Mongolia Eager for Oyu Tolgoi Deal by Year End, Official Says

Mongolia’s prime minister is pushing to end the deadlock with Rio Tinto Group (RIO) over the expansion of the Oyu Tolgoi copper and gold mine by the end of this year, according to an industry official of the landlocked nation.

Prime Minister Altankhuyag Norov sent an order to solve the dispute by the end of this year to government departments including the Economic Development Ministry and the Mining Ministry, according to Khorloo Baatarkhuu, a counselor of Mongolian National Mining Association, who says he’s read the document from the premier’s office. Rio put the $5.4 billion underground expansion at the Oyu Tolgoi mine, the largest foreign investment in Mongolia, on hold in July 2013.

“The central government sent around an order about a month ago, urging people to work on the negotiations diligently and quickly,” Baatarkhuu said in an interview in Chengdu, China, on Oct. 29. “We want the project to resume development as soon as possible as the deadlocked situation hurts the country’s economic growth and forex incomes.”

Officials from the prime minister’s office, the mining ministry and the board of Oyu Tolgoi LLC didn’t respond to requests for comment. The Ministry of Economic Development was dissolved this month as part of a reorganization by Altankhuyag, who said in a televised address Sept. 9 that the government intends to resolve the mine dispute by “this autumn.” Melbourne-based Rio spokesman Ben Mitchell declined to comment.

Third-Largest Mine

Oyu Tolgoi, located about 80 kilometers (50 miles) north of the Chinese border, will contribute about a third of Mongolia’s economy when in full operation and will be the world’s third-biggest copper mine, Rio-controlled unit Turquoise Hill Resources Ltd., which owns 66 percent of the mine, said in a January presentation. Copper on the London Metal Exchange has fallen about 8 percent this year.

Commitments from lenders for $4.2 billion needed to help fund the underground expansion expired after a Sept. 30 deadline to reach an agreement was missed, Turquoise Hill said in a statement earlier this month. The two sides are still negotiating taxation and accounting standards as well as infrastructure and environmental management projects associated with the mine development, Baatarkhuu said.

The deadlock began last year after Rio raised cost estimates for the project. Officials from the Mongolian mining ministry and Rio said during meetings that Baatarkhuu attended that they’re targeting a deal by the end of this year, he said.

Biggest Customer

Copper concentrate production in Mongolia could rise to 1.5 million metric tons in 2015, up 25 percent from this year’s projected 1.2 million, according to Baatarkhuu. Mongolia has one smelter with annual capacity of 100,000 tons and there are no plans to build new ones, he said.

Almost all of Mongolia’s production will be exported to China its “neighboring the biggest customer in the world,” Baatarkhuu said. China imported 317,689 tons of copper concentrate from Mongolia in September, an 83 percent jump from the previous month, customs data showed. Mongolia is now the third-largest exporter of copper concentrate to China, supplying 25 percent of its imports last month.

To contact Bloomberg News staff for this story: Alfred Cang in Shanghai at acang@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net; Jason Rogers at jrogers73@bloomberg.net Andrew Hobbs

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Russia, China & Mongolia Begin Trilateral Talks

The first round of talks will take place at the deputy foreign minister level and focus on transit corridors.

Following up on Vladimir Putin’s September invitation for trilateral talks, Russian, Chinese and Mongolia deputy foreign ministers met in Ulaanbataar for the first-ever Russia-Mongolia-China trilateral consultation. Russian Deputy Foreign Minister Igor Morgulov kicked off the talks by remarking that the three countries share “vast borders, rich historic traditions, firm friendship of peoples, huge potential and vast prospects for practical cooperation, as well as closeness of approaches to international affairs,” according to Russia’s ITAR-TASS news agency. He added that Russia sees China and Mongolia “not only as close neighbors, but also as time-tested and reliable friends.”

According to ITAR-TASS, trilateral talks will likely focus primarily on economic matters, with an supplementary focus on humanitarian and foreign policy issues. Given that the talks are in their initial phase, no major agreements are expected to result from this first trilateral consultation.

The trilateral arrangement carries more meaning for Russia and Mongolia than it does for China. Russia, which faces alienation from Europe on its West, is increasingly looking at Mongolia and China as major economic partners. Earlier this year, Russia signed a major natural gas agreement with China, demonstrating the Kremlin’s eastward economic gaze. Similarly, Russia and Mongolia are working to integrate their national rail networks, increasing connectivity between the two neighbors.

