Copper vulnerable to supply shock as giant mine faces strike www.bloomberg.com

Copper bears could get caught wrong-footed as a strike looms at the world’s biggest mine.

In the U.S., hedge funds’ bearish bets outnumber bullish wagers by the most since 2016, latest government data show. The top brokers on the Shanghai Futures Exchange boosted their net-short position by more than half. Sentiment has turned increasingly negative even as BHP Billiton Ltd. and workers at its Escondida mine in Chile approach the end of a government-led mediation, after wage talks failed. A strike could start as early as Tuesday.

Copper has slumped almost 17 percent this year on Comex as an escalating trade war between the U.S. and China threatens global growth, fueling demand concerns for the metal that goes into building power grids, homes, cars and electronic gadgets. Societe Generale SA analyst Robin Bhar said the market is “fixated” on concerns about the global economy, ignoring the bullish factors that could send prices higher, including potential strikes in Chile.

“The market maybe isn’t priced correctly,” Andrew Cosgrove, a Bloomberg Intelligence senior analyst, said by telephone, citing the risk of supply disruption. “Last year, the market was net-long going into what was the beginning of a strike.”

Copper, often seen as a barometer of economic growth, posted the eighth weekly loss in the past nine. Futures for September delivery slipped 0.8 percent to settle at $2.7425 a pound Friday on the Comex in New York.

Money managers’ net-short position, or the difference between bets on price declines and wagers on price gains, reached 29,986 futures and options as of Aug. 7, according to Commodity Futures Trading Commission data released Friday. Bearish wagers are near the highest on records going back to 2006, data showed.

Things could turn quickly, should mediation fail and work stops at Escondida, squeezing bearish money managers and brokers in China and the U.S.

Labor tensions in Chile aren’t restricted to the BHP-owned behemoth. Pan Pacific Copper Co.’s Caserones mine is following a similar path, with workers voting to strike if mediation fails. The giant Chuquicamata open pit has been hit by protests as workers fret about a transition to underground operations that require a smaller workforce.

There’s less cushion to protect users of the metal against supply shocks, with stockpiles tracked by the London Metal Exchange down more than a third since the end of March, while those in warehouses monitored by Comex are at the lowest in 10 months. Inventories tallied by the Shanghai Futures Exchange are at the lowest since January.

Investors who have focused on the U.S.- China trade war have one other thing to consider: Beijing’s decision to slap a 25 percent tariff on American scrap would make refined copper more attractive than the recycled material, boosting the Asian nation’s imports of new metal, according to SMM Information & Technology Co. The U.S. supplied about 535,000 metric tons of copper scrap to China last year, about 15 percent of the nation’s overseas purchases.

That could further bolster demand at a time when the Chilean mining industry is seeing a record number of collective bargaining negotiations, that have the potential to disrupt operations. Last year, when BHP and the union failed to reach an agreement, a 44-day strike at the world’s largest copper mine and a slower ramp-up at Escondida’s third mill cut output by 300,000 tons, Goldman Sachs Group Inc. analysts estimate.

Mediation at Escondida ends Monday, and without an extension or an agreement, the strike could start Tuesday. The two parties’ positions seem far apart after more than two months of discussions, with 84 percent of workers rejecting the company’s last offer. The union is already geared up for a work stoppage, having stashed away about $864,000 to cover costs during a possible monthlong strike. Talks were continuing over the weekend, the union said.

“Positive fundamentals take a backseat,” Societe Generale’s Bhar said in a note Thursday. “Macro woes, which could be indicating sluggish demand and a potential economic slowdown are overshadowing short-term bullish factors, ” including the potential strikes in Chile and declining inventories, he said.

(By Susanne Barton and Laura Millan Lombrana).

Train with 328 passengers on board crashed in Dornogobi aimag www.montsame.mn

Ulaanbaatar/MONTSAME/ A train with 328 passengers on board derailed near Airag station, Airag soum of Dornogobi aimag at about 4.50am on Sunday, August 12. Sudden pouring rain measured at 82 mm is considered to have caused the crash by destroying the embankment of the rail track. Eighty-eight injured people were taken to hospital; two of them are under serious health condition. Emergency services have been taking urgent measures.

9 injured as train derails in SE Mongolia www.xinhuanet.com

ULAN BATOR, Aug. 12 (Xinhua) -- At least four coaches of a train with 328 passengers aboard derailed in southeastern Mongolia Sunday morning, injuring nine passengers including three children, authorities said.

Municipal government decides to spend MNT 1 billion for road repairs www.montsame.mn

Ulaanbaatar/MONTSAME/ A regular meeting of the Council of Governor of the Capital City was held on August 9, discussing some matters regarding constructional works and repair works of roads and streets destroyed by last month’s heavy rains in Ulaanbaatar city.

A.Enkhjin: BoM aims to increase its gold purchase by 10 percent www.montsame.mn

Head of the Reserve Management and Financial Markets Department of the Bank of Mongolia A.Enkhjin was interviewed on the purchase of gold and issues in this regard.

- How much gold the BoM is planning to purchase in 2018?

The amount of gold accumulated to the BoM reached 7.1 tons in the first half of the year, an increase of 400 kg or 6 percent compared with the same period of the previous year. Last year, a total of 20.01 tons of gold were purchased from the individuals and entities under the ‘Mongolian Gold’ campaign and the central bank plans to increase gold purchase by 10-20 percent this year. In order to achieve this goal, the bank launched the ‘National Gold to the Fund of Treasures’ five-month campaign to provide public with information about the bank's purchase of gold and its importance, conducting a wide range of trainings and promotional activities in this regard.

- How about the studies and researches on whether the Bank accumulates all extracted gold with its gold purchase?

