson. “The mine had already started then—they’d been stripping overburden for years. The lack of coherent baseline makes it very difficult to assess their performance.”

Robinson described how agreements between herders and Oyu Tolgoi were slower to be implemented in relation to concerns around tailings facilities in the Undai River watershed. He also mentioned the shoddy construction of 37 wells that were supposed to monitor the separation of the upper and lower aquifer. Oyu Tolgoi’s subcontractors constructed these wells with gravel instead of concrete, causing the upper level of water (which was to be used by herders) to drain into the deeper groundwater that is used by the mine.

“There’s been no hydrological analysis of the Oyu Tolgoi area to monitor the overall water levels and to address these wells,” said Robinson. “The wells were fixed, according to Oyu Tolgoi, but there’s no analysis of the consequences.” The total number of wells drilled falls far short of what was initially promised.

With the underground expansion underway, Khanbogd herders are still struggling to access and understand the compensation they are being offered by Oyu Tolgoi as it relates to the mine’s open-pit phase. The absence of meaningful economic alternatives to herding combined with the irreparable damage to their land has forced herders into dependency, circumstances the Accountability Council describes as “desperate.”

The bigger picture: austerity and tax evasion

Oyu Tolgoi has been an important vehicle of neoliberal intervention and accelerated the privatization of Mongolian land and resources. Rio Tinto and Turquoise Hill claim that the mine is a “national treasure” that is “contributing to the prosperity of Mongolia.” However, until the country pays off the loan from Turquoise Hill that financed the government’s 34 per cent share in Oyu Tolgoi, Mongolia won’t see substantial profits from the mine.

Mongolia has been under strict austerity measures following a $5.5 billion bailout by the International Monetary Fund (IMF) in 2017. The IMF bailout pressures Mongolia to privatize public assets and enforce free-trade policies. The country remains saddled with an external debt of $29.37 billion.

The influence of the mining lobby has significantly shaped Mongolia’s economic and energy policies. Armando Torres, CEO of Oyu Tolgoi LLC, is a director at the Business Council of Mongolia, which has been instrumental in lobbying for corporate tax reforms favorable to the extractive industry, including new measures announced in June 2019, which took effect on the first day of 2020.

These new tax reforms include a significant drop in withholding tax rates, which mining companies are known to exploit. The Ottawa-based Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development describes this kind of taxation policy as an “added incentive for a company to load up the mine with debt, as well as charge above-market interest rates to reduce local taxes and shift profits overseas.”

In July 2019, Rio Tinto announced an unprecedented delay of 16-30 months, estimated to cost up to $1.9 billion, raising the mine’s total cost to $7.2 billion. Citing “stability risks” and more challenging ground conditions than expected, Rio Tinto estimates that this delay may require the relocation or removal of “critical underground infrastructure, such as the mid-access drive and the ore handling system.”

No doubt the new tax arrangements are also appealing for Rio Tinto and Turquoise Hill, as the mine’s owners have repeatedly been charged with tax evasion. In 2018, the Centre for Research on Multinational Corporations (SOMO) published a report documenting how Turquoise Hill Resources had set up a network of shell companies in global tax havens, including the Netherlands.

Ambiguity in Mongolian tax laws and the Canadian Revenue Authority’s approval of the shell companies has allowed for substantial corporate tax avoidance. In addition to a $130 million fine in 2015 (which Turquoise Hill settled for only $30 million), the Mongolian Tax Authority fined the Canadian company an additional $155 million for tax evasion in 2018.

The allegations published by SOMO also include an estimated $559 million in Canadian taxes that were effectively avoided when the company shifted profits through a Luxembourg-based shell company Movele.

Erdenebat Bataa, the head of the Economics Department at the National University of Mongolia, confirmed SOMO’s claims that there was “widespread evidence of transfer pricing and other tax evasion strategies.” Erdenebat has written extensively about the danger of the country’s excessive dependence on the extractive industries.

Referring to the unilateral negotiations between the mining companies and the Mongolian government, Erdenebat said he does not expect positive results from mining in Mongolia until “experts with personal and professional integrity” are involved in the negotiations. “…The World Bank’s country economists never bothered cooperating with indigenous economists, nor [did they reply] to many invitations to seminars and events at the Mongolian Economists’ Association and the National University of Mongolia,” wrote Erdenebat in an email interview.

Despite the glaring unfairness of the agreements, Mongolia’s government unanimously approved a resolution in December 2019 that confirmed the validity of all agreements related to Oyu Tolgoi dating back to 2009. Pressure from the IMF and World Bank together with lobbying on the part of the extractive sector, continue to act as barriers to Mongolia’s sovereignty over its own tax legislation and energy priorities, much less to allow the country to protect the traditional land rights of its people.

