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ECONOMY
MONGOLIA JAN-OCT COAL EXPORTS SURGE 72 PCT ON YR
Mongolia's coal exports came in at 23.11 million tonnes during the first ten months of 2022, up 71.69% or 9.65 million tonnes year on year. The export value jumped 159.27% from the year prior to $5.11 billion, showed data from the Mongolian Customs General Administration (MCGA).
MCGA didn't release the specific figure for October, and Sxcoal calculated the shipments at 4.09 million tonnes based on the overall exports published by the administration.
The volume surged 178.41% or 2.62 million tonnes year on year yet decreased 1.75% or 72,700 tonnes month on month, data showed.
In October, the export amounts totaled $607 million, with the average price calculated at $148.55/t, down $171.91/t year on year and $1.11/t month on month.
Mongolia exported 21.56 million tonnes of coal to China from January to October, soaring 70.5% year on year, taking up 93% of the total.
Source: sxcoal.com
See also: Mongolia Looks to Sell More Coal to China as World Shuns Polluting Fuel
Mongolian enterprises can control coal quality, enhance brand awareness, Fenwei
Coal transportation on Tavan Tolgoi-Tsagaan Khad route surges 370%
CREATION OF THE ‘MONGOLIAN COAL’ BRAND
The bill on the Sovereign Wealth Fund will be discussed at the autumn session of Parliament. As the government supports, its approval without much objection is expected. The main point is that the structure, management, executive management, board of directors, operating strategy, and direction of the state-owned company, Erdenes Mongolia , is clearly stated in the bill. So, if the law is approved, Erdenes Mongolia will become the Sovereign Wealth Fund. On the other hand, by bringing Erdenet Mining Corporation and Mongolrostsvetmet into the Erdenes Mongolia company’s structure, it will become a "holding" company. This also applies to the government decree issued in April of this year that updates the company's rules.
This clarifies many issues. There are good objectives for an open and transparent business environment, good corporate governance, joint management of joint ventures and mutually beneficial investor relations.
Source: Mongolian Mining Journal
FRC MEETS WITH FINANCIAL SERVICE COMMISSION AND THE FINANCIAL SUPERVISORY SERVICE OF SOUTH KOREA
T.Tserenbadral (Vice Chairman, Financial Regulatory Commission, FRC) met with Kim Yong-Jae (Standing Commissioner, Financial Service Commission, FSC), and Lee Myung Soon (First Senior Deputy Governor, Financial Supervisory Service, FSS) on 4 November, 2022. During the meeting, T.Tserenbadral presented a brief introduction about the activities of the FRC, and information about its work in recent years. Particular examples included:
- measures implemented to increase capital market growth,
- policy development to support new services and products,
- increase participation of foreign (and professional) investors, and reduction of financial costs (by creating fair competition in financial markets).
T. Tserenbadral also provided information about planned activities to:
- optimize the form of ownership of state-owned companies, and
- reform the Bank sector and improve governance (by establishing publicly controlled and open joint-stock companies, in stages). In this way, the stock market value of Mongolia will increase two to threefold, and products that meet the demands of foreign and domestic investors will be created.
Source: FRC
DIGITAL SOLUTIONS TO MAKE LIFE EASIER FOR UB CITIZENS
It is a wise and timely decision to use new solutions to solve the issues of the city, ensure the comfort of citizens and create conditions for living in a safe and pleasant environment. Therefore, the digital transition plan of Ulaanbaatar has been presented taking into account international standards, the characteristics of Mongolia, the culture and traditions of the citizens, the extreme climate and the characteristics of the state structure. In other words, Ulaanbaatar is cooperating with more than 70 national IT entities and 1,000 Mongolian engineers to use information technology solutions in each branch of the capital. We are highlighting digital solutions that were introduced in the city.
As part of the digitalization of public transport, the ePASS project, an integrated system with automation and information technology solutions will be introduced to the city’s public transport and school bus services.
Source: The UB Post
‘IT IS NECESSARY TO CREATE HEALTHY, SAFE AND GREEN WORKPLACES’ - INTERVIEW
The following interview is with Head of the Federation of Energy, Geology and Mining Workers’ Trade Unions of Mongolia D.Dolgor.
How do you evaluate the state of labor relations among employees in the energy, geology, and mining sectors?
Our federation is working to protect the labor rights and legitimate rights of workers in the energy, geology and mining sectors. Since last May, workers in the energy sector have started speaking to the government about concerns for their health and safety. On average, power plants and utility networks have been operating for about 30 years. Due to the lack of investment in the energy sector, the technology and equipment are outdated. People are working under such conditions.
Due to the pandemic, the electricity tariff for households has not been raised since 2019. However, the prices of oil, lubricants and spare parts used in power plants and pipelines have hiked significantly.