For Mongolia, this trilateral arrangement fits perfectly with its greater international aspirations. As I’ve noted on The Diplomat before, Mongolian President Tsakhiagiin Elbegdorj has almost single-handedly transformed the country’s foreign policy. Under Elbegdorj, Mongolia has grown increasingly activist in the region. Mongolia’s eagerness for this trilateral arrangement should be unsurprising as it remains sandwiched geographically between two behemoth neighbors. In order to realize its international aspirations, Mongolia necessarily needs to coordinate with both China and Russia.

Speaking to this sentiment, Mongolia’s Deputy Foreign Minister Dambyn Gankhuag remarked that “Mongolia is actively cooperating with its neighbors — the Russian Federation and the Chinese People’s Republic — to deepen the existing strategic partnership relations, as well as to give concrete substance to them.”

This first round of trilateral talks will likely focus on the setting up of transit corridors between the three countries — in essence, connecting Russia to China via Mongolia. Specifically, the three countries will look into rail development, highway construction, and a gas pipeline. ITAR-TASS notes that “the Mongolian side is expected to offer Russia to build a section of the so-called western route pipeline not via the Altai mountains but across its steppe territories.”

Source:http://thediplomat.com/

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Rio Tinto poised for write-off on delayed Mongolian copper mine

RIO TINTO looks set to take a $US2.5 billion writedown on its huge but troubled copper project in Mongolia.

Construction of the $US5 billion Oyu Tolgoi mine has become ensnared in a tax dispute with the government.

The mine has the potential to transform an economy that is on a par with Angola or Swaziland in national income per head. The International Monetary Fund says that it will be responsible for a third of the country’s GDP growth by the time it is operational.

However, the delays contributed to a $US2.5 billion reduction in the project’s value, according to a report by Turqoise Hill, the Rio-controlled company that owns most of the project.

Rio (RIO) had flagged at its half-year results in August that it may have to write down the value of the project if the delays continued.

Its value has shrunk from $US9.9 billion to $US7.4 billion during the past year, with $US1.1 billion of the fall in value due to the delays and slower production ramp-up. First production from the underground element of the project, which holds about 80 per cent of the value, was supposed to arrive in 2017 but is not now expected until 2019, with one analyst who visited the site this week saying that 2020 is a more likely start date.

Daniel Greenspan, a Macquarie analyst who visited the site, wrote to clients: “We got the distinct impression that even if the green light was given tomorrow, it could take at least ten months before workers and contractors are mobilised and construction recommences. Therefore, the 2019 production start date targeted in the new (technical report) is likely one year off at least.”

Construction of the underground mine, and its 200km of tunnels, was postponed last summer after the Mongolian government announced that it was reviewing a feasibility study, which meant that Rio was unable to hit a September 30 deadline attached to a $US3.6 billion finance package.

Rio cut 300 jobs in May and appointed a new chief executive for the project, Andrew Woodley, in September.

The project would be one of the world’s largest copper mines at full capacity, helping Rio Tinto to break its dependence on Australian iron ore for the vast majority of its profit. Macquarie is forecasting that the project will suck in about 40 per cent of Rio’s growth investment from next year.

The negotiations and impending writedown come at a fraught time for Rio. The company was informally approached in July by Glencore about a potential merger and is three weeks into a six-month period, enforced by the Takeover Panel, during which Glencore cannot return.

Sam Walsh, Rio’s chief executive, said: “It’s a 50-year project ... I need to make sure with these sorts of projects that you don’t put lead in the saddle that you have to carry for 50 years.”

The Times

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Fitch: Mongolian Banks Face Rising Risks from Subsidised Mortgages

(The following statement was released by the rating agency) HONG KONG, October 31 (Fitch) Mongolian banks' mortgage exposure continues to rise amid the government's commitments to provide affordable housing to low- to medium-income households, and to contain inflation, Fitch says in its Asia-Pacific Banks: Chart of the Month report. Ongoing securitisation by the Mongolian Mortgage Corporation supports banks' liquidity as banks can repay 90% of funding from the Bank of Mongolia with the senior tranche of the residential mortgage-backed securities. The securitisation also improves banks' interest spread. However, most of the credit risk remains in the sector as banks retain the equity tranche carrying a 1,250% risk weight for regulatory capital purposes. The mining sector and the volatile operating environment for the banks remain the key pressure points for Mongolian banks. The report "APAC Banks: Chart of the Month" is available at www.fitchratings.com or by clicking on the link above. Contact: Sabine Bauer Senior Director +852 2263 9966 Fitch (Hong Kong) Limited 2801, Tower Two, Lippo Centre 89 Queensway, Hong Kong Ivan Lin Associate Director +852 2263 9984 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable Criteria and Related Research: APAC Banks: Chart of the Month

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Mongolia Eager for Oyu Tolgoi Deal by Year End, Official Says

Mongolia’s prime minister is pushing to end the deadlock with Rio Tinto Group (RIO) over the expansion of the Oyu Tolgoi copper and gold mine by the end of this year, according to an industry official of the landlocked nation.

