21.HAFTA BCM HABERLERİ
Business
RIO TINTO, MONGOLIA REACH DEAL TO BUILD OYU TOLGOI UNDERGROUND MINE
Mongolia and Rio Tinto PLC have reached an agreement paving the way for work to resume on a
delayed USD5 billion underground copper mine that is expected to underpin the growth prospects of
both the country and the global miner. The Oyu Tolgoi project, which started producing from a USD6.5
billion open pit mine two years ago, is the biggest single foreign investment in Mongolia and has long
been seen as a bellwether of the country's openness to foreign investment. "There is no doubt that
moving forward with the Oyu Tolgoi project will improve the investment climate in Mongolia", said
Prime
Minister
Chimed
Saikhanbileg.
Before development of the much larger underground mine can begin, Rio Tinto said the project will
need to finalize financing, conclude a feasibility study and secure all necessary permits. Analysts
estimate the mine will reach commercial production in 2019 or 2020 at the earliest.
Source: Reuters
NOW WHAT FOR OYU TOLGOI?
One question wasn’t getting an immediate answer on Tuesday after word came that Rio Tinto
Group and the government of Mongolia had finally come to new terms on the key expansion of the Oyu
Tolgoi copper-gold mine. That is, the matter of when the crucial underground Phase II mine might
come online. Before arguments over Oyu Tolgoi broke out between Mongolia and Rio Tinto two years
ago, production was planned to come online next year from the lucrative looking ore in underground
deposits at Oyu Tolgoi. The arguing, of course, threw a wrench into those works.
Rio Tinto suggested Oyu Tolgoi Phase II wouldn’t operate before 2020. Jeff Tygesen, Turquoise Hill
President and chief executive officer, was more vague. In a teleconference with analysts. Tygesen
acknowledged the question was no doubt on the minds of many, but said that it was “too early in the
process to provide an estimated restart date.” However, they were keen to reiterate previous cost
projections that put the bill to get Oyu Tolgoi underground built at around USD4.9 billion. So now the
reboot of Oyu Tolgoi Phase II becomes a matter of going back to the banks to reassess debt terms (the
project is looking for USD4 billion in loans), reassessing cost estimates and getting permits. Tygesen
said financing could come together by fourth quarter 2015.
Source: Mine Web
OYU TOLGOI LOSES TAX APPEAL, BUT NOT THE ONE YOU'RE THINKING OF
An appellate court has rejected Oyu Tolgoi LLC's appeal against a 2009 tax ruling for MNT 345.7 million
(USD 180,000) tax dispute, which is separate from the USD30 million tax dispute announced in 2014
that was delaying the relaunch of the mine's second phase. The Administrative Appellate Court decision
supercedes a 12 March decision by the Court of Appeals.
Source: News.mn
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SUPREME COURT REJECTS SOUTHGOBI'S REQUEST FOR APPEAL IN $18MN TAX VERDICT
The Supreme Court has rejected SouthGobi Resources Ltd.'s request for an appeal hearing against a
USD18 million tax verdict that has been upheld by courts, said the miner in a 21 May announcement.
The court argued that the Criminal Procedure Law allows only “the defendant, person acquitted, [or]
the victim” may lodge a complaint, although SouthGobi noted that ignores other provisions that allow
civil defendants to appeal. Also, no judicial proceedings in Mongolia are outside of the scope of
supervision
by
the
Supreme
Court,
it
added.
Also announced, China Investment Corp. (CIC) agreed to a deferral until 22 July of 7.9 million in
interest on a convertible debenture due on 19 May. The deferral comes with a fee of 6.4 percent a year
and may lead to proceedings if the new deadline is missed. SouthGobi has also requested a 30-day
extension of its delisting review with the Toronto Stock Exchange until 18 June.
Source: SouthGobi Resources Ltd.
MSE TARGETS 10 IPOS IN 2015
The Mongolian Stock Exchange (MSE) will assist 10 companies in arranging initial public offerings (IPOs)
this year, said the head of the exchange. Following an attempt by the Ministry of Finance to unseat D.
Angar as chief executive of the local bourse, Angar complained of a lack of support from government
keeping the exchange from meeting its full potential, rather than any failures on the MSE’s part. But
that shouldn't stand in the way of the IPO goal. “If we are not able to do this, we will take full
responsibility,”
he
said.
Trade on the stock exchange has grown from up to MNT 10 million a day to MNT 2 billion. Last April, it
recorded a record-breaking MNT 55.5 billion. Still, there is room for improvement, said Angar. He said
only 10 percent of total government securities hit the exchange and government financing is overly
concentrated in the banking sector.