Source: The UB Post
CAN MONETARY POLICY GUARANTEE 4-5 PCT ECONOMIC GROWTH IN 2023? - EDITORIAL
Since the macroeconomic policy is aimed at improving the quality of citizens’ life by ensuring economic growth, keeping inflation and unemployment at a stable low level and reducing fiscal and trade deficits, the draft basic guidelines for 2023 state monetary policy, which is expected to be passed by Parliament this week, is drawing people’s attention.
Mongol Bank developed the draft guideline to support the economic and financial stability of Mongolia and overcome the pandemic and international conflict situation, the rise in foreign and domestic prices and other spillovers through the coordinated implementation of budget, monetary and financial policies.
The pandemic effects and the external geopolitical tensions have directly and indirectly affected the country’s economy for the past two years.
Mongol Bank explains that progressive measures taken in terms of budget, monetary and financial policies have yielded results, expanding the economy by 1.9 percent in the first half of 2022 compared to the same period of last year.
Source: The UB Post
MINERS WORKING LONG SHIFTS DESERVE TO BE PAID MORE FAIRLY - EDITORIAL
After the implementation of the revised labour law, which was endorsed last July and made effective from this year, miners have less money in their hands. That is because miners who worked more days at mining sites and spent much less time at home, are now entitled to have more time with their families and earn less. But it is not that simple. Miners require fair salary from their employers under the revised law. But employers have answered them that they are paid what they are entitled. Under the new labour law, miner’s average working hours per day should be limited to eight hours (as regulated by the law’s articles 87, 92, 109.1) and if it is extended, no more than four hours overtime can be added. But the laws are not implemented well. On the contrary, miners’ salaries have been decreased due to the law’s related regulations on average salary defining, salary calculation methodology, approved following the labour law.
Source: Mongolian Mining Journal
IN MONGOLIA, A QUEST TO DEMOCRATIZE CARBON CREDITS - EDITORIAL
For several years, The Asia Foundation’s Mongolia office in Ulaanbaatar has been working to reduce our carbon footprint. We started with simple efforts to reduce our emissions—limiting energy use, walking to meetings, composting our food waste, etc.—but we soon bumped up against some fundamental constraints, such as how our office building is heated during the long cold winters and the inevitability of car and airplane travel. These factors meant there was no direct pathway to zero emissions for our office.
Through this process we discovered that the only path to our goal of net zero emissions was to purchase carbon credits.
Carbon credits are based on a simple concept. Some entities are required by regulation, or choose voluntarily, to reduce their emissions. Those who cannot reduce their own emissions to zero, like our Mongolia office, can instead pay for emissions reductions by others by purchasing carbon credits.
Source: The Asia Foundation
POLITICS
15 HIGHLIGHTS FROM PRESIDENT OF MONGOLIA'S NATIONAL STATEMENT DELIVERED AT COP27
President of Mongolia U. Khurelsukh yesterday delivered a national statement at COP27. The following are some of the highlights of his statement that expressed Mongolia's stance on climate change.
- In these difficult times when the world is faced with significant challenges such as the global food and energy crisis, rising prices, and geopolitical tensions. It is imperative that all countries remain committed to achieving the Sustainable Development Goals and intensify their actions, especially towards combating climate change without losing momentum.
- Soil, food, and human beings are inextricably linked. Healthy soil produces healthy food and healthy food nurtures healthy people. Therefore, combating climate change is important to protecting soil, our food, and humankind.
- Every country needs to comprehensively address the pillars of food supply, food security, and climate change as part of SDGs.
- Mongolia, in its efforts to achieve SDGs, is successfully implementing the “Food Supply and Security”, “Healthy Mongolians” and “One Billion Trees” national movements.
- …
Source: Montsame
See also: UN chief warns "We are on a highway to climate hell" at COP27 summit
Mongolia becomes the first Asian country to join the EU Forest Partnership
Mongolia plants over 10 mln trees in 1 year to combat desertification
MINING MINISTER J. GANBAATAR MET WITH MINISTER FOR RESOURCES OF AUSTRALIA
Minister of Mining and Heavy Industry of Mongolia J. Ganbaatar, who is participating in the “International Mining and Resources Conference (IMARC) 2022", met with Madeleine King, Minister for Mineral Resources and Minister for Northern Australia.
During the meeting, Minister J. Ganbaatar mentioned that this year marks the 50th anniversary of the establishment of diplomatic relations between Mongolia and Australia and expressed his satisfaction with the expansion of cooperation in the field of mining.
Minister for Resources of Australia Madeleine King said that she will support Mongolia’s cooperation with relevant organizations of Australia in the fields of geology, exploration, and investment such as Geoscience Australia.
In addition, Minister J. Ganbaatar invited Minister Madeleine King to visit Mongolia at her convenience.