Prime Minister Altankhuyag Norov sent an order to solve the dispute by the end of this year to government departments including the Economic Development Ministry and the Mining Ministry, according to Khorloo Baatarkhuu, a counselor of Mongolian National Mining Association, who says he’s read the document from the premier’s office. Rio put the $5.4 billion underground expansion at the Oyu Tolgoi mine, the largest foreign investment in Mongolia, on hold in July 2013.

“The central government sent around an order about a month ago, urging people to work on the negotiations diligently and quickly,” Baatarkhuu said in an interview in Chengdu, China, on Oct. 29. “We want the project to resume development as soon as possible as the deadlocked situation hurts the country’s economic growth and forex incomes.”

Officials from the prime minister’s office, the mining ministry and the board of Oyu Tolgoi LLC didn’t respond to requests for comment. The Ministry of Economic Development was dissolved this month as part of a reorganization by Altankhuyag, who said in a televised address Sept. 9 that the government intends to resolve the mine dispute by “this autumn.” Melbourne-based Rio spokesman Ben Mitchell declined to comment.

Third-Largest Mine

Oyu Tolgoi, located about 80 kilometers (50 miles) north of the Chinese border, will contribute about a third of Mongolia’s economy when in full operation and will be the world’s third-biggest copper mine, Rio-controlled unit Turquoise Hill Resources Ltd., which owns 66 percent of the mine, said in a January presentation. Copper on the London Metal Exchange has fallen about 8 percent this year.

Commitments from lenders for $4.2 billion needed to help fund the underground expansion expired after a Sept. 30 deadline to reach an agreement was missed, Turquoise Hill said in a statement earlier this month. The two sides are still negotiating taxation and accounting standards as well as infrastructure and environmental management projects associated with the mine development, Baatarkhuu said.

The deadlock began last year after Rio raised cost estimates for the project. Officials from the Mongolian mining ministry and Rio said during meetings that Baatarkhuu attended that they’re targeting a deal by the end of this year, he said.

Biggest Customer

Copper concentrate production in Mongolia could rise to 1.5 million metric tons in 2015, up 25 percent from this year’s projected 1.2 million, according to Baatarkhuu. Mongolia has one smelter with annual capacity of 100,000 tons and there are no plans to build new ones, he said.

Almost all of Mongolia’s production will be exported to China its “neighboring the biggest customer in the world,” Baatarkhuu said. China imported 317,689 tons of copper concentrate from Mongolia in September, an 83 percent jump from the previous month, customs data showed. Mongolia is now the third-largest exporter of copper concentrate to China, supplying 25 percent of its imports last month.

To contact Bloomberg News staff for this story: Alfred Cang in Shanghai at acang@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net; Jason Rogers at jrogers73@bloomberg.net Andrew Hobbs

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Russia hails ties with China, Mongolia as trilateral consultations open

ULAN-BATOR, October 30. /TASS/. Russia is satisfied with a dynamic pace of ties with China and Mongolia, Deputy Foreign Minister Igor Morgulov said in his opening remarks at the first Russian-Mongolian-Chinese consultations at the deputy foreign ministerial level.

Russia, Mongolia and China share “vast borders, rich historic traditions, firm friendship of peoples, huge potential and vast prospects for practical cooperation, as well as closeness of approaches to international affairs,” Morgulov said.

Russia sees China and Mongolia “not only as close neighbors, but also as time-tested and reliable friends,” he said.

Consultations would focus on cooperation in trade-economic, humanitarian and foreign policy sectors, he said, adding that they were expected to become a basis for future concrete projects.

Mongolia’s Deputy Foreign Minister Dambyn Gankhuyag said, “Mongolia is actively cooperating with its neighbors — the Russian Federation and the Chinese People’s Republic — to deepen the existing strategic partnership relations, as well as to give concrete substance to them”.

Chinese’ Deputy Foreign Minister Chen Gopin expressed readiness to join efforts with his counterparts at consultations towards the implementation of the already signed agreements.

INFOGRAPHICSAltai gas pipeline

Gazprom is in negotiations with China on supplying gas via the western route in the volume of 30 billion cubic meters per year and possibly increasing it later to 100 billion cubic meters per year. Infographics by TASS

The parties are expected to discuss the idea of transit corridors between Russia and China, notably rail and motor roads, a gas pipeline and energy supplies. The agenda will also include steps to invigorate political dialogue in the tripartite format.

As for gas cooperation, the Mongolian side is expected to offer Russia to build a section of the so-called western route pipeline not via the Altai mountains but across its steppe territories. Mongolia’s government says it would help spare large funds. The western route provides for gas supplies to China from West Siberian gas fields. Direct gas supplies are planned to be launched in 2019.

