China's fight against smog makes palladium 2018's best metal www.mining.com

Palladium prices are shattering record highs, and investors are betting that tight supplies mean the bull run is just getting started.

The metal, used in pollution-control devices in cars, has jumped almost 9 percent this year in New York, the best performance among major metals. Demand is roaring thanks to China, which is on a mission to reduce smog emissions. Tougher pollution standards mean carmakers are using more of the commodity in catalytic converters. We’ve been dealing with supply deficits going on eight years, and that’s expected to continue. Supply’s certainly been an issue on the mining front as well as the draw-down of existing stockpiles

Global palladium production is falling short of the robust demand, and market forecasters including Citigroup Inc. are projecting further price gains ahead. Hedge funds are also wagering on an extended rally, with the biggest positive bet on the metal since early March.

“The market has a very positive fundamental outlook,” said Maxwell Gold, director of investment strategy at Aberdeen Standard Investments, which oversees $730 billion. “We’ve been dealing with supply deficits going on eight years, and that’s expected to continue. Supply’s certainly been an issue on the mining front as well as the draw-down of existing stockpiles.”

Palladium is a thinly traded market. Much like sister-metal platinum, its production is extremely concentrated, with Russia and South Africa collectively producing about three quarters of the world’s mined supplies.

Auto Demand
Almost 70 percent of palladium demand comes from the auto industry, according to researcher CPM Group. Car sales have stayed relatively strong in most places, helping to insulate prices from the hand-wringing over global growth that’s dragged down many industrial commodities.

Supplies are so constrained that users have turned to exchange-trade products to borrow the material they need. This has pushed palladium holdings in ETFs to the lowest since 2009 as manufacturers seek supplies above ground, said Gold.

Hedge funds are adding to their bullish outlook. In the week ended Nov. 13, money managers increased their net-long position, the difference between bets on a price increase and wagers on a decline, for a second straight week to 12,837 futures and options, according to data from the Commodity Futures and Trading Commission published Friday. That’s the most since March 6.

Palladium futures in New York jumped 5.2 percent in the week ended Friday to $1,154.60 an ounce.

Substitution Threat
One threat to demand: substitution. Historically, palladium has usually been cheaper than platinum, and therefore was used as a popular alternative since the two metals share many of the same chemical properties. But the recent rally has reversed the price relationship, and now palladium suffers the threat of substitution from platinum.

Still, manufacturers need 18 to 24 months for such changes to take place, so that probably won’t be an issue in the immediate future, Suki Cooper, a precious metal analyst with Standard Chartered Bank in New York, said by telephone.

In terms of substitution, “many manufacturers have indicated that it’s not something that can be switched easily or quickly, even though is economically possible,” she said. “The longer-term outlook remains positive and price risks are skewed to the upside.”

(By Marvin G. Perez)

Millennium Challenge Corporation presents GMS licenses www.montsame.mn

Ulaanbaatar /MONTSAME/. Previously, the second Compact agreement between the Government of Mongolia and US Millennium Challenge Corporation (MCC) was authenticated, with Prime Minister U.Khurelsukh and US Secretary of State Michael Pompeo signing MCC USD 350 million compact.

Mongolia calls for global attention on climate change www.news.mn

Dramatic temperature changes and extreme weather events in Mongolia have been blamed for the deaths of thousands of livestock in recent years and is believed to be forcing hundreds of families each year to abandon their traditional nomadic farming ways. As world leaders prepare for the UN climate conference in Poland next month, Mongolians are pleading for international action.

ADB Opens a New Wastewater Treatment Plant in Arvaikheer, Mongolia www.agenparl.eu

