Recent news

  • Banking reforms would have to wait. The Spring session of the present Parliament, its last before members to its successor are elected, ended without completing discussions on them, presented as part of an economic package. Members of the Government were keen to make some progress on the reforms, and so was the IMF as part of its Extended Fund Facility package, but time was against them.  The ante was being upped even before the session began, with Prime Minister U. Khurelsukh saying on 27 March that the time was ripe to change the way the country’s commercial banks worked, warning that “if banks don’t accept our suggestion to reduce their lending rates, we shall have to take stern measures to see that this is done.”  Finance Minister Ch. Khurelbaatar followed this up on 14 April, when he said in Parliament that after two years of calling for banking sector reforms and asking for Parliament’s permission to let foreign banks work in
  • What with the pandemic and the excitement over the election, an important decision taken by the last Parliament just before its final session ended did not receive adequate attention. Following a Constitutional Court decision that Resolution #64 adopted by Parliament in 2014 had violated the Constitution it was resolved that the 267-km Tavantolgoi-Gashuunsukhait (TT-GS) railroad would have a broad gauge, thus closing a debate that had been going  on for years.  
  • The eighth parliamentary election was held successfully on June 24 and what the 73.64 percent of the total electorate voted for is now known. This was the first election since major amendments were made to the Constitution, though this might not have had any direct bearing on the voters’ choice. At 606, the number of candidates was the most ever, though almost nobody from outside the two major parties won. Some candidates were arrested on charges not directly related to the election. The new Parliament has 76 members, as before. Of them, 62 are from the MPP -- three less than in the last parliament, but still giving the ruling party an overwhelming numerical strength -- 11 from the DP, one each from the Right People Electorate Coalition and Our Coalition, and one independent.
  • What has so far been the impact of the COVID-19 situation on the banking and financial sectors? What future risks do you see?  The quarantine imposed by the Government has been good for preventing the virus from spreading but it has also reduced mining output and thus led to lower exports. Trade, travel, transportation and almost all other sectors have been hobbled, and this has in turn caused uncertainty in the banking sector. According to the Bank of Mongolia, repayment of 54,000 loans worth MNT3.5 trillion has been stalled. Banks make up about 90 percent of the financial market in Mongolia, and if this unavoidable failure in repayment of loans continues, banks will have their profitability reduced and assets depleted, forcing them to dip into their reserves. Since almost everybody’s income has been affected, people have no disposable funds and so banks are getting far less deposits. They will issue fewer new loans.
  • Erdenes Tavantolgoi Mining (ETM) was formed with the status of a daughter company of the state-owned Erdenes Tavantolgoi JSC with the specific purpose of facilitating the long-talked-about IPO. Kh.Narankhuu, Director General of Erdenet Mining  Corporation from 2000 to 2007 and a former Member of Parliament, was brought in as CEO to oversee the complex and multi-faceted work of preparing documents and material required by the stock exchange and also to woo investors. Now that the IPO has been put on hold and ETM itself is being wound up, Narankhuu opens up to G. Iderkhangai on what the past months were like. Given his status in the mining sector, his views command special respect and he does not disappoint in this long-ranging conversation.  
  • You are right. When the state budget was discussed at the end of last year, there was much to be optimistic about. The aimags in the Gobi were allocated substantially higher budgets than those that had lower incomes. The budget revenue was calculated differently, with tax revenues included. As part of the reform of taxation laws, the social insurance fee had been increased, but the budget revenue figures show that receipts from this would be 42 percent less.  Things were expected to be quiet until after the end of the parliamentary election, for foreign – and domestic -- investors would decide on their plans only after knowing what the next government looked like.  Commodity prices were high, and we all hoped for a quick end to the China-US trade war. All this has now changed. 
  • One after another, mining companies around the world -- big or small – have been announcing since mid-March temporary suspension of their operations or, in some cases, reduction of production. The decisions were taken as governments worldwide imposed total or partial lockdown of their national economy in an attempt to contain the spread of COVID-19. Almost everywhere all non-essential activities were suspended. Mining provides many essential items of daily use, but it was defined as non-essential in countries such as Mexico and Peru, though Australia, Argentina, Brazil and Chile were among those which did not follow suit. Jurisdictions like Quebec shut down mining as a non-essential activity but made a volte face only weeks later. 