The Ulan-Bator-based newspaper UB Post reminded that earlier in 2014, on September 11, the first meeting of the leaders of Russia, Mongolia and China was held at the initiative of the Mongolian side on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Dushanbe. The leaders then reached an agreement to continue cooperation between the foreign ministries of the three countries.

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Mongolia Coal Miners ‘Burning Cash’ as Prices Drop, Moody’s Says

Mongolian coal producers are “burning cash” and face pressure in the next 12 months because low prices and weak demand from China will persist, according to Moody’s Investors Service.

Coking coal at Queensland has declined 17 percent this year to $112.80 per metric ton on Oct. 16, extending annual losses since 2010, according to Energy Publishing Inc. At that level, producers may just break even until prices recover to about $125 to $140 from the second half of next year, according to senior credit officer Simon Wong.

“At current levels, many operators are not generating enough cash flow to service their debt and capex,” Hong Kong-based Wong said by phone on Oct. 24. “They are burning cash. Liquidity will continue to be under pressure for these companies and they will need to conserve cash for the next 12 months.”

Mongolia’s economic growth is set to cool to 6.3 percent this year versus 11.7 percent in 2013, according to World Bank forecasts. The Asian nation is becoming more dependent on volatile mining revenues amid rising government debt and foreign-currency borrowing, Moody’s said in a report on Oct. 24.

The 2017 notes of Mongolian Mining Corp., an Ulaanbaatar-based miner listed in Hong Kong, have lost 11.5 percent this year, according to Bloomberg-compiled prices. The company had a $28 million net loss in the six months through June 30, following losses in 2013 and 2012.

Junk Debt

Moody’s rates the securities Caa2 (975), or eight levels below investment grade. Standard & Poor’s ranks the debt CCC+, or the seventh-highest junk rating.

Other Hong Kong-listed companies with coal operations in Mongolia have shown signs of financial stress.

SouthGobi Resources Ltd. said in September it was seeking more funding because it may run out of money by December to remain a going concern. Mongolia Energy Corp. said on Oct. 24 it’s seeking to extend HK$3.45 billion ($444.8 million) of debt by five years under a restructuring to be voted by shareholders on Nov. 12.

Hidili Industry International Development Ltd. bought back some of its dollar-denominated notes this month, while Winsway Enterprises Holdings Ltd. sold its stake in a Canadian coal unit to cut debt.

Apart from weak selling prices, land-locked Mongolia presents more challenges because in-land producers are geared toward selling to the Chinese market, compared with other seaborne producers that can ship to more countries, Moody’s Wong said.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.netAndrew Monahan, Ken McCallum

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Rail options open for Aspire's Mongolian coal

PERTH (miningweekly.com) – The shareholders of coaldeveloper Aspire Mining on Monday smiled on the news that the company’s Ovoot project, in Mongolia, had been presented with a rail solution.

The Mongolian government recently approved a new national rail policy, which included the extension of a rail from Erdenet to Aspire’s Ovoot coking coalproject, and on to the Russian border at Arts Suuri.

The new rail line was considered an important connection between Russia,Mongolia, and through the Trans-Mongolian Railway, to China.

“The Mongolian Parliament’s decision provides the rail solution to unlock the value of the Ovoot project. We expect that this railway, along with the current expansion of the Trans Mongolian Railway towards 100-million tonnes a year, with have a dramatic effect on the competitiveness of Northern Mongolian coalin both the Chinese and seaborne coking coal markets,” said Aspire MD DavidPaull.

He noted that the new rail also brought major economic and social benefits to the Northern Mongolian provinces, as economic development and regional integration were fast-tracked.

With the Parliamentary approval, the Mongolian government was now empowered to negotiate a concession agreement for the railway between Erdent and Ovoot as the first stage of the Northern rail line, and Paull said that Aspire’s dedicated rail subsidiary was looking forward to providing a tender proposal for the concession agreement in the near-term.

The $144-million Ovoot project would have an initial production of five-million tonnes a year, with first production targeted for 2017. 

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Inner Mongolia: Hundreds of Herding Families Forced Off Their Pastures

As part of an ‘ecological recovery’ program, Chinese authorities have evicted hundreds of Mongolian herders and their families from their pastures.  It is suspected that the confiscated land will be used for strip-mining and exploited for its natural resources.  The confiscation of their land has deprived the Mongolian herders of their livelihoods and they are receiving inadequate compensation.

Below is an article published by UCA News:

Hundreds of ethnic Mongolian herding families in China's Inner Mongolia region are calling on the international community for help following their forced eviction from a huge area of their traditional grazing lands, local residents said on Thursday [23 October 2014].