ARVAIKHEER, MONGOLIA (16 November 2018) — The Asian Development Bank (ADB) and the Uvurkhangai Provincial Government of Mongolia today inaugurated a new wastewater treatment plant in the provincial capital Arvaikheer. The state-of-the-art plant was built under additional financing for the ADB-funded Southeast Gobi Urban and Border Town Development Project, and will ensure safe, reliable, and environmentally friendly wastewater treatment for over 28,000 residents.
“The new plant replaces an inefficient treatment system that was built more than 30 years ago,” said Uvurkhangai Provincial Governor Mr. Ganbold Gonchoo. “It is designed to meet current and future demand for the next 25 years and will play a significant role in the economic development and improved livability of Arvaikheer city. It is also an important milestone in the strategic partnership on urban development between ADB and the province.”
“The new plant is the first of ten similar facilities to be built in Mongolia with ADB support,” said ADB Country Director for Mongolia Mrs. Yolanda Fernandez Lommen. “It will facilitate the town’s ongoing growth and development and will ensure that domestic and commercial wastewater will no longer be discharged into the local river basin.”
The plant was opened ten months ahead of plan and has an operating capacity of 3,000 cubic meters per day. It features integrated fixed-film activated sludge technology designed by Mongolian engineers and produces high quality effluent through effective and energy-efficient treatment processes. The plant will reduce odor and adhere to strict environmental conditions and national effluent standards.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.

China to boost cooperation with India, Mongolia: defense minister www.globaltimes.cn

State Councilor and Minister of National Defense Wei Fenghe met with Indian Defense Secretary Sanjay Mitra and State Secretary of the Mongolin Ministry of Defense Khalzankhuu Batbileg in Beijing Thursday.

Death on Mongolia’s ‘Coal Road’ www.news.mn

Kh.Sugar, director of the Citizens’ Representative Assembly has held a press conference regarding the dangerous situation on the main coal transportation route to China.

Mongolia shaken by widening loan scandal www.asia.nikkei.com

ULAANBAATAR -- Braving subzero temperatures, hundreds of demonstrators gathered outside Mongolia's State Palace on Wednesday to demand prosecutions of officials caught in a widening loan scandal.

"I'm here to fight against the crooks who stole from the people, and I will fight until they face justice," said Munkhtsetseg Ulzii-togtokh, a shopkeeper in her 60s.

Her anger stems from years spent fruitlessly trying to expand her business with a government loan -- the Small and Medium Enterprises Development Fund extends loans with an interest rate of around 3% versus typical business bank rates of up to 20%.

The rage at Mongolia's biggest political demonstration of the year is over allegations that three members of Prime Minister Ukhnaa Khurelsukh's cabinet have benefited by getting the low-interest loans for business controlled by them or their family members. More than a dozen lawmakers and police officials have also been implicated.

The head of the fund has been arrested, and the state auditor and the minister overseeing the fund -- himself an alleged beneficiary -- have both been ousted. Others are under investigation.

The aspersions are tainting the premiership of Khurelsukh, who took office just last year after a separate scandal over officials getting favorable deals led to the ousting of his predecessor.

The Mongolian National Chamber of Commerce and Industry announced Wednesday that its more than 3,500 member companies would withhold tax payments until the lending scandal is resolved. The chamber is also demanding a constitutional amendment to public oversight of government finances.

"Over the past two years, the crisis in the Mongolian economy has been overwhelming," the chamber said in a statement. "Meantime, high-ranking officials are taking advantage of funds meant to support businesses and are using their power and privilege to benefit themselves."

Julian Dierkes, who heads the program on Inner Asia in the School of Public Policy and Global Affairs of the University of British Columbia, said the demonstrations could get much bigger.

"If officials and organizations neglect the deep-seated public frustration over corruption, we might expect massive protests for calling changes," Dierkes wrote in a blog post earlier this month.

In financial distress after years of slumping commodity prices, Mongolia last year began a $5.5 billion bailout program with the International Monetary Fund. At the same time, the country's politicians have sought to avoid becoming overly dependent on neighboring China for support and trade.

The loan scandal is sharpening a constitutional standoff between Khurelsukh and his Mongolian People's Party government and President Khaltmaagiin Battulga of the opposition Democratic Party.

Battulga, who has been pushing for the country to shift away from parliamentary government, late last month sought the dissolution of the legislature -- a demand rejected last week by a parliament dominated by the People's Party.

Khurelsukh has demanded that lawmakers who received SME Fund loans apologize and repay the money. The People's Party, however, has been split by the scandal, with some lawmakers calling for a no-confidence vote against their own cabinet.

"SME embezzlement is a result of too many businessmen holding political powers and making our society dirtier and more corrupted," said Tserendash Tsolmon, a senior politician and former minister.

