Southeast Asia poised for export boost from new US tariffs www.asia.nikkei.com

SINGAPORE -- Southeast Asia will likely enjoy a boost in exports from the new U.S. tariffs on China announced recently, with more companies diverting production and shipments through the region in order to avoid higher rates.

But the trade war could prove a double-edged sword. Shipments to China, Southeast Asia's biggest trading partner, are seen suffering, and it is unclear how the region will fare once the dust has settled.

On Aug. 1, U.S. President Donald Trump announced a 10% tariff on $300 billion of Chinese products starting Sept. 1, which is expected to affect a wide range of consumer goods such as clothing and shoes. Southeast Asian businesses see big opportunities in the likely drop in Chinese shipments.

"Indonesia is expected to enjoy an increase in textile and garment exports to the U.S. in the wake of the new U.S. tariffs," said Ade Sudrajat, chairman of the Indonesian Textile Association.

Indonesian industry representatives visited Washington in July, before Trump's announcement, and agreed to ship more textiles to the U.S. in exchange for increased imports of American cotton, Ade said.

"Thai food exports to the U.S. are expected to rise substantially" if the new tariffs take effect, said Pimchanok Vonkorporn, head of the Thai Commerce Ministry's trade policy and strategy office.

Evaluating U.S. tariffs' impact on Asian economies, Morgan Stanley said in a research note on Aug. 5 that Vietnam and Indonesia notched notable gains in non-tech-segment exports to the U.S. amid the levies on Chinese goods.

Exports from Southeast Asian countries -- Malaysia, Thailand, Indonesia and the Philippines -- are also comparatively sheltered from the new U.S. tariffs, compared with economies with "higher trade linkages with China" -- such as Hong Kong, South Korea and Taiwan, which have seen their share of global exports dented by Sino-American trade tensions, the report said.

Consumer goods such as clothing and food tend to have narrow profit margins, which means a 10% tariff is a heavy blow for Chinese products. And because they do not require specialized know-how, they can easily be replaced by alternatives.

Many Southeast Asian countries have enjoyed a boost in exports to the U.S. since last summer, when Washington imposed three rounds of tariffs on China. Vietnam's exports jumped 27.4% from a year earlier in January-June. Thailand and Singapore logged 17.4% and 4.8% increases, respectively.

Production itself is shifting to the region as well. "We're getting phone calls here several times a week now with big multinationals, who are in fact now finally looking to supply chains," said Asian Trade Center Executive Director Deborah Elms.

Even those that were sitting on their hands are starting to act. The new tariffs will only accelerate the trend, Elms said.

But the deepening trade war could further cool Southeast Asian shipments to China. A decline in Chinese exports to the U.S. means China will need less raw materials and parts from Southeast Asia.

Thailand, Indonesia, Singapore and Malaysia all saw exports to China decline on the year in January-June. The trend threatens to squeeze the region's growth as a whole.

There is also the risk that Chinese companies start diverting products originally intended for the U.S. to Southeast Asia, upsetting the supply-demand balance there.

"There will be a negative impact from Chinese products flooding Indonesia. So the question is, what will our trade balance look like?" Ade said.

Nikkei staff writer Alex Fang in New York contributed to this report.

EV sector will need 250% more copper by 2030 just for charging stations www.mining.com

While it is a known fact that electric vehicles (EVs) use about four times more copper than gasoline-powered vehicles, short-term demand for the metal won’t come from the car industry, but from the charging stations and related infrastructure needed to support EV growth, a new study shows.

According to Scottish consultancy Wood Mackenzie, there will be more than 20 million EV charging points by 2030, consuming over 250% more copper than in 2019. But the forecast would only become a reality if more private and public investment is allocated.

The EV charging infrastructure ecosystem is very complex, and most projects require strong partnerships between both public and private stakeholders to deploy the necessary infrastructure, the research notes.

Not only electric utilities, but equipment makers, software and network providers, as well as governments and non-governmental organizations will need to join efforts, the report reads.

In North America alone, the EV infrastructure market will total $2.7 billion by 2021 and $18.6 billion by 2030, according to the report.