Several hundred people from Zaruud (in Chinese, Zalute) Banner demonstrated outside the offices of the nearby Tongliao municipal government last Sunday [19 October 2014] over what they said were forced and violent evictions from their homelands in June.

"After we returned to our grazing lands in June to graze our sheep and cattle, the [Arkund] township government dispatched large numbers of riot police and grasslands management officials," the herders said in an open letter issued at the same time.

"They pushed over the herders' yurts and snatched away their livestock, using violence to force 62 herders off their grazing lands," the letter said, according to a copy obtained this week.

"Herders who tried to resist were threatened and beaten up by police," it said.

Dagula, a resident of Heyehua village in Zaruud Banner — the administrative equivalent of a county — said she was there at the time.

"On June 25 [2014], they forcibly evicted us," she said. "They went into the sheep pens and started grabbing the sheep."

"When we saw our property being snatched away, of course we couldn't stand it, and we tried to stop them."

"There were some clashes," she said. "They behaved like bandits. They didn't even produce any paperwork."

The evictions come as part of a widespread "ecological recovery" program under which officials cordon off thousands of acres of valuable grasslands and forbid herders to graze their animals there.

But overseas rights groups say the government's ongoing land grabs have little to do with environmental responsibility and everything to do with exploiting the land for lucrative strip-mining and other natural resources.

Dagula said the trouble had started in the village five years ago when local officials ordered the herders to stop grazing the grasslands and move away.

"The policy at the time was that the grasslands should be rested for five years, and then we could graze them again," she said.

"Those five years have now passed, and we have a 30-year contract to graze these lands still in force."

Dagula said local people no longer believe in the "ecological" policy for managing the region's fragile grasslands.

"They are just using ecological protection as a pretext for evicting us," she said.

She said herders' attempts to petition the Tongliao authorities on Sunday [19 October 2014] had come to nothing, however.

"They said our demands weren't acceptable," Dagula said.

One herder, Chenggal, was severely beaten and detained for five days, according to a report paraphrasing the letter on the US-based Mongolian News website.

It said dozens of herders had traveled to municipal government offices in Tongliao last month in a bid to return to their traditional grazing lands.

A second Heyehua resident, Galasang, said local people are also calling on the government for greater compensation for the loss of their livelihoods.

The government has already paid out seven yuan per mu [0.165 acres] for the land, which works out at around US$1,800 per household for the whole five years, residents told RFA.

"There are about 100,000 mu (16,474 acres) involved, and they've been taking it over gradually since 2004," Galasang told RFA on Thursday [23 October 2014].

"All the herders have moved to Jarud banner town, where the government finds a job for one person per household," he said. "That brings in a little over 2,000 yuan ($327) a month, so the herders are having trouble making ends meet."

Repeated calls to the Zaruud banner government offices rang unanswered during office hours on Thursday [23 October 2014].

Instead, some local residents said they had received threatening SMS messages after the petitioning attempt on Sunday [19 October 2014].

"If you carry on making trouble, we'll get the criminal gangs to break your legs," one message read.

Another said: "We'll cut out your tongues!"

Earlier this month, authorities in Huvuut-shar (Xianghuang) Banner agreed to boost subsidies to herding families after some 400 people protested the illegal confiscation of their grazing land.

The herders told local ruling Communist Party officials they wanted something done about the illegal confiscation of their grazing land, concerns over mining, official inaction following natural disasters and delays in compensation payments, the US-based Southern Mongolia Human Rights and Information Center (SMHRIC) reported.

Ethnic Mongolians, who make up almost 20 percent of Inner Mongolia's population of 23 million, regularly complain about environmental destruction and unfair development policies in the region.

Clashes between Chinese companies and ethnic Mongolian herders protesting the exploitation of their grasslands are increasingly common in the region, which borders the independent country of Mongolia.

Rights activists say grasslands on which the herding communities depend for a living are constantly being taken over for China’s mining and tourism industries and for national development projects, forcing them to take action to stand up for their rights.

Photo credit: Xianyi Shen

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Rio Tinto has withheld $US4.2 billion needed to push ahead with giant Mongolian copper venture

Rio Tinto is leaving $US4.2 billion in financing needed to move forward its troubled Oyu Tolgoi project in limbo until the miner can get greater clarity from the Mongolian government.

Rio copper boss Jean-Sebastien Jacques told Fairfax Media on Tuesday that the miner had not requested a formal extension to a lapsed deadline for project financing because the ball was in the Mongolian government's court.

"Either they want to do it or they don't want to do it," he said. "If they want to do it, we can move with pace, but it is really their call now."

