Working group on ‘Mongolia-China Expo’ meets www.montsame.mn

Ulaanbaatar /MONTSAME/ Working group of the People’s Government of the Inner Mongolia Autonomous Region worked in Mongolia in connection with the upcoming ‘Mongolia-China Expo’ to be held on September 6-10 in Hohhot, Ulanqab and Tung lio cities of Inner Mongolia Autonomous Region, China.

New airport management launched www.montsame.mn

Ulaanbaatar /MONTSAME/ A ceremony to launch a new airport management was held at New Ulaanbaatar International Airport in Khushig Valley on July 5.

An Indian billionaire doubles down on controversial coal mine www.bloomberg.com

The Indian billionaire behind the controversial Carmichael coal mine in Australia is hitting back at criticism the endeavor will be both unprofitable and too dirty.

In an interview in New Delhi, Gautam Adani took aim at two major faults opponents have flung at the development: that the mine’s low-quality coal won’t earn enough money to justify his $2 billion investment, and that the world must abandon the fuel in favor of renewable energy to avoid catastrophic climate change.

Gautam Adani
“If the project wasn’t viable, we wouldn’t have pursued it,” said Adani, whose net worth of $9.8 billion makes him India’s sixth-richest person, according to the Bloomberg Billionaires Index. “Renewable energy is good for the nation, but it can’t meet our baseload power needs.”

Adani bought the resource in Australia’s Galilee Basin in 2010 as Indian companies rushed for overseas energy supplies amid forecasts of booming demand. But as coal prices fizzled through the first half of the decade, Carmichael’s output — closer to lower-quality Indonesian coal than the high-value varieties Australia is known for — is seen unable to fetch a price strong enough to be profitable.

“The commerciality of Adani’s Carmichael mine remains challenging given the significant capital spend and low-quality thermal coal product expected from the mine,” said Brent Spalding, a principal analyst at Wood Mackenzie Ltd.

Climate warnings
Australia’s Newcastle coal, a benchmark in Asia, would need to rise above $100 a metric ton, from about $78 now, for Carmichael to break even, according to Spalding.

Carmichael, which cleared final state approvals last month, will open up a new mining basin in the Australian outback amid increasingly dire warnings of the need to cut carbon emissions to avoid the ecological and economic havoc of climate change. Though coal is the most carbon-intensive fossil fuel, Adani has found a relatively friendly host country in Australia, where the economic heft of the resource industry helped re-elect a pro-coal federal government and overcome staunch opposition from environmentalists.

“We entered Australia with two overarching goals; contributing to energy security in India and creating job opportunities for the locals,” said Adani, 57, who started as a diamond trader in Mumbai before setting up Adani Group in 1988. His conglomerate — spanning ports, energy and mining — has become one of India’s key infrastructure service providers, while also venturing overseas.

Surplus generation
Coal’s use has been on the decline in Europe and the U.S. amid cheaper alternatives and pressure to ditch the most-polluting fossil fuel. Yet it dominates power production in much of Asia, a position it’s expected to sustain despite a boom in cleaner sources, such as wind and solar, as energy demand continues to grow.

Adani said the board approved 10 million metric tons of annual output from Carmichael’s first phase, which will head to his power plants in India, including Mundra and Godda. Adani Group is headquartered in Gujarat the state where current Prime Minister Narendra Modi served as the chief minister for little over a decade before he swept national elections in 2014.

India’s per-capita consumption of electricity “is way below the global average,” Adani said. “India’s development is linked to the availability of more power. And coal will play a big role in this as a baseload supplier.”

India’s challenges supplying reliable power to every home have been more about distribution than whether it has enough power plants or coal. The nation already has a surplus of generation capacity, but it’s money-losing, debt-saddled state utilities struggle to purchase and distribute enough power, leaving some power stations shuttered and homes in the dark.

When the company decides to raise the capacity of Carmichael — peak annual capacity is now seen at 27 million tons, down from an original 60 million — it will explore selling washed coal to buyers in Japan and Korea, according to Adani. Construction has already begun, he said, reiterating the company’s two-year timeline for first output.

“The need of the hour,” Adani said, “is to get started.”