“By 2040, we predict that passenger EVs will consume more than 3.7 million tonnes of copper every year. In comparison, passenger internal combustion engine (ICE) vehicles will need just over 1Mt,” says Henry Salisbury, WoodMac research analyst. “If we look at cumulative demand, between now and 2040 passenger EVs will consume 35.4Mt of copper – around 5 Mt more than is required to meet current passenger ICE demand.”

Currently, less than 1% of the world’s vehicles are electric, but by 2030 EVs are expected to make up approximately 11% percent of new car sales.

Consumption from the car industry will also weigh on demand, but later. An average gasoline-powered car uses about 20 kg of copper, mainly as wiring. A hybrid needs about 40 kg and a fully electric car has roughly 80 kg of copper (176 pounds).

The amount goes up as the size of the vehicle increases. For example, a fully electric bus uses between 11 and 16 times more copper than an ICE passenger vehicle — depending on the size of the battery and the actual bus.

This means, in the next decade, global copper demand will increase between 3 and 5 million tonnes, experts seem to agree. Once electric vehicles become popular, they estimate demand to reach 11,000,000 tonnes of new copper for EV’s alone, with potential upside in other green technologies.

Practical and psychological barriers
While EVs are getting cheaper and able to go farther on a single charge, consumers face the challenge of being able to charge their vehicles on long trips.

Gas stations are everywhere, the process of refuelling is fast and there is rarely any need to plan these kinds of stops ahead of time.

EV charging stations are far from being that common. Despite advances in charger and battery technologies, it still takes much longer — about 30 minutes with today’s fast chargers — to recharge a car battery than to fill up the tank.

“As it stands, range anxiety – worrying that a battery will run out of power mid-journey – is a key psychological barrier standing in the way of more widespread EV adoption,” WoodMac’s Salisbury says.

“One way to address this is to roll out more charging infrastructure. As this happens, more connections to the electrical grid will be required and more copper will be needed as the network expands,” he notes.

Salisbury also believes copper will benefit from the fact that there are not viable alternatives to it. The metal’s physical properties make it the best to conduct electricity and it can comfortably accommodate the higher temperatures common to EVs.

“Aluminum is the closest alternative,” Salisbury says. “However, despite it being lighter and almost three times cheaper, copper comes up trumps on size and efficiency. An aluminum cable needs to have a cross-sectional area that is double the size of any copper equivalent to conduct the same amount of electricity.”

Copper is also a key element in green technologies and renewables, which despite being adopted at a fast pace, still represent only a minor percentage of the world’s total energy production.

New Sainshand-Altanshiree rail carries first passengers www.montsame.mn

Ulaanbaatar /MONTSAME/. It has been recently reported that a construction of railroad between Sainshand city of Dornogobi aimag and Altanshiree soum has completed. Last weekend, the first passenger train ran on the newly-commissioned 27,7 km long railway. The railroad was built to reach Altanshiree soum, where the first oil refinery of Mongolia with a capacity of 1.5 million tons per year is currently being developed.

Tavantolgoi-Zuunbayan railway construction goes smoothly www.montsame.mn

Ulaanbaatar /MONTSAME/. Last weekend, President of Mongolia Kh.Battulga worked in Dornogobi to become acquainted with the development works of Tavantolgoi-Zuunbayarn railroad, being built in Mandakh soum of the aimag. As reflected in a document “State Policy on Railway”, a 414.6 km long road from Tavantolgoi coal mine in Tsogttsegtsii soum of Umnugobi aimag to Zuunbayan, Dornogobi aimag is presently under construction. Thanks to the railway, Tavantolgoi’s coking coal’s sole market dependency will end and around 40 deposits along the railway line, that are not under exploitation yet, will be utilized and their products will be supplied to international buyers at international market price. Also, the railway expected to help reduce widespread problems, such as degradation of pastureland, dust and soil pollution and bring positive social and economic changes to the food, agriculture and tannery industries.