Author Bio:

Lital Khaikin is an author and journalist based in Tiohtiá:ke (Montréal). She has published articles in Warscapes, Briarpatch, and the Media Co-op, appeared in literary publications like 3:AM Magazine, Berfrois, and Black Sun Lit’s “Vestiges” journal. She runs The Green Violin, a slow-burning samizdat-style literary press for the free distribution of literary paraphernalia.

Finance Minister of Mongolia signs loan agreement with China’s Exim Bank Vice President www.akipress.com

Minister of Finance of Mongolia Ch.Khurelbaatar met with Vice President of the Export-Import Bank of China Xie Ping in Beijing to exchange views on the projects being implemented in Mongolia by Chinese government soft loans, Montsame reports.

TRQ to spend USD 1.3 billion underground development www.zgm.mn

Turquoise Hill Resources (TRQ) announced fourth-quarter 2019 production for Oyu Tolgoi (OT) as well as operational and financial guidance for 2020. Copper production in Q4’19 of 32,905 tons was lower compared to Q4’18 due to decreased head grade driven by the transition from Phase 4a and Phase 6a, to Phase 4b, Phase 6b and lower grade stockpiles, the company said in a report.Equally, gold production in Q4’19 of 24,343 ounces was also lower compared to Q4’18 due to the transition from Phase 4a to low-grade sources of Phase 4b and stockpiles.

2020 OUTLOOK

OT is expected to produce 140,000 to 170,000 tons of copper and 120,000 to 150,000 ounces of gold in concentrates in 2020 from both the open pit and the beginning of the underground development material being processed.Although the mid-point copper production range guidance is higher in 2020 versus the 2019 guidance, a lower gold production year is expected for 2020. This is due to the need to mine through lower grade material on the periphery of the South West pit as Phase 4b sinks towards the highest gold and copper grades in the bottom of the pit. It is anticipated that the higher grade ore will be accessed in 2021, resulting in a significant increase in gold production in 2021. Mill throughput for 2020 is expected to be approximately 40 million tons. Operating cash costs for 2020 are expected to be USD 800 million to USD 850 million. Capital expenditure for 2020 on a cash-basis is expected to be approximately USD 80 million to USD 120 million for open-pit operations and USD 1.2 billion to USD 1.3 billion for the underground development exclusive of any expenditure on power.Open-pit capital is mainly comprised of deferred stripping, equipment purchases, tailings storage facility construction, and maintenance componentization. Underground development capital includes both expansion capital and VAT. C1 cash costs are expected to be in the range of USD 1.80 to USD 2.20 per pound of copper produced, up from 2019 guidance largely reflecting the reduced gold production estimate. Unit cost guidance assumes the midpoint of expected 2020 copper and gold production ranges and commodity assumptions of USD 2.71 per pound copper and USD 1,362 per ounce gold.

UNDERGROUND DEVELOPMENT UPDATE

Construction of shaft 2 was completed in October 2019 allowing for the movement of 300 people per cage cycle versus a maximum of 60 people per cage cycle through shaft 1. Underground development material is also being lifted to surface via the Shaft 2 production hoist. Productivity improvements resulted in increased underground lateral development rates during the fourth quarter, with an average rate of 1,607 equivalent meters (eqm) compared to 1,214 eqm in the third quarter, with December seeing a record 1,809 eqm.Construction is progressing on shafts 3 and 4 with both collars now installed. Final preparations are now underway to enable commencement of main sinking operations for both shafts during the second quarter of 2020 Detailed analysis work on the mine design is still anticipated to be completed during the first half of 2020, and the Definitive Estimate, which will include the estimate of cost and schedule for the underground project based on the updated design of Panel 0, is still expected to be delivered in the second half of 2020.

Quality of life in Mongolia www.montsame.mn

Ulaanbaatar /MONTSAME/ The ‘Vision-2050’ is a policy document, which was formulated by a working group comprising of 1500 people, including scholars, experts and state secretaries of 13 ministries, heads of some government agencies, authorities of universities and representatives of non-government organizations. According to the Prime Minister's order No: 52 dated April 30, 2019, the working group analyzed development stages of the past 30 years of Mongolia and formulated the policy document that will define long and mid-term development policy until 2050. We are presenting 9 fundamental goals of the development policy in detail.

Ambassador of Japan pledges to increase Mongolian exports to Japan www.montsame.mn

Ulaanbaatar /MONTSAME/. On January 20, Minister of Foreign Affairs of Mongolia D.Tsogtbaatar met with Japanese Ambassador to Mongolia Hiroyuki Kobayashi to congratulate him on presenting his diplomatic credentials and assuming office.