  • The Parliamentary election is going to be held in times of difficulty for candidates, voters and the country alike. The popular observation that the MPP is in power when there is a mineral boom while the bust phase of the cycle keeps a DP government company was proving to be true until some time ago when mineral prices started going down. The MPP’s campaign boast was expected to be that it had revived the economy left ailing by the previous government, but that is unlikely to resonate with the voters now. Several scandals such as the one around the SMEs Development Fund have also dented the MPP’s reputation, but, on the other hand, people admire its success in ensuring that there has been no loss of life in Mongolia from COVID-19 and acknowledge that while the coronavirus situation continues to batter the economy, the government cannot be faulted for this. 
  • Note: All figures in this report are from data released by the National Statistics Office and cover the period 1 January to 15 April. Mongolia’s total foreign trade turnover reached $2.54 billion, a drop of 30.9% YoY.  Exports accounted for $1.18 billion of this and imports for $1.36 billion, down 43.7% and 13.7% respectively. The foreign trade deficit of $175.9 million was mainly because of the dramatic decline in mineral exports. The last days of the period under review showed some improvement in coal and oil exports, but this is only when they are seen against the situation in most of March, when exports were almost stopped. Any return to the pre-pandemic levels is still a long way off. 
  • In keeping with its position as the world’s second biggest mining company, Rio Tinto has been taking several bold steps to halt contributing to climate change. With the divestment of its last coal project in 2018, it became the first major company to have no fossil fuel asset. This was also when Rio released its first climate change report titled ‘Our approach to the climate change 2018’. This has now been followed by “Our approach to climate change 2019”, which was released in February this year. In this Rio sets out its goal of achieving zero emission from its operations anywhere by 2050. That would cover both direct and indirect emission – in scientific parlance, Scope 1 and Scope 2 emission. CEO Jean Sebastien Jacques has said that the company will spend up to $1 billion in the coming five years on strategizing and getting ready to take up projects to reach the lofty goal. 
  • The first parliamentary election after the amended constitution comes into force on May 25 has been scheduled to be held on June 24, but there are some who want it to be deferred until the Coronavirus threat recedes. All contesting parties will campaign on the basis of their action plan which have first to be cleared by The National Audit Office. During its check this office found that all three major parties, and several of the others in the fray, had gone overboard in making promises. It promptly rejected their plans and asked the parties to submit by 25 April revised action plans that kept within the parameters of the law.   
  • Known to speak his mind, B. Lkhagvajav trained as a lawyer and holds a doctorate in business administration. He was President of the Mongolian National Chamber of Commerce and Industry and has been a member of the Supervisory Board of the Bank of Mongolia. In a long-ranging interview with G. Iderkhangai, he peppers his views on the present with snippets from the past, all to express some concern about what the future holds. At one time you used to regularly speak out when something significant happened in the mining sector, but for several years now, we have missed your strongly held and bluntly expressed views. What has kept you silent?          You are right. I have refrained from speaking on mining matters since, say, 2010, after expressing my views regularly between 2006 and 2010 when the OT agreements were being discussed.
  • The Mongolian People’s Party promised in 2016 that the 1072 shares of Erdenes Tavan Tolgoi held by every citizen would be “made alive and valuable”. The announcement by the company in February that it would distribute dividends before the parliamentary election was welcomed by shareholders -- most of whom would also vote in the election -- as a step in that direction, but for the MPP promise to be truly fulfilled, it is not enough to pay dividends. To be “alive”, the shares must be free to be traded in the stock exchange. Only then would citizens know that they own something “valuable”.  The “small” Tavantolgoi, a company treated as A-Grade by the Mongolian Stock Exchange, earned a net profit of MNT52 billion in 2018 when it sold 1.8 million tonnes of coal.