(By Rajesh Kumar Singh, Anurag Kotoky and Debjit Chakraborty)

START Mongolia merges with StartupJohor to form a united brand START www.e27.co

The new entity aims to build a global acceleration hub for startups in Johor region of Malaysia, while at the same time becoming the gateway to global expansion for Mongolian startups

START Mongolia and StartupJohor, the ecosystem developers in their respective regions, have merged together to form a unified brand​.

Called START, the new entity aims to build a global acceleration hub for startups in Johor region of Malaysia, while at the same time becoming the gateway to global expansion for Mongolian startups.

The merger further expands the existing market reach for both parties. StartupJohor is based in Iskandar Malaysia, the southern economic development region of the Johor province of Malaysia. The city is strategically located beside Singapore and Indonesia that allows companies based within to have an easy access to the market opportunities in Malaysia, Singapore, Indonesia and southeast asian countries.

This strategic location, along with a relatively cost-effective environment compared to Singapore with a ready-built world-class infrastructure in Medini, Iskandar Puteri, will be a gateway for Mongolian startups to expand their operations to overseas market.

Furthermore, Mongolian distinct geographical location, and East European and Asian cultural mixture will be a gateway for Malaysian startups into central Asia. So, Mongolia’s location in between Russia and China will be a gateway to markets beyond Mongolia, eastern region of Russia and Stan countries.

In the future, START will showcase Mongolian and Malaysian startups to investors, synchronise their operations, best practices of ecosystem building and ​database platform comprises of the two ecosystem​. On the innovation front, START will open tech-driven hubs and expand into corporate innovation programs.

The idea of merger became inevitable to each party when the hubs were promoting their startups overseas. So, given the potential for further ecosystem development and market reach, the new START brand will bring mutual benefits to startups in Mongolia and Malaysia in the area of market reach, product testing, operational synergy, investor and partnership diversification.

StartupJohor, established in 2014 and has dedicated in building startup and entrepreneurial ecosystem in southern region of Malaysia, has multiple signature programmes under its umbrella and incubates its startup companies in its five co-working offices in the southern region of Malaysia, Johor Bahru and Iskandar Puteri.

Similarly, ​START Mongolia, since its establishment in 2011 as Startup Mongolia NGO and WorkCentral Mongolia, is an ecosystem developer with community building programmes in startup community and track record in the corporate world. START Mongolia incubates companies with a global aim in its three co-working offices in Ulaanbaatar, and it has launched first co-working and incubator in Darkhan, the center for the northern region of Mongolia.

“In general, the markets in central asian region have had a limited exposure to the global startup ecosystem. However in Mongolia, the home-grown startups, given the high internet and smartphone usage and culture to adopt new technology, are altering the landscape intensively in this region. Tech and startup arena in Mongolia already have gave birth to home-grown fintech, martech, insurtech and blockchain startups. On the local stock exchange, number of microfinancing fintechs and blockchain tech companies have successfully raised funding through IPO,” said Zolboo Bayarsaikhan, CEO of START Mongolia.

“Many great companies are coming up from Johor Bahru. These companies have been acquired, raised substantial funding and on the path to IPO in the local stock exchange, and we are seeing a clear trend and movement that many best startup may not necessary coming out from first-tier cities such as Kuala Lumpur or Singapore. There is a rising amount of great companies from tier-two cities or even countries as well,” said Feng Lim, CEO of StartupJohor (now START Malaysia).

“Following to this changing landscape, the traditional business are keen to digitise their business operations, but in most industries, the tech solutions, and the corporate culture and structure to deal with the outcome are not readily available. This is where START Mongolia has the team, expertise and community to help them. Now through this merger, START is setting up the channel for the rest of Asia to enter into rapidly changing startup ecosystem and market of Mongolia and Central Asia,” added Bayarsaikhan.

Chinese Ambassador to Mongolia Xing Haiming hails 70 years of China-Mongolia relations www.globaltimes.cn

Editor's Note: China and Mongolia share the longest borderline of 4,710 kilometers. The two countries are good neighbors, good friends and good partners linked by mountains and rivers. This year marks the 70th anniversary of the establishment of the diplomatic relations between China and Mongolia. Chinese Vice President Wang Qishan will pay a friendly visit to Mongolia on Wednesday. In an exclusive interview the Global Times' reporter Zhang Dan (GT) in Ulan Bator, Chinese Ambassador to Mongolia Xing Haiming (Xing) tackled topics of the bilateral relations and Mongolia's attitude toward Belt and Road initiative (BRI).