Source: Montsame
See also: Possibilities of attracting investment in geological exploration discussed
“SUSTAINABLE DEVELOPMENT COOPERATION FRAMEWORK” DOCUMENT PRESENTED TO PRIME MINISTER
On November 8, Prime Minister of Mongolia L. Oyun-Erdene received United Nations Resident Coordinator in Mongolia Tapan Mishra to discuss the relations and cooperation between the two sides.
UN Resident Coordinator Tapan Mishra expressed that the UN and its specialized agencies would support the Government of Mongolia's New Revival Policy and presented the Prime Minister with the document of the UN Sustainable Development Cooperation Framework for Mongolia 2023-2027.
The Prime Minister said that this document is aimed at intensifying the implementation of the long-term program document “Vision-2050", is aligned with the Action Plan of the Government of Mongolia for 2020-2024, and also ensures close intersectoral coordination.
In addition, he informed that the Government of Mongolia is paying a special attention to the issues of renewable energy and water sources.
Source: Montsame
'WE CAN APPROVE THE STATE BUDGET WITHOUT DEFICIT BY RAISING REVENUE'
During its plenary session on November 3, Parliament reviewed the draft 2023 Budget Law and the draft amendment to the Law on Budget Framework Statement for 2023.
Parliamentarians asked questions and expressed their views on the bills at the session.
Legislator M.Oyunchimeg underscored that the Consumer Price Index is estimated to be 8 percent although it is already 13 to 14 percent right now. She noted that the 30 percent increase in the price of flour was putting too much pressure on the people. The best-selling consumer good was baked goods, she said.
Minister of Food, Agriculture and Light Industry Kh.Bolorchuluun explained, “The prices of flour and rice did not increase in the last four to five years and remained stable. However, the price suddenly increased by 30 percent. The price stabilization program was approved in May. This program can only keep inflation at 10 percent. However, the cost of grain and rice increased by 50 percent.”
Source: The UB Post
REPAYMENT OF MNT 779 BILLION MADE TO DEVELOPMENT BANK
Between January 20 and October 31, 2022, a total repayment of MNT 779.6 billion was made to the Development Bank of Mongolia. MNT 681.2 billion were repaid in cash, and MNT 98.4 billion were repaid by real estate.
A total of 14 borrowers' loans were paid-off. 12 loans were paid-off in cash or MNT 278.3 billion, and 2 loans were paid-off by real estate.
As of October 31, 2022, the Development Bank has loans outstanding of MNT 2.8 trillion of 53 borrowers. 31.5% or MNT 890 billion is borrowed by 8 borrowers of state-owned companies, and 68.5% or MNT 1.9 trillion was borrowed by 45 private sector borrowers.
Source: GoGo News
“ERDENES TAVANTOLGOI” COMPANY TO NOT AGREE ON UPFRONT PAYMENT TERMS
During its regular meeting dated October 26, the Cabinet made a decision to impose an emergency regime for “Erdenes Tavantolgoi” state-owned enterprise for six months, assigning State Secretary of the Ministry of Finance J. Ganbat as the Government’s Special Representative to take relevant measures to improve the company’s operations and management and increase the revenue.
In this regard, on November 8, the Special Representative held a press briefing, during which he emphasized that making the company’s information on contracts and activities transparent and open to the public is the most appropriate solution.
After being assigned as the Government’s special representative, he started publicizing the coal mining and transportation information and contracts signed with mining companies accessible on the company’s website. Tender information related to procurement is linked online. Specifically, the quantity of coal loaded from the mine is disclosed on the company’s website.
Source: Montsame
CONSTRUCTION PERMITS INSPECTED
The meeting of the Ulaanbaatar Mayor’s Council was held on November 3.
At the beginning of the meeting, the results of inspections made to the construction permits issued after 2020 were discussed. Head of the Ulaanbaatar Specialized Inspection Agency S.Davaasuren introduced the result of the inspection.
Since 2020, the Ulaanbaatar Urban Planning and Development Department has issued a total of 1,143 building permits, 1,197 electrical and energy permits, 104 utility and network permits, 368 permit extensions and 16 renewed permits. A total of 67 of 410 construction permits were found to be in violation. In this regard, the mayor instructed the relevant officials to eliminate the violations found during the inspection.
General Manager of Ulaanbaatar and Head of the Ulaanbaatar Mayor’s Office D.Ganbold presented the increasing cost of waste disposal at the landfill.
Ulaanbaatar has more than 410,000 households and 175,000 entities. As this number increases every year, the amount of waste is also increasing.