  • Following the success of the 2019 Block XX drilling campaign which resulted in the discovery of oil in the  Gazelle 1 and Heron 1 wells, as well as Heron 1 delivering one of the highest flow rates ever recorded in Mongolia, Petro Matad Limited, the AIM quoted Mongolian oil explorer, is now focused on securing the exploitation licence required under the production sharing contract (PSC) to enter into the development phase on Block XX. The company has been advised by the Mongolian authorities that there is support at the highest levels of Government to grant the licence, as the Government recognises that Petro Matad has been the country’s most active oil explorer in recent years and that the success of its 2019 exploration efforts is very well timed in light of the Government’s commitment to the construction of a domestic oil refinery.
  • I have been in the geological sector for 34 years and have worked in both the state and private sectors, as also in research organizations and foreign investment companies. I never left geology, even in the difficult years of transition to the market economy. After graduating in 1986 from the State University in Irkutsk in the then Soviet Union, I started my career as a specialist in the Institute of Geological and Mining Production and Research in what was then called the Geological and Mining Ministry. Here I did some Mongolia-related research under the guidance of Dr. J.Byambaa. Then I was a researcher with the Institute of Geology of the Academy of Sciences, and a specialist in charge of the Mongolia-related studies when the Mineral Resources Authority was founded. I am proud that I have worked closely with Mongolia’s best of the best scientists. 
  • Preliminary statistics for the first quarter show that the first turbulence of a coming crisis is being felt in the Mongolian economy. Foreign trade, which had grown slightly in the first two months, declined from mid-March. Exports that bring dollars to the domestic market fell by almost 50 percent. After a two-month standoff, mineral exports, including coal, are unlikely to reach the 42 million tonnes projected in this year’s budget. Due to declining coal supply, copper has become the leading export mineral. Although Oyu Tolgoi’s copper concentrate shipments continued, exports fell by 13 percent. Meanwhile, copper price hit $4,685 on the London Metal Exchange, its lowest since 2016. In the 2020 consolidated budget, copper price was estimated at $5,991. Although mineral exports have declined overall, the supply of iron ore with railway access has retained its growth. Currently, the budget revenue has been disrupted by MNT275 billion.
  • One of the key objectives of the long-term development policy Vision-2050, which the government has submitted to parliament for discussion and approval, is to put Mongolia among the top ten countries in the world in terms of happiness and freedom from corruption. Among the other goals of what the Prime Minister has called the “most ambitious” roadmap for national prosperity, are expanded use of innovation and technology-based knowledge, economic diversification, green development, raising the GDP by 6.1 times, and taking annual per capita income to $15,000. If these goals are indeed achieved in the next 30 years, Mongolia would have a seat at the table of the world’s developed countries, of which the top ten today are Singapore, the USA, Hong Kong, the Netherlands, Switzerland, Japan, Germany, Sweden, the United Kingdom and Denmark. According to the World Economic Forum’s 2019 Competitiveness Report, Mongolia ranks 102nd out of 141 countries  considered.
  • Sales revenue from the Salkhit and Asgat silver deposits would be used to compensate the loss to the exchequer from the writing off of pensioners’ loans, but will there be any revenue from Asgat at all in the near future, given that the appropriate technology for extraction there has not been identified? Nobody knows if there has been a breakthrough, but it seems unlikely.   Two other hurdles stand in the way of any quick start to sales from Asgat. First, it is about 3000 m above sea level and there is no infrastructure. Second, there are no processing facilities and ore is uneconomic to transport.
  • Following the outbreak of the Novel Coronavirus in worldwide to inform that we are forced to postpone Mongolia’s largest international mining and oil expo 2020 originally planned to take place from 8 – 10 April 2020 in Ulaanbaatar, due to emergency situation related with the 1st Covid 19 case in Mongolia. A new date for the expo is yet to be scheduled. We aim to organize Mongolia Mining 2020 prior to this summer's mining season for the best benefit of our exhibitors, partner and mining industry. Dates for the expo will be set depending on further circumstances and we will officially inform you at least 30 days prior to the new dates.