Rio has been in a long-running stand-off with the Mongolian government over their joint venture, the massive Oyu Tolgoi copper and gold mine, and let a September 30 project financing deadline pass for $US4.2 billion ($4.8 billion) to fund the underground expansion.

Mr Jacques said the miner was considering submitting a formal extension request to the 15 commercial banks in the lending consortium financing the next development phase.

"The main reason why we have not submitted a formal request yet is that we want to understand where the government of Mongolia is coming from," he said.

"Because after 18 months of conversation with the government, there is a deal on the table. We believe it is a well-balanced deal, it is beneficial for all parties.

"Now really the ball is with the government."

Mr Jacques, who took the helm of Rio's copper division 18 months ago, was confident the commercial banks would sign off on a formal extension. The lapsed September 30 deadline was an extension on an initial deadline of March 31.

The first stage of Oyu Tolgoi is in operation but the much bigger second stage – the underground mine – is where the bulk of the project's value lies.

"We all agree that 80 per cent of the value is sitting underground," he said.

"However, we will do [develop] it only if it is value accretive for our shareholders. The government fully understands that."

The lending consortium fronting $US4.2 billion for the second phase also includes development banks, who Mr Jacques says are open to an extension until at least Christmas.

Led by the World Bank's International Finance Corporation, the line-up also includes the European Bank for Reconstruction and Development and the Australian government's Export Finance and Insurance Commission.

Rio controls the Oyu Tolgoi project through a 66 per cent stake held by its Turquoise Hill subsidiary. The Mongolian government owns the other 34 per cent.

Tax issues, as well as compensation for cost blowouts associated with the first phase of Oyu Tolgoi, are among the key stumbling blocks.

"We will only deploy this level of capital if the investment environment is the right one," Mr Jacques said.

"If there is no stability about taxes, or if we have concerns about a few other issues, then it could be very difficult to convince our shareholders to deploy another $US6 billion in the country."

In June, the Mongolian government slapped Oyu Tolgoi with a bill of about $US130 million in unpaid taxes. But they later settled for a $US30 million payment.

Mr Jacques, who was this week made chairman of the International Copper Association, said Rio had to be patient.

He said there had been good progress on Oyu Tolgoi since he took the top job.

"They may need more time – what we are talking about here is the GDP of the country for the next 30 or 40 years. It's a very big decision for them, and that's why we need to be patient."

He stressed that copper is not a short-term game, and Oyu Tolgoi has been 17 years in the making, and so far cost $US7 billion in investment.

"There is no short-term fix as far as copper is concerned. It's a long story to get there, but when you have the right assets in your portfolio ... you print money."

He pointed to the largest copper mine in the world – Escondida, which Rio owns in a joint venture with BHP Billiton – as an example of the long lead times on copper projects.

"We all love Escondida but it took us more than 20 years to get there," he says. 

Source:The Sydney Morning Herald

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Mongolian women 'want status over big families'

A new study suggests the aspirations of women in Mongolia have rapidly shifted. Before the rapid economic transition of the 1990s, the wealthiest women in the Communist-style era had big families. However, women today are less interested in babies and driven more by money and status.

The research by Oxford University and Sheffield University was based on interviews with 9,000 women in Mongolia, a country that underwent a sudden transition from a Soviet-style state to mass privatisation. While the older cohort who lived under a Communist-style regime were likely to have bigger families if they were wealthier, younger women living in a more capitalist society want wealth and a partner with social standing before starting a family.

The research is published in the latest issue of the journal, Proceedings of the Royal Society B. The authors describe this as a 'demographic-economic paradox': the unequal and skills-based society of Mongolia today enables the educated women to rise up the social ladder and make money, but rather than this change being liberating, the paper suggests it seems to be at the expense of high fertility. As the free market takes hold, those women who have children later to pursue education become wealthier and this trend is particularly marked in the cities where most of the opportunities lie.

The research investigated the link between women's attitudes towards child-bearing and wealth, both between and within regions. The researchers analysed survey data on 9,000 women, aged from 15-49 years old, and over 4,000 husbands. They were asked about income, household amenities, educational level, the total number of children born, and how many children they already had when they first used contraceptive methods.

They found wealth becomes linked with small family sizes and women who live in the wealthiest households start using contraception before the birth of their first child or after one or two babies, while women who live in the poorest households start using contraception after three, four or five children

This effect was found to be three times stronger in urban as compared with remote, rural areas. The paper is one of the few empirical studies to look at how decision-making on reproductive behaviour is shaped by a woman's access to resources and economic opportunity.

