Massive FX leak: Renewable energy www.zgm.mn

Mongolia, which has a vast source of renewable energy, has not been able to export the electricity harvested from clean sources and instead, pay more to foreign investors. Key players in the industry, consisting mainly of foreign investors, sell their expensive power to Mongolia under the name “clean energy.”

BoM: Inflation to be at 7.8 percent at the end of 2020 www.zgm.mn

Inflation is projected to be 7.2 percent at the end of 2019 and 7.8 percent at the end of 2020. In May, inflation stood at 7.9 percent nationwide at 8.8 percent in Ulaanbaatar.

Mongolia casts doubt on Rio Tinto's Oyu Tolgoi expansion www.afr.com

Rio Tinto is facing more uncertainty in Mongolia after a senior lawmaker was reported suggesting the developing nation would not honour a 2015 agreement that underpins a $US5.3 billion expansion of the Oyu Tolgoi copper mine.

Mongolian media quoted the nation's minister for Mining and Heavy Industry, Sumiyabazar Dolgorsuren, as suggesting the Mongolian government would no longer accept a 2015 legal agreement that laid out the fiscal terms for the expansion.

That agreement was struck by Rio chief executive Jean-Sebastien Jacques when he was the miner's copper boss.

“We do not stand by the contract,” Mr Dolgorsuren was quoted as saying by News.mn.

The comments have since been republished by Bloomberg's bureau in the Mongolian capital Ulaan Baatar.

Rio shareholders will likely take the comments with a grain of salt; Mongolian parliamentarians have on many occasions in the past decade made threats to discard the major legal agreements that underpin Rio's investment in Oyu Tolgoi.

On most occasions the threats have proved to be hollow, with Rio continuing to work under a 2009 investment agreement that Mongolia has sought to revisit numerous times.

Adding to the tension is the fact the Mongolian Parliament is currently controlled by political rivals of the party that struck the 2015 agreement in Dubai.

But the outburst comes at a fragile time for Rio given a Mongolian parliamentary working group continues to analyse Oyu Tolgoi from a range of perspectives, including the fiscal terms but also practical issues relating to the supply of power and water.

Rumours have persisted in recent months that the parliamentary working group will seek revisions to the 2015 expansion agreement, while Mongolia's anti-corruption agency is investigating some of the politicians involved in signing the 2009 investment agreement.

Rio copper boss Arnaud Soirat made clear in April that he had no appetite to revisit those agreements.

''A commitment to honouring agreements and contracts is essential, especially in our industry, where time horizons are long and upfront investment is massive. At Oyu Tolgoi, the sanctity of the key
investment agreements makes the shareholders’ potential US$12 billion investment in Mongolia possible,'' he told an audience in Chile.

''Without these agreements we do not have a business case. And we will not have an operation.''

Rio is also expected to confirm the scale of cost and schedule blow outs on the project in coming months, which could further strain the relationship given the Mongolian government owns 34 per cent of the mine and is eager for its copper and gold to boost government revenues as soon as possible.

Mongolia has been unable to fund its 34 per cent share of development costs on the project; a situation that has further complicated the relationship and will ensure Mongolia's dividend streams from the mine are compromised in its early years of operation.

While Rio has been forced to tolerate the volatility that comes with Mongolian politics, the company's hand in negotiations is strengthened by the fact Oyu Tolgoi is viewed internationally as a bellweather for Mongolia's investibility.

Foreign investment into Mongolia slumped in the years prior to the 2015 Oyu Tolgoi agreement, and successful development of the mine is expected to embolden other investors.

Peter Ker covers resource companies, based in Melbourne. Connect with Peter on Twitter. Email Peter at pker@afr.com

European Union and Mongolia hold productive political, economic and human rights dialogue www.eeas.europa.eu

The European Union and Mongolia held a Joint Committee meeting today under the EU-Mongolia Partnership and Cooperation Agreement.

In 2019, the EU and Mongolia celebrate the 30th anniversary of the establishment of diplomatic relations. The presence of the EU Delegation in Ulaanbaatar since 2017 allows both parties to consolidate, deepen and diversify their relations.

In the meeting, both the EU and Mongolia reaffirmed the importance of further enhancing their relations by discussing priority areas of cooperation in the political, economic and human rights spheres. They exchanged views on regional and global issues and discussed opportunities for strengthening cooperation in the framework of the Europe-Asia connectivity strategy.

