NTR Metals, the US based company for trade and processing of the precious metals, is implementing its successful operation globally. The company has decided to enter the Mongolian gold industry. Kenneth W. Beilstein explains about what services does the new branch of NTR Metals in Mongolia bring here and the opportunities for the Mongolian gold industry’s development.NTR Metals’ services including logistics and trades are new in Mongolia. Could you tell us the details of your main services in Mongolia? What’s the main purpose of your operation in Mongolia?Thank you for the opportunity to introduce NTR Metals to the Mongolian mining industry and to discuss our business objectives and capabilities. NTR Metals is the first global precious metals refiner and trading company to establish operations in Mongolia and our aim is to provide fully integrated services for Gold + Silver trading based on the international ‘spot’ and futures markets, hedging, refining, assaying and immediate payment/liquidity facilities. We also work closely in strategic cooperation with security and logistics providers, such as Bambai Security and Brinks Global Services, to offer comprehensive door-to-door secure logistics solutions. In summary, we are bringing full service precious metals refining and trading capabilities to the Mongolian mining industry and offering LOCO Ulaanbaatar pricing and purchasing terms.
How do you bring your services to the Mongolian gold miners (spot and future trading, logistics)? Could you tell us more details about that?
We are an infrastructure company, not a mining company. We offer fully integrated logistics solutions to our clients from the mine site or their preferred place to our office in Ulaanbaatar and purchase the gold based on the international ‘spot’ price. Currently, the mining companies sell their gold at the MongolBank’s price. The price is based on yesterday’s price in London. However, our service offers them real time ‘spot’ pricing. That is one of our main advantages.
Sampling and assaying will be done in our center in Ulaanbaatar. As a pricing option, the miners can choose the terms of average pricing or future pricing, not only spot price when they sell their gold. This will bring positive results to the companies’ management. Because these pricing/sale options offer them the opportunity to budget and forecast revenue from their operation, revenues are less dependent on market fluctuation. Let’s say you have a gold mine. You want to lock some of your revenue in at a good price. Future trades would be solution to manage revenue in that way. Currently, the Mongolian gold miners don’t have good mechanism to manage and ‘lock in’ their revenue.
Also, currently miners are responsible for trade and transportation of their production. These logistics from the countryside can sometimes be complicated. By working with NTR, we can manage the logistics and the mining companies can focus primarily on their main operation-extraction of the metals.
In addition, our business’ priority is compliance with the industry’s regulations. Our business reputation is based on complete transparency and compliance.
How is your new office organized in terms of human capital and technology?Our Ulaanbaatar office is staffed entirely with Mongolian nationals and managed by Mongolian professional managers trained by NTR Metals. The technology for melting and assaying is ‘state of the art’, as is the metal trading platform linked to our region trading desk in Hong Kong and group HQ in Dallas. NTR operates a 24 hour metal trading desk and NTR Mongolia is linked to that global trading platform.
Mongolia’s current gold market is relatively small. Why did you choose the Mongolian gold market? How do you expect the precious metals’ market opportunity to develop in our country?The Mongolian Gold market may be smaller than the giant mining producers like Australia, China or Peru; nevertheless, Mongolia is a substantial Gold producing country and Gold mining is an important sector of the Mongolian economy. We chose Mongolia as a part of our Asia business development strategy because of its stable investment climate, well-educated and experienced workforce and the substantially developing Gold mining industry. We expect the precious metals mining sector in Mongolia to grow and we look forward to contribute to that growth and to contribute to the overall growth and development of Mongolia’s economy.
Could you tell us your company’s position in the world gold industry and your company’s successful development history?NTR Metals is a leading global company in precious metals with over 70 offices in the Americas, Europe and Asia. Our group company, Elemetal LLC, also operates a ‘good delivery’ refinery – Ohio Precious Metals – which is the leading USA Gold + Silver refining company. The NTR Metals business development model of locating full service offices in key Gold market regions – for example Ulaanbaatar – has been very successful. We’re very excited to be operational in Mongolia.
The positive outlook is that the Mongolian gold industry will be more organized after your service comes here is expected. Since windfall profit tax, black economy or illegal gold export was increased as the gold industry’s production significantly decreased.