GT: What have the diplomatic ties over the past 70 years have achieved and what is the future course they are likely to take?

Xing: Mongolia has established diplomatic relations with China since the founding of the People's Republic of China in October 1949 as one of the first 10 countries that established ties with China at that time. Even though the two countries have experienced some setbacks since then, good-neighborliness and friendliness have marked ties.

In 1994, the two countries revised the Treaty on Friendly Relations and Cooperation between China and Mongolia, which laid the political and legal foundation for the healthy and stable development of the bilateral relations.

Chinese President Xi Jinping paid a historic visit to Mongolia in 2014. The two countries upgraded bilateral relations to comprehensive strategic partnership, marking a new historical chapter in the bilateral relations.

At present, the "three carriages" - mutual political trust, economic and trade cooperation, people-to-people and cultural exchanges are driving bilateral relations fast forward.

High-level exchanges are frequent, meanwhile, mutual political trust has deepened. In 2018, the heads of the two countries met twice, reaching a consensus on a series of important issues and giving a boost to bilateral cooperation.

In April, Mongolian President Khaltmaa Battulga paid a state visit to China and attended the second Belt and Road Forum for International Cooperation. The meeting between the two top leaders was a significant one in the year of the 70th anniversary of the establishment of the diplomatic relations between China and Mongolia.

In terms of trade cooperation, Mongolia has been supporting and participating in the China-proposed BRI. The two sides are speeding up the alignment of the BRI and Mongolia's Development Road Program.

China has been the biggest trading partner, the most important source of investment and aid to Mongolia for years. Last year, Mongolia's trade volume with China reached $8.53 billion, accounting for 66.2 percent of Mongolia's total foreign trade volume, 26.9 percent higher than that of 2017. The two sides are working together to achieve the goal of bilateral trade volume of $10 billion by 2020.

China and Mongolia are accelerating joint research on FTA. The two countries have signed an inter-governmental agreement on a joint economic zone, which comprises land in Erenhot, North China's Inner Mongolia Autonomous Region and Zamyn-Uud, Mongolia.

On July 10, Chinese Vice President Wang Qishan will pay a visit to Mongolia, which will take bilateral relations into a new phase in the new era.

GT: Amid anti-globalization, unilateralism and trade protectionism, what is the significance of the joint research by the two countries on free trade zone (FTZ) and its implementation?

Xing: Currently, the main challenge for the global economy is the rising anti-globalization, unilateralism and trade protectionism. The US-led trade friction with China has aroused global attention.

I recently published an article with some facts about the trade friction and laid out China's stance in Mongolian media, which triggered a strong reaction in Mongolia.

I talked with people from all fields in Mongolia, and most of them understand and support China's position. They hope that China and the US can properly resolve trade disputes through dialogue and consultation.

China has been dedicating to protecting the free trade system and carrying out economic and trade cooperation with other countries based on equality, mutual benefit and mutual respect.

The FTZ cooperation between China and Mongolia demonstrates that most countries, including Mongolia, safeguard multilateralism and the system of free trade, instead of supporting unilateralism and trade protectionism.

The China-Mongolia FTZ is part of the consensus reached between the top leaders, which will open a huge market of almost 1.4 billion people.

It is to be noted that the population of Mongolia is less than 3.4 million. As a result, it shows China's sincerity to carry out economic and trade cooperation with Mongolia and care about Mongolia's development. The two sides are working hard to speed up feasible research on the FTZ and look forward to positive results as soon as possible.

GT: What is Mongolia's approach to the BRI?

Xing: Since China proposed the BRI, Mongolia has given active response to and support for it. Mongolian officials said many times that the country will actively participate in and support the BRI.

Mongolia also took the initiative to make changes in its development plan and proposed the alignment of its Development Road Program with the BRI.

The foreign minister of Mongolia has publicized the BRI several times at multilateral forums, appealing to more nations to participate in and build the BRI together.

It is notable that Mongolia has established the BRI fast-pass channel at the Chinggis Khaan International Airport, and some ports and stations. People participating in the BRI projects with approved certificates can pass through the BRI fast-pass channel.