Corresponding officials reported to the President that the railway construction project is continuing without hindrance. Personnel of the General Staff of the Mongolian Armed Forces and 7781st military unit of the Mongolian army are taking part in the construction works with 8 companies as sub-contractors and 4 companies of geology and geodetic control using around 210 machinery and equipment.

D.Sumiyabazar, Minister of Mining and Heavy Industry, who accompanied the President to Dundgobi aimag, noted that there are 37 deposits of mineral resources of special license along the 30 km long area of the Tavantolgoi- Zuunbayan railway, including Tavantolgoi coal mine, Kharmagtai copper-gold mine, Manlai coal mine as well as Kharaat Mountain, Tukhum and Dadiin Khar Mountain and Dulaan mountain with coal, copper, gold and gypsum resources. According to the Minister, total value of the deposits mentioned here reaches MNT 6 billion. Therefore, he said that the new railway will not only carry coals from the Tavantolgoi deposit, but also it will allow transportation from other deposits in the area in order to put them into economic circulation.

During the construction project, a total of 3700 people are estimated to be provided with employment and 1352 machinery to be used. Furthermore, 10 thousand people and their families will earn income from supply of materials, techniques, drinking water and food throughout the project period.

During his working trip in Dornogobi, President Kh.Battulga also visited the construction site of a 15 km long railroad in Zuunbayan and an extension of Zuunbayan station, a part of the Tavantolgoi-Zuunbayan railway construction. The extension is being built at the Zuunbayan station as the railway to Tavantolgoi will be connected to the rail line at 49.4 km line of the Zuunbayan station. The extension work is being performed by military personnel of the 7781st unit of the army.

The military unit crew working at the building site told that they have done excavation and earthworks on 59040 m3 land, over-fulfilling the scheduled works to 127 percent. Minister of Road and Transport Development B.Enkh-Amgalan said “Military troops’ highly effective and responsible organization has had a great influence on the advancement in the construction. Some technical issues related to the construction will be discussed at a cabinet meeting next week”.

At the end of his visit to the construction sites, President Kh.Battulga expressed his gratitude toward every person taking part in the development works and requested them to finish the project on time.

160 Mongolian students graduate from Cuban Universities www.news.mn

More than a hundred Mongolian youngsters have graduated from higher education institutions in Cuba, the Cubaminrex website reported.

Mongolia's photojournalism program attracts 20 from 6 countries www.xinhuanet.com

ULAN BATOR, Aug. 12 (Xinhua) -- More than 20 domestic and foreign photojournalists from six countries are taking part in an international photojournalism program, which kicked off here on Monday.

Cashmere’s journey from Mongolia to Multrees Walk www.heraldscotland.com

THE marriage between Mongolia and Multrees Walk - the Edinburgh avenue where Harvey Nichols and Louis Vuitton are neighbours - has to be sustainable, says Simon Cotton.

The chief executive of the luxury knitwear firm Johnstons of Elgin - which has just opened a flagship store in the Scottish capital’s exclusive shopping precinct - has set up a critical link between its mills and the cashmere farmers of Mongolia who supply the raw materials for their products that are sold under their own brand and for names like Burberry, another Multrees neighbour.

The 222-year-old firm is also investing in its Scottish future with a new £500,000 development centre set to open in Hawick later this year where it will centralise the design of new techniques and new types of fabric.

Mr cotton, 49, said there is growth across the company, which now has five stores in the UK, with others located on London’s Bond Street, in mills in Hawick and Elgin, and in St Andrews, and a further store could follow.

He said: “There’s two sides to our business. We have our own brand, and that’s about a third of our turnover.

“We have the private label business where we manufacture for other brands. Both sides have been growing.

“On the private label side, it’s been about having fantastic relationships with the best brands in the world, which we are doing very well, and we make iconic products for them, which the customers want.”

The firm tends not to mention private clients but customers such as Burberry are happy to make the association in their accounts.

“On the brand side, it has been very much about that new consumer interest in authenticity, and brands that have a provenance and a history.”

The firm sources merino wool mostly from Australia and cashmere from China, Mongolia and Afghanistan.

He said: “I was involved in the setting up of an organisation called the Sustainable Fibre Alliance.