Anthropologist Dr Alexandra Alvergne from Oxford University said: 'For a long time scholars have associated later child bearing with the length of time a mother has spent in education. However, we find that education on its own does not drive the decision on when to start a family. Rather, how much education translates into future wealth best explains fertility patterns across regions. This study suggests that many young women in Mongolia feel that in the market economy, they are having to choose between having babies and status in life and without supportive government policies, they can't have both.'

The paper says a woman's quest for status can depend on context: so whereas household wealth predicts a higher incentive to have children later in life in the urban areas of Mongolia, in Addis Ababa, fertility is highest among the wealthiest as big families carry status for women within that population.

Dr Alvergne concluded: 'Most programmes in developing countries focus on getting girls to go to school in order to encourage smaller families and economic growth. This study shows that girls and women are very aware of the value education may have in helping them rise through society and become wealthier. However, education is not always a passport to wealth and status. The quality of education needs to be good too in order to open up economic opportunities, with supportive policies giving them the option to combine being a mother with a career.'

 Explore further: Education 'protects' poor women from fattening effects of rising wealth

More information: Ecological variation in wealth–fertility relationships in Mongolia: the 'central theoretical problem of sociobiology' not a problem after all?
Proc. R. Soc. B December 7, 2014 281 1796 20141733; 1471-2954. rspb.royalsocietypublishing.or… 1/1796/20141733.full

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State Bank to Issue JCB Debit Card in Mongolia

Tokyo and Ulan Bator, Oct 14, 2014 - (ACN Newswire) - JCB International Co, Ltd. ("JCBI"), the international operations subsidiary of JCB, and State Bank, a government-run bank in Mongolia, are pleased to announce a new partnership for issuing JCB branded cards to the people of Mongolia. State Bank plans to launch debit card issuing in the spring of 2015. This will mark the first JCB card issuance in Mongolia.



Kimihisa Imada, Deputy President of JCBI stated, "The new card issuing partnership with State Bank offers JCBI the opportunity to launch the JCB brand in Mongolia, a market with a high potential for growth in both issuing and acquiring business, as the central bank is making progress on building the payments infrastructure. I am delighted that the partnership enables State Bank and JCBI to provide people in Mongolia with more attractive services such as JCB Plaza Lounges and other T&E services that embody the Japanese spirit of hospitality."



D.Batsaikhan, CEO of State Bank said, "State Bank has started to accept JCB cards in 270 ATMs, 1600 merchants and 540 branches through Bank of Mongolia since March 2014. Since then, we have stepped forth our partnership to the next level as the first issuer of JCB card in Mongolia. It is a very honor for us to have such a world brand as a partner. We are aiming to provide services to the tourist and travelers on business from both countries and also for the Mongolian people who are living and studying in Japan. We would like to offer services which will match the needs of the customers with JCB cards between two countries, which can provide more worthwhile services to our customers. We hope that our partnership will introduce more attractive services to both countries' customers."



About JCB



JCB, founded in Japan in 1961, is a major global payment brand and a leading credit card issuer and acquirer. The JCB acceptance network includes about 26 million merchants in 190 countries and territories. JCB cards are now issued in 16 countries and territories, with more than 84 million card members. As part of its international growth strategy, JCB has formed alliances with more than 350 leading banks and financial institutions globally to increase merchant coverage and card member base. As a comprehensive payment solution provider, JCB is committed to providing responsive and high-quality service and products to all customers worldwide. For more information, visit: www.jcbcorporate.com/english



Note: JCB statistics included in About JCB are as of the end of March 2014.



About State Bank



The State Bank was established on 26th, November, 2009 as a completely state-owned bank in order to ensure banking and financial stability, and to protect the rights and render risk-free services to its customers. As of today, State Bank has MNT 2 trillion in assets and offers banking services that located in every part and settlement areas of the country.



Since its establishment, the Bank takes pride in its professional staff and advanced technology and in the swift and reliable services it provides its customers. In five years it already has made significant contributions to the development of Mongolia's banking system and economy and become 4th TOP ranking bank in Mongolia.



Contact

JCB International Co., Ltd.

Ayako Tanaka

Corporate Planning

Phone: +81-3-5778-8390

Email: jcbinternational-pr@info.jcb.co.jp



State Bank of Mongolia

Mandakhnaran. A

Director of E-Banking Department

Phone: +976-11-310103

Email: mandakhnaran.a@statebank.mn






Source:ACN Newswire.

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Mongolia will never host US military base - president

Mongolia will never host an American military base, Mongolian President Tsakhiagiin Elbegdorj said Monday in an exclusive interview with TASS.

“When we ask Mongolian residents with which country it is necessary to cooperate, statistics show 60% prefer Russia, 15-20% choose China,” Elbegdorj, who was in Moscow for several hours prior to his visit to Europe, said.