In addition, Mongolia gives important suggestions in order to support and implement the BRI projects, which also shows its positive attitude.

GT: Is the cooperation between China and Mongolia mutually beneficial?

Xing: President Xi Jinping proposed building a community with a shared future for mankind. This proposal will work better when looking at neighboring countries. You cannot move your neighbors. We should have cooperation, gain mutual benefits and win-win results - these are our goals.

Probably Mongolia may gain more benefits from some projects. However, generally speaking, our cooperation is mutually beneficial and supportive of each other.

China's borderline with Mongolia is longer than that with Russia. If the border is peaceful and stable with friendly people-to-people exchanges, it will for sure bring benefits to both sides.

GT: Apart from China's support, Mongolia has accepted aid from Russia, Japan, South Korea and other countries. How is aid from these countries different and is there competition among them?

Xing: Mongolia's territorial area is very large - about 1.56 million square kilometers with the population of approximately 3.3 million.

Under such circumstances, the priority for the country is to develop friendly and cooperative relations with its two neighbors. The next step is to develop relations with other countries.

China is pleased to see Mongolia carrying out normal and friendly cooperation with other countries. However, we do not allow unfriendly actions taken place at our surrounding areas. We do not allow behaviors that do not respect China's key benefits. Mongolia said that it will respect China's core benefit completely.

GT: How can Mongolia better attract Chinese investors and protect their rights?

Xing: Investment is in fact a way of cooperation and is usually controlled by the company itself. It is not inter-governmental cooperation.

I suggest investors first learn about the country's investing environment. After evaluating the investment amount and budget, you can finally invest.

I think the first principle is to pay mutual respect; second, we should gain mutual benefit and win-win results. No one should eat the food alone. Third, Chinese companies should shoulder social responsibility in the invested country. They should not only care about making profits.

I believe if all of the above work is done well, it is very prospective for a Chinese company to invest in Mongolia.

GT: How do you comment on people-to-people exchanges between China and Mongolia?

Xing: When President Xi Jinping visited Mongolia in 2014, he announced a plan to strengthen bilateral exchanges and cooperation in fields such as youth, media and language exchanges.

China has offered 25 TV series for free to Mongolia. I can tell you there is currently a trend in Mongolia to watch Chinese TV series. It shows that Chinese culture is very popular and welcomed in Mongolia.

Moreover, the Chinese government provides Mongolia with a large number of scholarships every year. Each year, when the embassy holds tests for Chinese government scholarships, it is as popular as the college entrance exam in Mongolia.

Our embassy keeps trying innovative work to promote cultural exchanges. We have translated four great Chinese classical novels into Mongolian, which has been well received in Mongolia.

Forest fire in Inner Mongolia extinguished www.xinhuanet.com

HOHHOT - A fire that broke out in a primeval forest in North China's Inner Mongolia autonomous region Sunday has been basically put out, after an overnight battle by more than 300 firefighters.

Morgan Stanley Turns Bearish on Global Stocks as Challenges Grow www.bloomberg.com

Morgan Stanley cut its global equities allocation to the lowest in five years, and downgraded its investment recommendation to underweight, saying the outlook for stocks over the next three months looks particularly poor.

How Rio Tinto dug itself a hole in Mongolia www.afr.com

Alarm bells started to ring for the engineers working underground at Rio Tinto's Oyu Tolgoi mine when they had to abandon attempts to drill a fairly simple borehole for ventilation.

Rather than carve a discrete tunnel through the rock to surface, the bore collapsed into an ungainly void, unfit for use.

As they conducted a post mortem into the borehole failure, the engineers were mindful the incident could be the proverbial canary in the coal mine for Rio's plan to build a huge network of tunnels more than a kilometre beneath the Mongolian desert as part of a $US5.3 billion expansion.

"We are pretty confident that it is stress-related and or fault-related, or both," wrote Oyu Tolgoi's then manager of Vertical Development and Mass Excavation Scott Ramsay, when discussing the cause of the bore failure.

"If it is stress alone due to depth, then we recognise that we have a much, much greater problem, as you'd be aware, because we have not only internal vent raises, but also vertical ore passes and ore bins and underground crusher stations to excavate at 1300 metres below surface for the success of this mine".

