Fingers in the till? Mongolian Minister resigns www.news.mn

B.Batzorig, Food, Agriculture and Light Industry Minister of Mongolia announced his resignation on Wednesday because of financial irregularities. The resignation was demanded by the ruling Mongolian People’s Party Group in parliament.

Deaths of four Mongolian journalists are suspicious www.news.mn

‘In recent years, a total of four Mongolian journalists have died, furthermore, their deaths are suspicious’ said Kh.Naranjargal, head of the Globe International NGO at a press conference. The Press Council of Mongolia has been conducting a survey on regulations for ensuring journalists’ safety and implementing these regulations in cooperation with the Mongolian Bar Association and Globe International.

Mongolia’s gold purchases increase by 34 percent www.news.mn

The Central Bank of Mongolia (Mongol Bank) purchased 3.4 tonnes of gold from legal entities and individuals in October; an increase of 34 percent on the same month in 2017. Furthermore, the total gold purchase reached 17.7 percent in the first ten months of 2018; an increased of three percent on last year. As of mid-October, the Central Bank of Mongolia was purchasing gram a of gold for MNT 99,911.55.

IMF: Authorities should improve public financial management www.zgm.mn

The International Monetary Fund (IMF) has announced the completion of the fifth review of the Extended Fund Facility (EFF) and recommended Mongolia to further improve public financial management as Parliament is currently discussing the pre-election year budget. This enables Mongolia to draw 26.2088 million Special Drawing Rights (SDR) equivalent of about USD 36.22 million, bringing total disbursements under the arrangement to SDR 157.2 million (about USD 217.33 million). The fund highlighted, “The combination of strong policy implementation and a supportive external environment has helped the authorities meet all end-September 2018 quantitative targets under the program, with significant over-performance on fiscal targets. Progress has also been made on structural reforms, albeit with some delays.” Following the Executive Board’s discussion of the review, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, said, "The fiscal accounts have posted a primary surplus, reflecting both a sharp increase in revenues and continued expenditure restraint.

Ruling party sends 2019 Monetary Policy Guidelines for final discussion www.zgm.mn

Parliament’s plenary session began with a protest of the Democratic Party (DP) faction yesterday. The DP members hung up banners, declaring not to attend plenary sessions and standing committee meetings until the MPs involved in SME Development Fund scandal are ousted and left the session. Without the DP faction, the remaining Parliament members held the first discussion on 2019 Monetary Policy Guidelines, during which the Governor of Bank of Mongolia (BoM) Bayartsaikhan Nadmid informed that the bank has injected USD 720 million into the foreign exchange (FX) market so far this year and is planning USD 1 billion currency intervention before the end of 2018. This is expected to reduce the weakening MNT rate at about 5 percent fluctuation. “The Law on Currency Regulation, which is currently under discussion by the Parliament, includes an article that states transactions of Oyu Tolgoi and other private entities that has stability agreement with the Government shall be made through BoM accounts. The approval of the bill will help grow FX reserves,” addressed Mr. Bayartsaikhan.

Investment opportunities presented to Australian investors www.montsame.mn

Ulaanbaatar /MONTSAME/. Delegates lead by the Minister of Mining and Heavy Industry D.Sumiyabazar and MP A.Undraa are currently participating in the International Mining and Resources Conference (IMARC-2018), which is taking place in Melbourne, Australia. Minister D.Sumiyabazar hold a meeting with Australian investors today.

Infrastructure construction of oil refinery running at over 30 percent www.montsame.mn

Dornogobi /MONTSAME/ An infrastructure construction of the oil refinery to be built in Altanshiree soum of Dornogobi aimag is running at over 30 percent.

Mongolia looks to list Tavan Tolgoi in NY, Hong Kong in 2019 www.mining.com

MELBOURNE, Nov 1- Mongolia is looking to list up to 30% of the state-owned company that owns the massive Tavan Tolgoi coal mine on the New York and Hong Kong stock exchanges in 2019, the country's mining minister said on Thursday.

IMF Executive Board Completes Fifth Review under the Extended Arrangement for Mongolia and Approves US$ 36.22 Million Disbursement www.imf.org

On October 31, 2018, the Executive Board of the International Monetary Fund (IMF) completed the fifth review of Mongolia’s performance under the program supported by a three-year extended arrangement under the Extended Fund Facility (EFF). Completion of the review enables Mongolia to draw the equivalent of SDR 26.2088 million (about US$ 36.22 million), bringing total disbursements under the arrangement to SDR 157.2454 million (about US$ 217.33 million).

Mongolia continues to perform well under the program. The combination of strong policy implementation and a supportive external environment has helped the authorities meet all end-September 2018 quantitative targets under the program, with significant over-performance on fiscal targets. Progress has also been made on structural reforms, albeit with some delays.

Mongolia’s three-year extended arrangement was approved on May 24, 2017, in an amount equivalent to SDR 314.5054 million, or about US$ 434.3 million1 at the time of approval of the arrangement (see Press Release No. 17/193 ). The government’s Economic Recovery Program, supported by the IMF, aims to stabilize the economy, reduce the fiscal deficit and debt, rebuild foreign exchange reserves, introduce measures to mitigate the boom-bust cycle and promote sustainable and inclusive growth.