  • BAYAN-UUL   The Bayan-Uul silver-mixed metal deposit is under an exploration licence. Its central part is in Choibalsan soum of Dornod aimag, 790 km from Ulaanbaatar, some 20 km from the Khavirga border checkpoint and 27 km from the Khavirga railway relay of the Choibalsan-Ereentsav railway station. Geologically it is part of the Tsav ore node and is 25 km east from the Tsav silver-mixed metal deposit which is currently under mining.  Prospecting on 1:500000-1:200000 scales was taken up in 1975 by a Mongolia Geological Mapping Expedition team of the Geological Ministry of the former Soviet Union. This led to the preparation of a geological map, and the discovery of the Tsav ore node, the Tsav and Bayan-Uul silver and mixed metals deposits, as well as of the Salkhit, Modot, Altantolgoi and Omnod occurrences. Parts in these were identified where further detailed work was to be done. 
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LATEST

  • 2020-07-16 10:43
    Banking reforms would have to wait. The Spring session of the present Parliament, its last before members to its successor are elected, ended without completing discussions on them, presented as part of an economic package. Members of the Government were keen to make some progress on the reforms, and so was the IMF as part of its Extended Fund Facility package, but time was against them.  The ante was being upped even before the session began, with Prime Minister U. Khurelsukh saying on 27 March that the time was ripe to change the way the country’s commercial banks worked, warning that “if banks don’t accept our suggestion to reduce their lending rates, we shall have to take stern measures to see that this is done.”  Finance Minister Ch. Khurelbaatar followed this up on 14 April, when he said in Parliament that after two years of calling for banking sector reforms and asking for Parliament’s permission to let foreign banks work in
  • 2020-07-10 13:58
    What with the pandemic and the excitement over the election, an important decision taken by the last Parliament just before its final session ended did not receive adequate attention. Following a Constitutional Court decision that Resolution #64 adopted by Parliament in 2014 had violated the Constitution it was resolved that the 267-km Tavantolgoi-Gashuunsukhait (TT-GS) railroad would have a broad gauge, thus closing a debate that had been going  on for years.  
  • 2020-07-06 10:53
    The eighth parliamentary election was held successfully on June 24 and what the 73.64 percent of the total electorate voted for is now known. This was the first election since major amendments were made to the Constitution, though this might not have had any direct bearing on the voters’ choice. At 606, the number of candidates was the most ever, though almost nobody from outside the two major parties won. Some candidates were arrested on charges not directly related to the election. The new Parliament has 76 members, as before. Of them, 62 are from the MPP -- three less than in the last parliament, but still giving the ruling party an overwhelming numerical strength -- 11 from the DP, one each from the Right People Electorate Coalition and Our Coalition, and one independent.
  • 2020-06-29 14:04
    What has so far been the impact of the COVID-19 situation on the banking and financial sectors? What future risks do you see?  The quarantine imposed by the Government has been good for preventing the virus from spreading but it has also reduced mining output and thus led to lower exports. Trade, travel, transportation and almost all other sectors have been hobbled, and this has in turn caused uncertainty in the banking sector. According to the Bank of Mongolia, repayment of 54,000 loans worth MNT3.5 trillion has been stalled. Banks make up about 90 percent of the financial market in Mongolia, and if this unavoidable failure in repayment of loans continues, banks will have their profitability reduced and assets depleted, forcing them to dip into their reserves. Since almost everybody’s income has been affected, people have no disposable funds and so banks are getting far less deposits. They will issue fewer new loans.
  • 2020-06-23 15:40
    Erdenes Tavantolgoi Mining (ETM) was formed with the status of a daughter company of the state-owned Erdenes Tavantolgoi JSC with the specific purpose of facilitating the long-talked-about IPO. Kh.Narankhuu, Director General of Erdenet Mining  Corporation from 2000 to 2007 and a former Member of Parliament, was brought in as CEO to oversee the complex and multi-faceted work of preparing documents and material required by the stock exchange and also to woo investors. Now that the IPO has been put on hold and ETM itself is being wound up, Narankhuu opens up to G. Iderkhangai on what the past months were like. Given his status in the mining sector, his views command special respect and he does not disappoint in this long-ranging conversation.  
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