“The [rest of the] world is our third neighbor. Of course, we want to have good relations with all other countries. It’s good for our neighbors too, because there appear more opportunities for investment,” he said.

“When someone somewhere asks whether an American military base may appear on Mongolian territory, [I can say:] it will never be like that,” Elbegdorj said.

He recalled that Mongolia’s Constitution bans deployment of foreign military bases on the country’s territory.

Source:TASS, Russian news agency

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The pits

Mongolia loses its shine—and some of its treasured autonomy

Oct 11th 2014 | ULAANBAATAR | From the print edition

NOT long ago Mongolia seemed a blessed land, with growth rates—over 17% in 2011 and around 12% in each of 2012 and 2013—that were the envy of the world. Mining was the promise in a country with annual GDP per person of less than $2,000 just five years ago and $4,000 today. Some $3 trillion of get-at-able minerals are thought to lie under a country bigger than France, Germany and Spain combined, equivalent roughly to $1m for each of nearly 3m Mongolians. For many, the despoiling of a pristine landscape and a capital, Ulaanbaatar, with the second-worst air pollution in the world, seemed a price worth paying for a boom that made politicians rich and filled the streets with snazzy new cars and apartment towers.

But now the shine has come off. Mongolia faces a balance-of-payments crisis in which its hard-currency reserves have fallen by two-thirds; the currency, the togrog, is also sharply lower. At home, a credit crunch has brought Ulaanbaatar’s building frenzy to a near-halt. One factor is coal, Mongolia’s chief mineral export before a vast new copper mine, Oyu Tolgoi (OT) in the Gobi desert, comes properly on-stream. Its price has fallen as demand from China has slumped. The second factor is a fight among the foreign investors who fuelled the boom; and for that, the Democratic Party government is squarely to blame.

The importance to Mongolia of OT, controlled by Rio Tinto, a British-Australian giant, is hard to overstate. When it is fully up and running, sending ore across the border to China, it could account for one-third of GDP. The $6 billion spent to date accounts for most of the recent foreign direct investment.

Yet the project is stuck in bitter disputes between Rio and a meddling Mongolian government, which owns 34% of the project, over the scale of management fees, the kinds of cost overruns that are inevitable when developing such a large mine, and demands for tax. Mongolia’s raucous democracy has amplified the disputes.

Until they are resolved, Rio refuses to start spending the $5 billion or so needed for the second, and harder, phase of OT’s development, when the mine will start to dig deep. Mongolia’s finance minister, Ch. Ulaan, admits that it would have been better had the government not insisted on being a shareholder in OT but had merely pocketed the royalties. Too late. Other foreign miners have taken fright, further alarmed by the suspension of over 100 other licences pending a government review over corruption. Foreign direct investment has fallen by three-fifths this year. Thankfully, signs suggest the government and Rio are narrowing their differences. Rio says it has finished a feasibility study of the second phase at OT. The government seems to have backed down over huge tax demands.

That is welcome, but meanwhile the government also faces the consequences of ill-advised domestic measures implemented last year to counter a slump in growth. One was a “price-stabilisation programme” designed to reverse a fast rise in the prices of basic foodstuffs and construction materials. Another was to subsidise mortgages, bringing down the rates Mongolians paid from roughly 18% to 8%. Both measures involved huge central-bank injections of money into the banking system and the alarming growth of the government’s off-budget financing. The session of the State Khural (parliament) that opened this month is supposed to consider emergency measures to rein back spending, but cutting the mortgage subsidy, in particular, will prove politically tricky. Meanwhile, the level of non-performing loans at banks, currently under 5%, is certain to rise.

Even without progress on OT’s second phase, Mongolia should be able to avert a full-blown crisis, thanks largely to offers of help from its southern neighbour, China. Hard-currency reserves inched up in August, due in part to a loan from China’s development bank. Moreover, China has offered a lifeline in terms of extensive swap arrangements to Mongolia’s central bank. President Xi Jinping of China recently called on his Mongolian counterpart, Tsakhiagiin Elbegdorj.

So too did Vladimir Putin of Russia, which was Mongolia’s overlord until a democratic revolution in 1990—led by a young Mr Elbegdorj. What Russia can now offer is unclear; one analyst in Ulanbaatar says that Mr Putin’s chief motive was to “bare his arse to the West”.

Mongolia has long been a staunch friend of the West as it has tried to keep from falling into either Russia’s or, expecially, China’s orbit. Now, both want their pound of flesh. There is talk of Sino-Russian gas pipelines and railways crossing Mongolia. China’s state mining companies, which Mongolia has long sought to keep out, may muscle in. And that may be only the beginning of the Chinese influence. The price of the Democrats screwing up has been the loss of some of Mongolia’s treasured autonomy.

Source:http://www.economist.com/

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