The EU and Mongolia discussed further steps in assisting the Mongolian authorities with a possible budget support operation that will contribute to boost employment creation and improve public finance management.
The third EU-Mongolia Human Rights Dialogue was held back-to-back with the Joint Committee. The EU and Mongolia discussed issues related to enhancing cooperation in multilateral fora. While the EU acknowledged the firm basis of the rule of law in Mongolia and the country's good compliance with human rights and fundamental freedoms, recent initiatives in the field of human rights and rule of law risk being contrary to Mongolia's international obligations, such as the independence of the judiciary, the rights of the child and human rights defenders. The EU welcomed the recent statement by the Mongolian Minister of Justice on the country’s continued strong commitment to the abolition of the death penalty. As is the case for all human rights dialogues, the EU met with civil society representatives ahead of the Dialogue, which contributes to a regular engagement with such groups.

The Subcommittee on Trade and Investment, held prior to the Joint Committee reviewed the state of trade and economic cooperation with a focus on the improvement of the business climate and the diversification of Mongolia's economy. It also reviewed the state of implementation of the EU Trade-Related Assistance to Mongolia (TRAM) project that assists Mongolia in the diversification of its economy and capacity building, as well as support for business intermediaries. The Joint Committee decided to establish a dialogue on sanitary and phytosanitary related issues.

Prior to the Joint Committee, dialogues took place in the context of EU’s special incentive arrangement for sustainable development and good governance (GSP+). The EU and Mongolia discussed how to make better use of these trade preferences as well as the effective implementation of international conventions on human rights, labour rights, environment and good governance. Agreed follow up actions include the adoption of the revised labour law, enforcing child protection, and ensuring the independence of the judiciary.

The Mongolian delegation at the Joint Committee was headed by Mr Tsogtbaatar Damdin, Minister of Foreign Affairs. The European Union's delegation was headed by Mr Gunnar Wiegand, Managing Director for Asia and the Pacific at the European External Action Service.

The EU and Mongolia agreed to hold their next Joint Committee meeting in 2020 in Brussels.

Mongolia exported 3.5 million tons of iron ore from January 2019 www.qazaqtimes.com

For the first 6 months of this year, Mongolia exported 3.5 million tons of iron ore totaling $ 207.5 mn, reports the country's main customs administration. At the same time, this figure increased by 720.9 thousand tons compared to the same period of the previous year. According to experts, China remains the main export destination for Mongolia. The share of China in 2018 accounted for 66% of total exports of Mongolia. In 2018, Mongolia exported 7.4 million tons of iron ore.

Biodiversity and Adaptation to Climate Change-III project agreement signed www.montsame.mn

Ulaanbaatar /MONTSAME/ On June 26, Ch.Khurelbaatar, Minister of Finance, Stefan Duppel, Ambassador Extraordinary and Plenipotentiary of the Federal Republic of Germany to Mongolia and, Petar Gjorgjiev, Director of the Office of German Credit Institute for Reconstruction (KfW) in Ulaanbaatar signed intergovernmental and financial agreements on the third phase of the ‘Biodiversity and Adaptation to Climate Change’ project and the Mongolia-Germany Joint University of Minerals and Technology establishment project.

Trump gift to coal industry won’t halt decline – report www.mining.com

Since peaking in 2008, US coal consumption has fallen 39% to the lowest level in 40 years.

Japan secures rare earth supply for longer through Lynas funding www.mining.com

Australia’s Lynas Corp (ASX: LYC) has signed a 10-year loan extension on easier terms with its powerful Japanese backers, which means the Asian nation now has a larger and lengthier hold on the company’s rare earths output amid China’s threats to use its market supply dominance as a weapon in the trade war with the United States.

Government to issue bonds using blockchain technology www.zgm.mn

Government bonds that were needed in the domestic market will be more accessible to citizens and investors by combining traditional and advanced methods in the coming year. The Ministry of Finance is planning to sell government bonds based on blockchain technology and at the Mongolian Stock Exchange (MSE). Preparations for forming government bonds with blockchain technology started last year. In this regard, the government adopted a regulation on trading securities based on blockchain technology in February 2018. “If we use such platforms, civilians and businesses will have the wider opportunity to get government securities,” said Minister of Finance Khurelbaatar Chimed. The Australian government also has the experience of issuing bonds worth USD 6 billion via blockchain technology. The blockchain-based bond trading platform was created by a Mongolian entity ICT group.

State Secretary D.Davaasuren receives OECD representatives www.montsame.mn

Ulaanbaatar /MONTSAME/ State Secretary of the Ministry of Foreign Affairs D.Davaasuren received representatives of the Organisation for Economic Co-operation and Development (OECD) led by the Head of Eurasia Division William Tompson on June 27.