The BoM receives monthly reports from the Precious Metals Assay Inspection Department of the Mongolian Agency for Standard and Metrology. The difference between the received assay data and gold purchased by the BOM is low. Therefore, it can be considered that the majority of gold mining companies and individuals sell the mined gold to the Central Bank. Before 2017, the annual average amount of gold sold to the BoM was 15-16 tons. However, the amount reached 20 tons last year, showing that the illegal gold trade was reduced as a result of the bank’s actions.
- In particular, how do you cooperate with law enforcement agencies to reduce illicit gold trade within this campaign? What do you think about the legal environment regarding the illicit gold trade? 
Under the ‘Mongolian Gold’ campaign last year we organized a workshop in Zamyn-Uud soum of Dornogobi aimag on enhancing cooperation of public organizations and preventing illegal exports of gold and precious metals. As a continuation of this work, a number of promotion works on improving public education in this regard are being implemented under the ‘National Gold to the Fund of Treasures’ campaign. For instance, the billboards calling to sell the gold to the Treasury Fund are posted along the main roads from Ulaanbaatar to the rural areas, information on the gold purchase of the BoM are regularly broadcasted through the media and numerous works including the upcoming trainings and events in August are planned. The results of the previous campaign showed that in order to reduce illicit gold trade it is important to provide the public with appropriate information. It is important that the citizens recognize the consequences of illegal gold trade, specifically that the illegally exported gold is confiscated.

- Is there any legal reform planned for the accumulation of national gold in the Fund of Treasures within the campaign?

The BoM is developing draft amendments to the Law on Treasury Fund. The amendment regulates the approval of assay of precious metal, precious stones and their articles for sale to the Treasury Fund by the legal entity with assay license or by the BoM, the state administrative body responsible for assay. Thus, it will allow legal entities with license that meets international standards and requirements to assay precious metals, not centralizing assay activities on one organization. As a result, it will save time of gold miners and make the services of public organizations and NGOs more accessible. The 2014 amendments to the Minerals Law reduced the royalty for gold sold to the BoM and authorized banks to 2.5 percent, which played an important role in increasing the volume of gold sold to the Treasury Fund. The BoM has submitted proposals to relevant ministries to extend the term of the provision which terminates on January 1, 2019. In addition, the BoM is planning to undertake measures to support the gold producers' operations and to reduce the cost of financing.

- How is the BoM involved in the Government’s ‘Gold-2’ program?

‘Gold-2’ program is aimed at ensuring short and mid-term development of gold sector, stabilizing legal environment, intensifying prospection, using major gold deposits and deposits of other metals that contain gold, ecological gold mining, increasing production and efficiency by introducing advanced technology, increasing international competitiveness and improving economic benefits. The Cabinet Secretariat, Ministry of Mining and Heavy Industry, Ministry of Finance, Ministry of Environment and Tourism, BoM, local administrations, National Police Agency, professional government and non-government organizations, gold miners and individuals are cooperating within the program. Gold funding has not been solved in the years before the program. In 2017, MNT 31.9 billion loan was given to 10 gold mining companies to start the project. Thematic geological research works on gold started in central and eastern regions of Mongolia.

- Once our country is rich in gold resources, it is imperative that refineries are required in the future. How do you plan to solve this issue?

According to the BoM survey, in case of establishment of gold refinery in Mongolia, the refined gold will cost 3-4 times higher than we pay now. Moreover, it will be difficult to store and sell the refined gold at the international markets since the newly established plant can appear in the Good Delivery List only after 5 years of operation. Therefore, these issues should be considered before making decision on refinery establishment. The BoM has conducted studies on the gold refinery. However, more detailed researches, technical and economic calculations of the refinery need to be done.

China could build world’s longest tunnel link to Taiwan www.rt.com

While its opponents are investing in wars, Beijing is investing in infrastructure. China seeks to build a tunnel that would connect its mainland with Taiwan.
If realized, shuttle trains would run through a 135km undersea section of the tunnel at up to 250kph by 2030 from China to Taiwan, which Beijing considers a renegade province rather than an independent state.

Foreign trade turnover rises as of July www.gogo.mn

In the first seven months of 2018, the foreign trade turnover amounted to 7.4 billion USD, an increase of 26 percent (1.5 billion USD) compared to the same period in 2017. The balance of trade totaled 851 million USD with exports worth 4.1 billion USD and imports valued at nearly 3.3 billion USD. According to data, a monetary value of the exports went up by 16.9 percent while the imports grew by 39.8 percent compared to July 2017. Mineral products, machinery, equipment, automobiles and parts, food products and base metals compose the majority of Mongolia’s import.

Kincora strengthens board and completes transition www.kincoracopper.com

Vancouver, August 13th, 2018 - Kincora Copper Ltd. (the “Company”, “Kincora”) (TSXV:KCC) is pleased to announce that Mr. Cameron McRae has joined as Chairman of the Board of Directors, with Mr. Anthony Jackson standing down from the Board and remaining Chief Financial Officer.

Turkey's currency crisis gets worse with fresh 11% plunge www.cnn.com

Turkey's currency nosedived again Monday as fears deepened about the country's ability to deal with a crisis that has rattled markets around the world.
The Turkish lira dropped as much as 11% against the dollar in morning trading in Asia. It had already plummeted more than 20% last week as a political clash with the United States intensified and investors fretted about the Turkish government's lack of action to tackle the problems plaguing its economy.

Mongolia Economic Update - July 2018 www.worldbank.org

Mongolia’s economic performance has improved dramatically with GDP growth increasing from 1.2% in 2016 to 5.1%in 2017 and 6.1% in the first quarter of 2018. Check out the infographic for quick facts and main recommendations from Mongolia Economic Update, the latest World Bank report on Mongolian economy.