Source: Unuudur
PROPHECY SELLS ALL EQUIPMENT FROM ULAAN OVOO FOR CAD2.4MN
Prophecy Development Corp. on 14 May announced that a wholly-owned subsidiary would sell all mining
and transportation equipment at the Ulaan Ovoo coal mine for some CAD2.4 million. Prophecy has
received about CAD1.7 million through its subsidiary Red Hill Mongolia LLC from an arm's-length party
in Mongolia. The remaining balance of approximately CAD700,000 will be paid in stages as equipment is
taken
from
Ulaan
Ovoo
and
is
expected
to
complete
by
1
June.
Prophecy is currently selling its remaining 80,000 tons of coal at Ulaan Ovoo by contracting with a third
party transportation company. Proceeds will be used to repay borrowed funds from the Trade and
Development Bank of Mongolia LLC and to advance its Chandgana mine-mouth power plant and
Pulacayo silver-zinc-lead projects. Open-pit mining operations at Ulaan Ovoo could restart with a
mining contract with a third party, which Prophecy sees as a more efficient way to run operations.
Source: Prophecy Development Corp.
INDIA TO HELP MONGOLIA SET UP AMUL-LIKE DAIRY COOPERATIVE
When Prime Minister Narendra Modi visited Ulaanbaatar on Sunday, he took along India's best known
food brand, Amul. Amul is all set to help Mongolia develop its dairy sector based on its model of
cooperatives. This follows a visit to Mongolia last month by a team from Gujarat Co-operative Milk
Marketing Federation (GCMMF)—India's largest co-operative that markets Amul. "Our cooperation will
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be for creation of an effective milk procurement system near Ulaanbaatar and Darkhan cities and in
Bayankhongor and Ovorkhangai provinces in partnership with existing rural cooperatives and milk
processing entities," GCMMF's managing director R. S. Sodhi said, while confirming the development.
Amul will help develop training programs for topics such as management of bulk milk cooling systems
and clean milk production, while Mongolia will invite dairy experts to share experiences in areas such
as animal breeding, health, dairy processing and establishing rural cooperatives.
Source: Times of India
TAVAN TOLGOI JSC DISTRIBUTES MNT16.7BN IN DIVIDENDS
Tavan Tolgoi JSC will distribute MNT16.7 billion in dividends, the company announced at a 4 April
shareholders' meeting. Shareholders will receive MNT59 per share for the 2014 fiscal year and MNT200
for 2013.
Source: Mongolian Stock Exchange
MSE RELEASES UPDATED APP FOR APPLE IPHONE
The Mongolian Stock Exchange (MSE) has announced an updated release of its mobile app for the Apple
iPhone. The updated version includes information on members of the MSE's network of brokers,
information on the management of listed companies and historical data on companies' share prices.
The MSE released its first version of the app on the Apple Store in October 2014.
Source: Mongolian Stock Exchange
SOUTHGOBI ANNOUNCES CHANGES TO ITS BOARD
SouthGobi Resources Ltd. on 15 May announced the appointment of two new directors to its board of
directors following the closing of a private placement with Novel Sunrise Investments Ltd. Ningqiao Li,
51, and Yulan Guo, 30, received appointments as non-executive directors, effective 15 May. Also
effective May 15, Bold Baatar resigned as non-executive director and member of the health,
environment, safety and social responsibility committee and the mergers and acquisitions committee
due
to
his
other
business
commitments.
Li is also a director of Novel Sunrise and has almost 30 years' experience in enterprise management,
corporate governance and strategic investment. Guo is a vice president of the investment banking
department of China International Capital Corporation Ltd., a leading investment bank in China and
Hong Kong, where he started his career in 2008.
Source: SouthGobi Resources Ltd.
ICT EXPO 2015
Creative professionals have gathered for the ICT EXPO 2015 conference at the Misheel Expo center in
Ulaanbaatar from 21 to 25 May. “ICT EXPO 2015 will be the largest ever event of this kind in Mongolia,”
reads a promotion for the event, which focused on showcasing the talents of tech companies in
Mongolia. The event includes competitions that test the talents of tech developers of all ages as well
as seminars on a variety of topics.
Source: ICT Expo 2015
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ASIAN YOUTH DISCUSS INVESTMENTS IN MONGOLIA
Some 200 of Mongolia's young business people gathered for the Asia Youth Council's 13th general
assembly on 20 May at the Chinggis Khan Hotel. Discussions throughout the event focused on
development and cooperation in eight sectors such as banking and finance, agriculture and information
technology.