All our sale information will be reported and also combined in the Mongol Bank report. Furthermore, we will cooperate only with the miners who operate according to the country’s law, who have valid license and who pay the royalty. We cooperate completely with Mongol Bank, Ministry of Mining, and Mineral Resources Authority of Mongolia. Actually the many countries’ government had implemented the windfall profit tax. But they faced unpredicted consequences. For Mongolia, artisanal miners are in the gold industry. We would not buy their gold until they are properly licensed. The environmental impact of artisanal mining must be carefully regulated and managed.
How will Mongolians benefit from your operation here?NTR Metals brings a wide range of services to the industry LOCO Ulaanbaatar: services like melting, sampling and rapid analysis; services like ‘real time’ pricing on international markets and immediate payment – liquidity is a very important benefit to the Gold industry; futures trading for those customers who wish to pre-sell a portion of their gold production; and integrated security and logistics for door-to-door transportation. In summary, all of these services that a Gold mining industry needs are now available here in Mongolia. Mongolians will benefit because the services that NTR Metals brings are an infrastructure development – infrastructure means broader employment opportunities and a diverse economic and tax base.
The world gold market has softened; however global giant economies are slowing this year. Many thought the gold market had to be bullish during the economic crisis. Could you give us an explanation about the gold market’s outlook in the short + long term and why precious metal prices are falling?Many factors influence the price fluctuations in the Gold market, especially short term fluctuations. Recently, investors have been focused on the USA equity market and we have seen the resulting movement into US stocks. However, longer term, we believe Gold will remain an attractive market for investment. The long term development of the East Asia and South Asia economies is bullish for Gold as well as the continuous growth of the Latin America economies. In addition, the challenges and population demographics of the developed economies in North America, Europe and Asia continue to provide the foundation for investment in Gold as a ‘safe haven’. Overall, we remain quite bullish on long term Gold price appreciation.
How do you expect the opportunities for Mongolian precious metals’ refining or recycling industry to develop in the future?Our expectations are that the Gold mining sector in Mongolia will continue to grow in a consistent and rational manner. Along with this growth comes the need for secondary, infrastructure services to support this development and this is why NTR Metals has opened our office in Ulaanbaatar.
Gold refining or recycling processes are regarded as a hazardous. How is this kind of technology developing in terms of eco-friendly and economic processes? Gold refining processes can be described in 3 broad categories: pyro-metallurgy, electro-chemistry and chemical extraction. NTR Metals’ processes in Mongolia focus on melting and sampling as well as instrumental analysis. These processes have no significant environmental impact. In addition, Elemetal LLC, our group company is an industry leader for ‘Responsible Sourcing’: our refinery - Ohio Precious Metals – has been independently assessed and certified to conform to the highest standards for Energy, Water, Waste and Supply Chain Management and is certified by EICC/GESI as a conflict-free smelter.
Now the world’s top economies are planning to increase their gold and precious metals reserves. Some say China is planning to increase its copper reserve. Do you think copper will become the “New Gold” in the future?That’s a very interesting question! Many countries have developed ‘strategic reserves’ of different metals in order to ensure supply stocks for peak demand periods. Historically, Gold, and Silver to a lesser extent, have been accumulated as ‘financial reserves’. Will Copper become a ‘financial reserve’ as opposed to a ‘strategic reserve’? I suspect not; Copper is very much an industrial metal and it’s probably more appropriate to view it in terms of ‘strategic reserve’.
Now coal, copper, iron ore and other kind of minerals projects are developing in Mongolia. Our economy is increasing and expanding; however, the general economic situation is not good. A ger economy means ger gold demand and it requires more reserve. What things do you advise for our economy to manage its gold market correctly during this time?Mongolia is a very fortunate country in terms of mineral resources. With its small population base the challenge is the development of the natural resources wealth to the long term, sustained benefit of the Mongolian people. This challenge – sustained, long term benefit to Mongolians - should always be the primary objective. To meet the challenge, my advice can be summarized in 3 words: consistency, transparency and responsibility. Consistent policies and regulations to manage the development.Administration of the development in a transparent and open manner. And responsible implementation and accountability to the policies and regulations. Whether it’s the Gold market or any other sector of the economy – consistency, transparency and responsibility – these foundation principles will bring sustained benefit to the Mongolian economy.