The more things have changed at Oyu Tolgoi in the seven years since Mr Ramsay sent that letter to Oyu Tolgoi's bore drilling contractor, the more they have stayed the same.

The reliability of the rock underground at Oyu Tolgoi remains a worry. Sovereign risk in Mongolia's young democracy remains a worry.

As Rio prepares to update investors on the cost and schedule blowouts affecting the most important growth project in its global business, shareholders are wondering what sized hole the company has found itself in.

Oyu Tolgoi has been pulling modest amounts of copper, gold and silver out of an open pit in Mongolia's South Gobi Desert for six years.

Right from the start, the main game was an underground expansion project, which holds about 80 per cent of Oyu Tolgoi’s value and will turn it into one of the world's top three copper mines.

For a small, poor population that emerged from socialist rule less than 30 years ago, the prospect of hosting one of the world’s most lucrative mines for at least 40 and maybe 100 years is understandably exciting.

Mongolia casts doubt on Rio Tinto's Oyu Tolgoi expansion
The mine dominates political debate in Mongolia, and consumes half of all foreign direct investment into the nation.

A rare period of harmony between Rio and the Mongolian government emerged in 2015, when they struck an agreement that allowed the mine to borrow $US4.4 billion from lenders like Australia's export credit agency, ANZ and NAB to build a $US5.3 billion underground mine expansion that would deliver "sustainable first production’’ in the early weeks of 2021.

The $US5.3 billion budget was understood to have a 14 per cent buffer for future cost blowouts.

While Rio is the project developer and mine operator, it does not directly own a stake in Oyu Tolgoi.

The mine is 66 per cent owned by Canadia’s Turquoise Hill Resources (TRQ) and 34 per cent owned by the Mongolian Government.

Rio owns 50.79 per cent of TRQ, meaning it effectively, but indirectly, owns just 33.52 per cent of Oyu Tolgoi.

As 2018 dragged on, it was increasingly clear to people working on the project that development of Oyu Tolgoi's "shaft two" was not going to plan.

With a 10-metre diameter and plunging to depths of almost 1300 metres, shaft two was intended to be a critical enabler of the underground project, allowing equipment, people, oxygen and huge volumes of ore to move between the underground mining areas and the surface.

Shaft two was supposed to be finished in mid-2018. But it was October 2018 by the time Rio fleetingly told its shareholders there would be a "revised ramp-up schedule'' on the project.

TRQ gave its shareholders more information, saying the delays could be about nine months.

By February, Rio was more forthcoming and pessimistic, flagging “some potentially significant changes to the design” and suggesting the delays would be greater than the nine months disclosed by TRQ.

TRQ reiterated those comments, and added that work was under way to understand the impact on project cost.

Some who have worked on the project feel Rio should have told investors about the problems at shaft two sooner. An investigation by Rio’s law firm Baker Mackenzie has left the company confident it did not breach disclosure rules.

For a ''block cave'' mine to work at Oyu Tolgoi, Rio needs the weak and fractured rock to collapse under pressure from blasting and gravity.

But there are fears the rock may collapse too well; meaning the underground passages and tunnels through which the ore is extracted (known as extraction drives and ore passes) may also collapse, rendering sections of the mine unworkable.

Studies have continued through 2019 with relocation of the ore passes being a top priority.

Rio is also considering mining a different section of rock first, to target structurally reliable areas.

This may mean a section of rock with particularly high copper grades is mined later than originally planned.

''This is critical to the economics in our view as it affects the pace of ramp-up to full production and in turn affects cashflow and profitability,'' Deutsche analyst James Gurry said.

''We are therefore expecting a slower ramp-up, less concurrent caving initially but a redesign that sets up the mine optimally for the following decades of life.''

Based on this year's disclosures, the project schedule appears vulnerable to at least one year's delay and some analysts have built a two-year delay into their models.

The cost blowout is harder to quantify.

RBC has added $US500 million to the existing $US5.3 billion budget.

Deutsche has assumed an $US800 million cost blowout, taking the capital spend to $US6.1 billion.

Goldman Sachs analyst Paul Young has assumed a total cost of $US6.4 billion, which would be a billion-dollar blowout.