Irmuun Demberel, head of promotions for the Invest Mongolia Agency, opened the event with his
presentation on opportunities for business and cooperation in Mongolia, followed by a speech
from AIESEC International's chief digital officer, Gordon Ching, on strategy and innovation in the Asian
market.
Source: Montsame
Economy
MONGOL BANK: FX AUCTIONS, CURRENCY SWAPS, 1-WEEK BILLS, T-BILLS
The Bank of Mongolia on 21 May reported that it had rejected USD3 million in bids at auction for U.S.
dollars and received no bids for Chinese yuan. Also that day, the central bank accepted an equivalent
of USD35.5 million in bids from commercial banks for a Mongolian tugrug swap.
The Bank of Mongolia on 20 May announced the issue of one-week bills worth MNT77.5 billion at
weighted interest rates of 13 percent a year. Also that day, the central bank reported MNT30 billion in
bids for the issue of 52-week bills with a face value of MNT30 billion. Bills were sold at a discounted
price with an average yield of 15.85 percent a year. Also reported was MNT100 billion in bids for threeyear treasury bills with a face value of MNT100 billion. Bills were sold at a premium price with an
average weighted yield of 16.7 percent.
Source: Bank of Mongolia
OT DEAL IS A BIG WIN FOR MONGOLIA, BUT NO GAME-CHANGER FOR 2015
Mongolia's prime minister’s triumph with a landmark agreement to expand the giant Oyu Tolgoi copper
mine might not deliver a definitive economic impact this year. Andrew Fennell, an analyst at Fitch
Ratings, said the deal will put Mongolia on the road toward economic stability. “We believe this deal
will provide relief to many of Mongolia's key credit weaknesses, principally its strained external
liquidity
and
mounting
refinancing
risks,”
he
said.
But any effect won't be instantaneous. Oyu Tolgoi LLC must still submit a feasibility study and
renegotiate with lenders for a USD4 billion project financing package that expired last year while the
dispute was ongoing. The Asian Development Bank has projected just 3 percent GDP growth for
Mongolia this year, and it doesn't believe Oyu Tolgoi can change that, according to its outlook for 2015.
Instead, it predicts that consensus on the mine could lift growth to 5 percent in 2016.
Source: BNE
MONGOLIAN BONDS SOAR ON OYU TOLGOI DEAL
Mongolia's sovereign bonds jumped three points the morning after the government, Rio Tinto Group and
Turquoise Hill Resources signed an agreement for the next stage of development of the Oyu Tolgoi
copper and gold mining project. The sovereign's 2022 bonds leaped 3.125 points to 92.375 in early
trade, according to Tradeweb prices, while the USD500 million 2020 9.375 percent governmentguaranteed bonds issued last week by Trade and Development Bank of Mongolia LLC (TDB) were at
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105.1/106.1, up nearly three points today and more than five points since pricing on 12 May.
The rally raises further questions about the timing of TDB's issue, which marketed its bonds at a
generous spread over the Mongolian sovereign. TDB priced the 9.375 percent bond at 280 basis points
over Mongolia's sovereign curve, and the bonds rallied three points on the first day of trading. State
Bank LLC is also considering a government-guaranteed offshore bond, and could now expect to pay a
lower yield.
Source: Reuters
MONGOLIA LEANS ON CHINA AS IT WAITS FOR COPPER MINE-LED REVIVAL
Mongolia's deal to expand the USD6.5 billion Oyu Tolgoi mine is a big step towards stabilizing its
economy, but as it waits for the investment boost to feed through, it is leaning on once-feared China to
help shore up its finances. The swap agreement comes with fees and interest paid to the People's Bank
of China (PBOC), but without the strings typically attached to an international bailout. Lkhagvasuren
Amar, a senior economist at the Asian Development Bank, estimated that Mongolia had drawn down an
equivalent of USD1.7 billion out of a maximum $2.5 billion from the currency swap, which he said was
a
“healthy
buffer.”
Bank of Mongolia’s chief economist, S.Bold, said the resolution of the Oyu Tolgoi dispute and other
mining projects could help lift growth this year to between 8 and 10 percent. Others take a more
conservative view. "The resolution of the dispute averts the risk of default," said Fitch analyst Andrew
Fennell. "But by itself, will not turn the corner."
Source: Reuters
WHAT MONGOLIA GAINS FROM RIO DEAL ON OT
It looks like there have been a few concessions made by 66 percent stakeholder Turquoise Hill
Resources Ltd. in order to get the underground phase of the Oyu Tolgoi copper mine built. First off:
Turquoise Hill (where Rio Tinto PLC has majority control) has given up a 2 percent net smelter royalty.