“Ourselves and a few other companies set this up to work in Mongolia particularly on the sustainability of cashmere, and just making sure that the nomadic herders that produce it are able to deal with issues like the challenges of global warming, because they’ve got warming there of 2.8C.

“That’s affecting the grassland, increasing animal numbers are affecting the grassland. The nomadic herding practices that have been in place for centuries really now have to deal with a lot of new challenges.

“Cashmere is a great, romantic story. You know, wild goats roaming the grasslands and all that stuff. But if we want that to be around for the next 100 years, we’ve got to support the people and the supply chain.”

Claimed as a world first, it has introduced lighter weight technology which it says allows customers to wear knitted products year round.

Last year the company committed £4.5 million, an 800 per cent increase from 2012, to introducing its new technology and R&D capabilities.

Owned by the Johnstons for the first four generations and then the Harrison family since 1920, it last year booked £9.9m, profit before tax, a 59% increase year-on-year.

The firm employs 1,000 over its Hawick and Elgin mills, and is responsible for one third of Scotland’s textile apprentices.

It again looks to the future by running school visits, with 2,500 children seeing the mills each year. “They’ll do tours, but they’ll also do face to face interviews with young people in the company. They’ll do hands-on projects as well. So really, it’s trying to engage with the next generation and let them see that textiles is a vibrant industry with a good future, which has not always been how it’s been portrayed.

“Obviously the industry as a whole has gone through some decline for a period of time, but there’s now definitely a resurgence as people get much more interested in things like authenticity and how things are made, who’s making the products, and things like that.”

The company says it has the most advanced weaving looms and knitting machines in the UK.

Mr Cotton said: “We’ve invested a lot in finer gauges for the weaving and the knitting. That’s to give us a more international appeal, more year-round appeal, and broaden our products, so it means that we can remain relevant to the private label customers regardless of what their fashion cycle does. But it also means that from our own brand, we can give a much wider range of products.

“The technology and investment in machinery certainly is part of it. Take, for example, the fine gauge knitwear, which we’ve developed, so a really fine knit where you can wear it under a suit jacket. We developed that with whole garment technology, so basically very little sewing required. It’s a product which is made almost entirely on a single machine. We did that in collaboration with a very high end, very well respected yarn spinner in Italy, and the Japanese technology leader in the sector, Shima Seiki. You needed all three parties to do that. Just buying the machinery on its own was certainly never going to get us there.

“We’re in the process of launching our innovation centre in October in Hawick, where we’ll have all our design team, all the technical developers, all our programmers together under one roof. The magic happens when you’ve got designers and technical people working together, and then you can do things which maybe can’t be done if you’re designing in one office and sending things down the modem to another office.”

He said so far Multrees Walk living up to expectations and some international shoppers are “engaged by the idea that there’s actually a Scottish luxury brand which can sit beside the Louis Vuittons and the Burberrys and the Max Maras very comfortably”.

Q&A

Q What countries have you most enjoyed travelling to, for business or leisure, and why?

A I have a particular fondness for Mongolia. Alongside two other companies, Johnstons was the original member of the Sustainable Fibre Alliance, which works with the nomadic herders in Mongolia to improve all aspects of the sustainability of cashmere production.

Q When you were a child, what was your ideal job? Why did it appeal?

A I don’t think I had a clear idea until I was in my mid-30s and realised I had the opportunity to lead a business.

Q What was your biggest break in business?

I joined Russell Europe Ltd as a marketing manager and, although incredibly hard at the time, I learnt very quickly as part of that process, and when we did achieve the turnaround it was extremely satisfying.

Q And your worst moment?

A For my first MD role in 2007 I took over a company that had never made a profit. I learned a lot about the value of “lean” in manufacturing and how to balance the need to fill factories with the need to stay profitable.

Q Who do you most admire and why?

A My wife runs a charity that brings to Scotland children from the areas of Belarus affected by the Chernobyl disaster. Somehow she manages to completely energise herself to work with the charity and can make some incredibly tough decisions when necessary.

Q What book are you reading, what music are you listening to?