Some argue the true cost will be much higher than those estimates now that Mongolia has ruled Oyu Tolgoi must be powered by a domestic energy source rather than continue to import power from China.

That means a new power station must be built, and the Oyu Tolgoi shareholders have agreed to own, and therefore fund, at least 51 per cent, and potentially all of the power station.

The cost of a power station is not included in Rio's official $US5.3 billion budget.

If forced to build a power station, Rio has always wanted to do it at the Oyu Tolgoi mine site.

But on December 30 Rio acceded to the Mongolian government's desire for the power station to be built at the Tavan Tolgoi coalfields, approximately 150 kilometres from Oyu Tolgoi.

Rio's copper boss Arnaud Soirat warned in November that the Tavan Tolgoi option would take six years to complete. Less than two months later Rio had pledged to build it in four and a half years.

Most pundits expect the power solution will cost between $US1 billion and $US1.5 billion.

Rio has already set aside $US500 million in its capital spending budgets for its share of power station costs.

TRQ management did not disagree on an investor call earlier this year when an analyst suggested the power station would cost about $US1 billion.

Combined with the blowout in mining costs, the addition of the power station has left many observers predicting a total capital spending bill north of $US7 billion.

Deutsche Bank, a pillar of European finance, unveils radical restructuring. It will cut 18,000 jobs www.cnn.com

London (CNN Business) Deutsche Bank will cut 18,000 jobs and dramatically shrink its investment bank as part of a costly overhaul that marks a retreat from Wall Street after two decades of intense competition with American rivals.

The German bank said Sunday that it would shutter its equities sales and trading business, while creating a "bad bank" for €74 billion ($83 billion) in assets that eat up too much capital. The assets will be sold over the coming years.
"Today we have announced the most fundamental transformation of Deutsche Bank in decades," CEO Christian Sewing said in a statement, calling the moves a "restart."
It's a dramatic shift for the 149-year-old bank, a pillar of European finance that has struggled to produce consistent profits despite undergoing a series of overhauls.
Deutsche Bank (DB) said the job reductions would be made by 2022, bringing its headcount down to roughly 74,000 employees.
End of an era
Germany's biggest bank at one point dreamed of dominating investment banking, competing with the likes of Goldman Sachs (GS) and Morgan Stanley (MS) in Europe and abroad. It stated its global ambitions in 1999 with the purchase of Bankers Trust, an American investment bank.

But the bank — and its investment banking team in particular — struggled to find direction following the global financial crisis.
A sluggish European economy and a reluctance to reform made it harder for Deutsche Bank to compete in the expensive sector.
The division continued to suck up resources even as it fell further behind competitors. The resignation last week of the head of the investment bank, Garth Ritchie, signaled that major changes were coming.
The reforms announced Sunday will let Deutsche Bank take a step back from investment banking and prioritize more reliable lines of business such as corporate money management. But the restructuring effort won't come cheap.
The bank said that costs related to the overhaul would push it to a net loss of €2.8 billion ($3.1 billion) for the second quarter. The total cost of the restructuring will hit €7.4 billion ($8.3 billion) by 2022.
Growing pressure
Pressure for Sewing to outline a path forward increased following the collapse of merger talks with crosstown rival Commerzbank (CRZBF) and a dismal first quarter earnings report.
In the first three months of the year, profit rose 67%, but that was due entirely to yet another round of belt-tightening. Revenue fell 9%, and the company said it would be "essentially flat" for the year.
Investment banking revenue fell 13% to €3.3 billion ($3.7 billion), while costs for the unit totaled €3.4 billion ($3.8 billion).
Shares in the bank are down almost 25% in the past year and hit a record low in June.
For weeks, Deutsche Bank had telegraphed that a turnaround plan was coming soon. But analysts weren't sure how far Sewing would go.
The bank has slashed thousands of jobs since he took over in April 2018, but this will be the biggest round of layoffs under his leadership.
Deutsche Bank did not provide a geographic breakdown of the cuts, but many are expected to hit US employees. The bank employs almost 9,300 people in North America, with most of those jobs in the United States.

China to overtake US as world's biggest insurance market www.chinadaily.com.cn

BEIJING -- China is expected to surpass the United States to become the world's largest insurance market in the mid-2030s, according to a report from Swiss Re Institute.