Another on 5 percent of sales will now be calculated on gross revenues, without some deductions. And
there's also a concession that cuts a management fee that Rio will get for some of the development.
Finally, parties have settled a tax dispute. TRQ will pay USD30 million to the tax authorities, instead of
an
amount
of
USD127
million
that
was
initially
calculated.
Overall, says Turquoise Hill, the impact of the deal is less than 2 percent of the USD7.4 billion it
estimates the project to be worth, under "net present value" assumptions made last year for a
feasibility study for the mine.
Source: Financial Times
INDIA TO OPEN $1 BILLION CREDIT LINE TO FINANCE INFRASTRUCTURE IN MONGOLIA
India will open a USD1 billion credit line to bolster Mongolia's "economic capacity and infrastructure,"
the Mongolian and Indian prime ministers announced on Sunday. Indian Prime Minister Narendra Modi
said he hoped his visit would bring closer economic relations that could lead to cooperation in
Mongolia's minerals sector. India has no investments in Mongolia's mines, although Indian companies
have expressed interest in its coal. Modi said economic relations between the two countries had been
modest, though that would change as India grew. "As the Indian economy adds strength to our region
and
the
world,
it
will
also
benefit
Mongolia,"
he
said.
Mongolian Prime Minister Chimed Saikhanbileg said the USD1 billion credit line could be used for
5
expanding the landlocked nation's railway system. Mongolia is building a rail link from its coal mines in
the Gobi desert to overcome bottlenecks in deliveries to China, but it is seeking funding to finish the
job. Saikhanbileg also mentioned establishing a "joint investment fund", but did not elaborate.
Source: Reuters
KOREA TO PROVIDE $30MN IN GRANTS
Korea will grant USD30 million in development this year, said South Korean Ambassador U Sun, when
presenting his credentials to President Tsakhia Elbegdorj in April. The USD30 million will be dispersed
through
various
government
agencies
and
NGOs.
Korea has provided USD300 million in eased lending to Mongolia since 2011 and is Mongolia's fourthlargest trade partner.
Source: Zuunii Medee
PARLIAMENT'S TT WORKING GROUP LOOKS FOR DEAL FOR BUILDING EAST-BOUND RAILWAY
Discussions with a parliamentary working group for the takeover proposal of state-owned miner Erdenes
Tavan Tolgoi LLC by a private consortium have borne the need for the construction of an east-bound
rail route from the mine. The working group reviewing the deal since Parliament Speaker Zandaakhuu
Enkhbold stepped in to block it in April has resolved issues concerning the 1,072 shares promised to
citizens and is still negotiating the handling of the debt to Aluminum Corp. of China. A new item,
however, is the request to build an east-bound railway that would run from Tavan Tolgoi to the
Ereentsav
Mongolia-China
border
point.
When matter are settled, they can again approach the consortium, which is made up of China Shenhua
Energy, Sumitomo Corp. and Mongolian Mining Corp. Japanese engineering firm Nippon Koe has already
finished plans for the 1,300 kilometer rail route.
Source: Mongolia.GoGo.mn
MODI'S MONGOLIA VISIT TO BRING COLOR TO KASHMIRI SHAWLS
Indian Prime Minister Narendra Modi's visit to Mongolia may bring color to sleek, soft and seductive
Kashmiri Pashmina shawls. Artisans and traders associated with shawl trade are awaiting the outcome
of the first-ever prime ministerial visit to Mongolia with a bated breath, hoping Modi will get them raw
wool at reasonable prices at their door step. The shawl industry faces severe shortage of raw domestic
wool as more than 10,000 goats perished in a massive snowfall in 2013. Further, artisans say, even this
meager production is not made available to them, as industry representatives from Ludhiana and other
fabric manufacturing places visit Ladakh and purchase wool from nomads, leaving them high and dry.
“Cashmere from Mongolia usually ranges from 11 to14 microns. We have been buying it from third
country markets. The move to buy directly from the Mongolian market will free us from several
hassles” said Delhi-based shawl trader and manufacturer Zafar Ahmed Bhat.
Source: DNA
BULGARIA TO BUILD $1MN GREENHOUSE IN MONGOLIA
Bulgaria's plan to build a greenhouse for vegetable production in Mongolia worth about USD1 million is
being hailed as an achievement from the visit of President Rosen Plevneliev to Ulaanbaatar. "The
greenhouse to be built here, in the Mongolian capital, will bring Bulgarian know-how in the production
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of vegetables. Hopefully the project will begin taking shape by the end of the year so that we can
actually start opening new markets," said Grudev.