"Powerful politicians like Khurelsukh must fight to declare justice at any cost," the lawmaker said. "I think its better for the MPP to provide political stability. It is not good for Mongolia in case of foreign investment when we have unstable governance, and cabinets changed in every one year or two."

Mongolia’s unemployment falls by 2.2 percent www.news.mn

According to the National Statistic Office of Mongolia, the number of people aged 15 and above, who are in work reached 1.3 million in the first 10 months of 2018; a total of 721.1 thousand of them are men and 610.2 thousand are women.

Meeting meat demand: Mongolia to trade 17.9 percent of livestock www.news.mn

Mongolia is planning to trade 17.9 percent or 15.1 million head of livestock nationwide from 2018-2019. According to provincial administrations, they have planned to use 5.5 million for local meat demands and to trade 9.6 million animals.

President vetoes 2019 State Budget www.zgm.mn

President of Mongolia Battulga Khaltmaa put a veto on the Law on 2019 State Budget and the accompanying legislation and parliamentary resolutions. President Battulga handed over an official letter to Parliament Speaker Enkhbold Miyegombo, requesting action in accordance with the corresponding laws and regulations yesterday.

The veto reads, “I have reviewed the Law on 2019 State Budget, which was adopted by the Parliament on November 2 and forwarded to the President’s Office on November 12.

I have no choice, but to veto the 2019 budget and remind the Parliament of the necessity to look back on its budget policy, adopt a tighter and more efficient budget that upholds the national interest and discipline, and fix the following issues that violate the law and contradict the national development policy and vision.”

The letter highlights several issues in the 2019 State Budget Law, including high budget deficit which is MNT 1.9 trillion or 5.4 percent of GDP, “MP’s money” amounting to MNT 8 billion and budget allocation for the construction of facilities without blueprint, and estimation of the mining revenue at MNT 3 trillion, which was concluded as unattainable by the National Audit Office. Furthermore, the President points out that the 2019 State Budget Law creates conditions for abrupt increase of public debt and that the projection of MNT 11.5 trillion budget expenditure is not compatible with the objective to maintain inflation within eight percent next year. In addition, President Battulga stresses that the lawmakers must create conditions for small businesses that are truly considered SMEs to be able to obtain loans with 3 percent annual interest from the SME Development Fund starting from January 1, 2019.

GOVERNMENT PLANS TO REDUCE INFLATION TO 6 PERCENT IN MID-TERM

Later on, the Parliament, at its plenary session, approved the 2019 Monetary Policy Guidelines. Officials highlighted that the monetary policy will focus on overall financial and economic stability, as well as creating legal regulations for consumer protection next year. According to the guidelines, the Bank of Mongolia (BoM) will implement policies to stabilize inflation measured by consumer price index at eight percent for the next two years and reduce it to six percent in the mid-term. “Since external demand and commodity price fluctuations remain high, the monetary policy will be directed towards overall employment in all sectors and preserve inflation within expectation,” said a spokesperson of the Parliament. BoM also viewed that the inflation can be stabilized under the target level in 2018-2019.

In order to reduce the impact of foreign economies, improve the country’s economic vulnerability, maintaining balance of external sectors and creating financial sources to repay foreign debts foreign exchange (FX) reserves must be raised, says the BoM and informed that the guidelines include objectives to increase FX reserves and necessary coordination between government bodies.

The BoM views that the financial market infrastructure and institutes must be strengthened to improve the effects of monetary policy and financial stability. Therefore, the guidelines included several objectives on protecting the rights of financial consumers, creating legal environment, adopting common internationally-approved practices of stable financing, identifying the standards of technology-based financial products and services, as well as ensuring the safety and reliability of customer information.

The monetary policy guidelines also reflected several objectives on improving assets of commercial banks and transparency of the BoM.

MP Javkhlan Bold addressed, “The monetary policy does not have to align with the budget. But the two policies should mutually support their respective objectives. Both revenue and expenditure of the 2019 budget are vastly expanded. The balance of payment and current account are expected to be under a deficit. Accordingly, there is a high possibility that inflation will rise next year; thus, we expect more tight monetary policy.”