Source: The UB Post
DISTRICT ADMINISTRATION TO PLAN GREEN SPACES, PEDESTRIAN AND CYCLING INFRASTRUCTURE
Mayor of Ulaanbaatar D.Sumiyabazar met with the governors of six districts of the capital city and reviewed plans for building pedestrian and bicycle paths and green facility infrastructure next year. For instance, in Songinokhairkhan District, 1,234 unauthorized garages were vacated this year and the construction of pedestrian and cycling paths has started. The Khan-Uul District authorities presented their plan to build an Eco corridor.
During the meeting, the Policy Research and Analysis Center of Ulaanbaatar provided information on the existing bicycle and pedestrian paths, as well as short-term planning on how to increase them and reduce traffic congestion. According to research, there are 31.4 kilometers of bicycle paths in the city center. However, there are issues such as these roads being cut off and not being connected to each other. Therefore, the study revealed that 31.5 kilometers of pedestrian and bicycle paths are needed to connect them and create conditions for people to go to work by bicycle.
Source: The UB Post
BILL ON PAWNSHOPS PASSED TO PROTECT CONSUMERS’ INTERESTS
During its plenary session on November 4, Parliament adopted the bill on the regulation of money lending, submitted by the government, in order to manage pawnshops.
As of today, there are about 1,000 pawnshops in Mongolia but very few of them pay taxes. Therefore, the law was developed with eight chapters to regulate the activities of pawnshops and protect the interests of consumers. It sets specific requirements for money lending operators and provides regulations for registration and control, according to lawmakers. The newly-approved law also disallows pawnshops to sell collaterals.
According to the Authority for Fair Competition and Protection of Consumers’ inspections in 2020, more than 900 pawnshops were found to be making some kind of violations, including operating without a license, valuing collaterals at up to 80 percent below market value and charging high interest and high overdue payment.
Source: The UB Post
DEFACTO REVIEW, NOVEMBER 6 - VIDEO
Highlights of the week:
1. Cases of fraudulent activities surrounding foreign investors
2. Changes in the management of Erdenes Tavantolgoi
3. Increase in the prices of railway transport and energy
Source: Jargal Defacto
BUSINESS
RIO TINTO'S TAKEOVER OF TURQUOISE HILL POSTPONED INDEFINITELY AFTER QUEBEC WATCHDOG RAISES CONCERNS
A Turquoise Hill Resources Ltd. shareholder vote on Rio Tinto Ltd.’s attempt to take full control of the Montreal-based miner has been indefinitely postponed after Quebec’s securities regulator said the way the transaction is currently structured raises “public interest concerns” due to side deals with shareholders who spoke against the bid.
Turquoise Hill said in a press release on Wednesday that it has been “engaged with Rio Tinto in order to address the differential treatment of minority shareholders resulting from the agreements.”
Once these concerns are resolved, the company said it will provide shareholders with supplemental disclosures regarding the revised terms and provide them with sufficient time to consider them. As such, Turquoise decided to indefinitely postpone the vote.
This is the third time Turquoise has postponed the shareholder vote. On Sunday, it shifted the vote for a second time to Nov. 15 from Nov. 8 because…
Source: Financial Post, AFR
See also: Former OSC chair says Rio Tinto deal with dissident shareholders is illegal, regulators likely to stop Turquoise Hill takeover
GOLOMT BANK LLC HAS REGISTERED SHARES TO BE ISSUED AS A PUBLIC OFFER
A total of 31 issues were discussed at the 20th regular meeting of the FRC (9 November 2022), and decided to register the ordinary shares of "Golomt Bank" LLC in the register of securities approved for public offering. "Golomt Bank" LLC is the second bank among influential banks in the banking system to register its shares for public offering within the framework of the reform of the banking system. Implementation of public offering of shares (IPO) by banks will increase the value of the stock market, increase the number of new products with good liquidity, improve the activity and participation of foreign and domestic investors, and make banking operations more transparent and open. In addition to the creation of long-term sources of financing for banks and the increase in credit output, it will be an important step in creating a multi-pillar financial system.
Source: FRC
MMC’S TENDER OFFER NOT DDE; RATING HEADROOM PRESSURE EASING
Mongolian Mining Corporation’s (MMC, B/Negative) tender offer, if accepted by the holders of its USD440 million senior notes due April 2024, has no immediate rating impact, Fitch Ratings says. Pressure on MMC’s rating headroom is also easing, reflecting the reduction in border disruptions.
MMC plans to purchase with cash part of its outstanding 9.25% senior notes due 2024 for an aggregate price of up to a tender cap. We regard MMC’s tender offer for part of its US dollar bonds as an opportunistic move and we do not treat it as a distressed debt exchange (DDE) even though the buyback consists of a material reduction in terms as it is below par. This is because we do not believe the offer was made to avoid a default since the company’s near-term liquidity remains adequate and its bond maturity in 2024 is close to 18 months away.
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