Source: dariknews.bg, Fresh Plaza
MIT PARTNERS WITH MONGOLIAN INSTITUTIONS
The Massachusetts Institute of Technology (MIT) will offer the help of its esteemed staff to improve the
performance of lecturers in higher education. Officials from the Ministry of Education and MIT signed a
memorandum of cooperation on 15 May to partner in joint research and the implementation of joint
programs on innovation and entrepreneurship. Beginning in September, Mongolian professors will work
with MIT counterparts to learn teaching methodologies and work as guest professors. They will also
participate in joint training on issues concerning urban planning.
Source: Montsame
U.S. MEDIA TO PROVIDE MONGOLIAN SCHOOLS SUPPORT FOR TRAINING MODULES
Education authorities have agreed to work with representatives of the U.S. film industry to build a
studio complex that matches standards found in Hollywood. Education, Culture and Science Minister L.
Gantumur met with representatives of groups such as ABC, CBS and ESPN in a meeting prompted by a
request by Hollywood Film School Mongolia LLC to help it introduce the standards of Hollywood into
Mongolia's higher education curriculum. The private film institute has requested permission and support
from the ministry to introduce to Mongolia's state-owned institutions trainings based on teachings of
Hollywood film schools. “If you bring the construction plan of the film complex and a feasibility study,
we will submit a request to the government and will invest in the construction," said Gantumur.
Gantumur noted a system in France where a portion of proceeds from films are transferred to an
education fund. “We need to approve the law on film urgently,” he said.
Source: Mongolia.GoGo.mn
MNT1.9BN BUDGETED FOR NAADAM
Government has budgeted MNT 1.9 billion this year's for the Naadam summer festival to be held from 4
to 15 July. According to plans agreed on this week, 16 cultural events will be held, including a concert
at
Chinggis
Khaan
Square.
Over
5,000
visitors
are
expected
this
year.
The 2015 budget nearly matches the budget for last year.
Source: Unuudur
BUBONIC PLAGUE, RABIES CASES REPORTED
Serious animal-borne illnesses are starting to spread among people in Mongolia with the warmer
weather. Outbreaks of the Bubonic plague have been identified at five counties in four provinces,
according to a 13 May statement from the Zoonotic Disease Research Center of Mongolia. The agency
said 211 people had been bitten by ticks, which can cause the spread of the plague.
Sixty people have been infected with rabies this year. Authorities reported that 200 animals have been
infected with rabies compared with over 700 animals or livestock for all of 2014.
Source: Unuudur
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UB IS CHOKING ON SMOKE
Thirteenth century Mongol conqueror Genghis Khan worshiped the sky as a god and declared it the
source of power as his hordes built the world's most expansive empire. In the last few years, however,
smog and ash have increasingly blotted out the sky here in modern Mongolia's capital. Coal-fired power
plants and the exhaust from the growing number of motor vehicles on Ulaanbaatar's roads are viewed
as the chief culprits, but the city's woes are exacerbated by the tens of thousands of gers clustered
around
the
city's
edges.
The mining booming has brought thousands of foreigners to Mongolia, including about 2,000 Americans.
For their sake as well as to address concern about the global effect of air pollution, the U.S. Embassy
here recently began measuring Ulaanbaatar's air quality at its location in the heart of the city. But
unlike in Beijing, where the monitoring program has been perceived by Chinese leaders as a stick in the
eye, the American efforts have been welcomed by the government and researchers, said U.S.
Ambassador Piper Campbell.
Source: LA Times
INDIA CONFIDENT OF OVERTAKING CHINA’S GROWTH RATE
India is on track to overtake China’s growth with annual expansion of more than 8 percent, says the
country’s finance minister. The Delhi government’s second year in power includes accelerating plans
for economic reform and pledging to resolve tax disputes with investors. “Our growth rates are much
faster, our job creation is faster, our fiscal deficit is totally coming under control, our current account
deficit
has
never
been
as
good,”
said
Finance
Minister
Arun
Jaitley.
Prime Minister Narendra Modi, who visited Mongolia last weekend, and his Bharatiya Janata party won a
landslide victory in last May’s general election on promises to end corruption and rejuvenate India’s
sagging economy. But they have ended their first year facing a tax row with global fund managers,
parliamentary delays to a land law and grumbles from business leaders disappointed by the gradualist
approach to reform. However, Jaitley noted that that outpacing China’s growth “doesn’t give me
satisfaction” as the Chinese economy was still much larger.
Source: Financial Times
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