Following the Executive Board’s discussion of the review, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, said:

"Mongolia continues to make good progress under the Fund-supported program. Helped by favorable commodity exports, a recovery in confidence, and strong program implementation, growth has accelerated further, leading to improvements in the fiscal position and debt dynamics. The fiscal accounts have posted a primary surplus, reflecting both a sharp increase in revenues and continued expenditure restraint. Meanwhile, past over-performance allowed the authorities to meet key reserve targets, despite a recent rise in balance of payments pressures.

“In the financial sector, the focus remains the follow-up to the Asset Quality Review (AQR). Select banks are in the process of booking the results of the AQR and subsequent on-site inspections. They are also now raising the needed capital to address identified shortfalls by the end-December 2018 deadline. The Bank of Mongolia will remain focused on ensuring financial sector stability throughout the process.

“Notwithstanding this progress, Mongolia remains vulnerable to external and domestic shocks. It is therefore crucial to take advantage of the still favorable economic environment to further bolster fiscal and external buffers, strengthen the banking sector, and improve the investment climate. In addition, the authorities should continue efforts to protect social spending, strengthen tax administration, and improve public financial management. A dedicated implementation of the authorities’ reform program is key to build resilience against shocks and ensure sustainable, inclusive growth.”

IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: TING YAN

PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG

Mongolia wants Rio to work with Tavan Tolgoi www.afr.com

Mongolian mining minister Sumiyabazar Dolgorsuren says he hopes Rio Tinto's Oyu Tolgoi copper mine will have a working relationship with the operator of the country's Tavan Tolgoi coal mine, but says he is flexible as to whether a power station should be built at the coal mine or at the copper mine.

Supply of power to Oyu Tolgoi, Rio's top global growth project, has become a major issue in 2018 after Mongolia terminated an agreement that allowed Rio and its subsidiaries to import the mine's power supply from China.

Rio now needs to find a domestic power source by 15 February 2022, which will almost certainly require the construction of new power generation in the developing Asian nation.

Rio's preference is to build a power station at the Oyu Tolgoi site in the South Gobi desert, but the Mongolian government is rumoured to favour construction of a power station at Tavan Tolgoi, which is currently managed by state-owned mining company Erdenes Tavan Tolgoi.

Despite those rumours, Mr Dolgorsuren said he was open to the idea of a power station being built at Oyu Tolgoi, which is currently the subject of a $US5.3 billion ($7.4 billion) expansion.

"In regards to the power plant project we hope that Erdenes Tavan Tolgoi and Oyu Tolgoi can cooperate on this and have a working relationship in order to resolve this issue," he told The Australian Financial Review at Melbourne's International Mining and Resources Conference.

"From my point of view I believe that whether it can be built on the Tavan Tolgoi site or on the Oyu Tolgoi site, with regards to choosing which one, I am quite flexible on that."

Listing decision
The Mongolian government is hoping to conduct an initial public offering (IPO) for Tavan Tolgoi in mid 2019 and is weighing up whether to list the company in Hong Kong or New York.

Mr Dolgorsuren, who represented Mongolia in wrestling at the 2000 Sydney Olympic Games, said his team were currently working to secure investment banks and underwriters to advise on the IPO, and he said strong coal prices were creating an incentive to push ahead with the float swiftly.

"This is something that a lot of people are waiting for and we are working very hard to ensure that we can do this in time because currently the commodity prices are rising and operations are quite stable therefore we believe we will be able to do the IPO," he said.

"We hope this mine could become a large player within the coal industry and in order to do this there are many infrastructure projects that we have to complete as well, and this includes the railway and power station and all the other plants we have to build.

"We plan to do the IPO around 2019 between April to June so this is our targeted time, however before this we would have to procure the consulting companies we have to work with and the investment banks, underwriters and book runners, and these are things we are doing at the moment right now.

"In terms of the stock exchanges, the cabinet has given directions to study the Hong Kong and the New York stock exchange, so these are two stock exchanges we are looking at at the moment."

The focus on Hong Kong and New York exchanges rather than the ASX comes after US coal miner Coronado's disappointing IPO on the ASX last week, which saw the stock initially price at the lower end of the expected range, and then slide sharply in its first few days of trading.

2018 has been a turbulent year in the relationship between Rio and the Mongolian government, with a working party from the Mongolian government reviewing the investment agreement that covers Oyu Tolgoi, while Mongolian tax authorities have also accused the miner's subsidiaries of having unpaid taxes.

There has also been an international investigation into the conduct of the Mongolian politicians who signed off on the Oyu Tolgoi investment agreement in 2009.

Despite the renewed turbulence, Mr Dolgorsuren said his government was mindful of the need to offer stability and security to foreign investors.

"There are around 50 Australian companies operating in Mongolia, companies with Australian investors, therefore it is very important to ensure that these foreign investors are protected and the environment is favourable for them to invest in Mongolia," he said.

Other ASX listed companies operating in Mongolia include copper explorer Xanadu, Aspire Mining and Terracom.