A I am reading Alistair Gray’s new book The Game Changer and listening to a young local musician called Calum Jones – he has a fantastic future.

Q What was the last film you saw?

A My son Seth took me to see Spider-man: Into 
The Spider-Verse. I thoroughly enjoyed it.

Mongolia to host festival as reindeer population increases www.theasian.asia

Ulaanbaatar: Mongolia will hold a two-day festival next week to celebrate the latest increase in the number of reindeer in the country.

Gold purchase drops 20 percent www.zgm.mn

Mongolia’s gold purchase has decreased 20 percent compared to the previous year, according to the Bank of Mongolia (BoM). As of June, BoM purchased 7.5 tons of gold, down by 1.8 tons year-on-year. The Central Bank’s fulfillment of gold purchase reached 30 percent in the second quarter of 2019.

US-Mongolia relations lack healthy balance www.globaltimes.cn

Mongolian President Khaltmaa Battulga met US President Donald Trump at the White House on July 31. During the state visit, the White House said, "The US and Mongolia have agreed that their relationship has reached the level of a 'strategic partnership.'" On Thursday, US Secretary of Defense Mark Esper was in Mongolia where he met high-ranking Mongolian leaders. Why have Ulaanbaatar and Washington become closer recently?

As tension increases with China and Russia, US frequent interactions with Mongolia could be regarded as an attempt to create more pressure for Beijing and Moscow.

Following its democratic transition, Mongolia has shown a willingness to become a liberal and democratic country with the US as its role model. This is in line with US strategy and provides room for Washington to export its ideology and values to Ulaanbaatar, which aimed at Beijing and Moscow.

As the China-US trade war continues to escalate, reports say that China could slash its rare-earth exports to the US as a countermeasure. According to the US Geological Survey in 2009, Mongolia had 31 million tons of rare-earth resources, 16.77 percent of the world's total and second only to China.

Boosting ties with Mongolia could be a way for the US to show China it has found an alternative country that can meet its rare-earth demands. This would reduce US reliance on China in this regard.

By strengthening ties with Mongolia, the US is also attempting to upgrade Mongolia's status in Northeast Asia, giving Washington another channel to deal with the Korean Peninsula nuclear crisis. Mongolia has maintained solid relations with all countries in the region including North Korea, with few historical or territorial issues. Ulaanbaatar wants stronger ties with Washington to earn more respect in the region, at least from Tokyo and Seoul.

Moving closer to the US, Mongolia can reduce its security reliance on China and Russia.

Mongolia proposed a "third neighbor" policy in 1990, aiming to build relationships with countries other than Russia and China, and formalized its foreign policy and legislation. Mongolia has been seeking to reduce its political, economic, and security reliance on the two giant neighbors by this "third neighbor" foreign policy.

As a superpower, the US has been Mongolia's most valuable "third neighbor." In Northeast Asia, Japan and South Korea are Mongolia's "third neighbors" in an economic sense.

Since Mongolia's democratic transition, China has been Mongolia's biggest partner in trade and investment. By cooperating with Japan and South Korea in investment, technology and trade, Mongolia wants to make its economy less reliant on China and Russia.

Beginning in 2000, the US began attaching great importance to Mongolia through people-to-people exchange and cooperation. Washington will continue to infiltrate Ulaanbaatar with its ideology, grooming officials in line with US values.

In the short term, however, it will be difficult for Mongolia to change its interdependent ties with China. As long as the two countries respect the core interests of each other, their bilateral cooperation in politics, economy, culture and military under the framework of China-Russia-Mongolia Economic Corridor and the China-proposed Belt and Road Initiative (BRI) will advance steadily. The border region between the two countries will remain stable and usher in continued development.

The US-launched trade war against China has influenced global economic development.

Washington's unilateralism has not received widespread approval from the international community, while China's BRI and proposal for a community of shared future for mankind have gained global acceptance.

The US development model has encountered multiple challenges and now Mongolia must make a rational stance between the two giants.

The author is director of the Russia and Mongolia research institute of the Inner Mongolia Academy of Social Science. opinion@globaltimes.com.cn