Why markets don't like US investment restrictions on China www.cnn.com

The Trump administration is expected to announce limits on Chinese investment soon — a move that is shaking the business world.
The news is a big deal. President Donald Trump's trade clash with China has already fed global economic uncertainty. The new restrictions would take that fight to new levels.

But how did we get to this point in the first place? And what about the restrictions makes Wall Street so worried?

Here's a look at what you need to know.

Trump piling pressure on China
The United States has long accused China of intellectual property theft, which it says has cost the US economy billions of dollars in revenue and thousands of jobs.

The Trump administration is now seeking to pressure China to stop practices that it says unfairly extract tech secrets from American companies. Part of the US response includes imposing new tariffs on $50 billion of Chinese goods, some of which are set to go into effect next month.

But US authorities have also been looking into investment restrictions. In March, Trump directed Treasury Secretary Steven Mnuchin to devise a system that would limit Chinese investment "in industries or technologies deemed important to the United States."

The focus is thought to be on "Made in China 2025," which is Beijing's plan to dominate industries of the future such as robotics, electric cars and aerospace.

In May, the White House said that specifics of its plan — as well as stronger export controls that would stop US firms from shipping certain technologies to China — would be officially announced by June 30, which is this Saturday.

New details and a market sell-off
The public got a sense of those specifics late Sunday, when the Wall Street Journal reported how the new restrictions might work. CNN confirmed some of those details Monday.

Firms with at least 25% Chinese ownership would be barred from buying companies that are involved in technology that the White House considers important, according to a person familiar with the plans who spoke to CNN. That includes the aerospace, robotics and automotive industries.

The Trump administration is also working on new export rules that would prevent those technologies from being shipped to China, the person said.

The markets weren't happy. At one point Monday, the Dow fell almost 500 points.

Amid the sell-off, Mnuchin tweeted that reports on the investment restrictions were "false, fake news." He suggested that the measures would be "not specific to China, but to all countries that are trying to steal our technology."

White House trade adviser Peter Navarro later appeared on CNBC, where he also cast doubt on news reports and added to the uncertainty over what will be announced this week.

"There's no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan," he said. "So this whole idea that somehow there's gonna be investment restrictions to the world, please, discount that."

That seemed to reassure investors somewhat, though the market anxiety didn't completely disappear. At the close, the Dow was down 328 points, or 1.3%, while the Nasdaq dropped 2.1%.

Still, investors fear Trump's China trade fight could hurt the US economy, setting off a series of escalating retaliatory moves by both sides.

The new investment rules could cut off access to some foreign capital — exactly the type of government intervention that scares businesses.

Chinese investment in the United States is already declining.

Investment plunged more than 90% in the first five months of 2018 compared with the same period a year earlier, according to a report last week by Rhodium Group, a research firm that tracks Chinese foreign investment.

The rules would also represent a major departure from the way foreign investment in the United States has been regulated for years.

Right now, that duty falls to the Committee on Foreign Investment in the United States, or CFIUS. The inter-agency panel, which is chaired by the Treasury Department, scrutinizes some deals that could allow a foreign investor to take control of a US business, and looks for potential risks to national security.

That panel has become more aggressive under Trump, especially on China. Experts say CFIUS has examined a greater number of deals, while paying particular attention to partnerships that could give foreign companies access to sensitive technologies or personal data on Americans.

CFIUS could become more powerful in the near future. Congress is considering legislation that would expand the panel's authority. The measures have bipartisan support and the backing of top Trump administration officials.

That effort has already faced tough lobbying from businesses, according to one of its sponsors. In corporate America, a unilateral approach by the Trump administration to restricting investment could be even more unpopular.

-- CNN's Jethro Mullen, Matt Egan and Kevin Liptak contributed to this report.

Petro Matad provides update on its planned 2018 Mongolia work programme www.energy-pedia.com

Petro Matad, the AIM quoted Mongolian oil explorer, has provided an operational update for its planned 2018 work programme:

Highlights

Rig mobilisation has been completed ahead of the drilling of the Snow Leopard-1 well in Block V. The well is expected to spud during the week commencing 9 July 2018
Permits are in place for the second well, Wild Horse-1 in Block IV. The well will be drilled after operations are completed at Snow Leopard and site preparation is scheduled to start during August with well spud forecast in September 2018
Negotiations on the rig contract for Block XX drilling are at advanced stage, with drilling on track to commence in late Q3 / early Q4 this year
Management will be hosting a presentation for investors in the week commencing 9 July 2018, a notice and further details will be issued closer to the time
Drilling

All permits, including foreign worker visas, are in place for Snow Leopard-1 drilling operations. Well site construction has been completed and an onsite water well has been drilled to supply the rig's operational requirements. The circa 1,100 kilometre rig move is 100% complete and the drilling camp is substantially in place. The rig is approximately 35 per cent rigged-up. Spud of the well is expected during the week commencing 9 July 2018.

Key Company personnel have been on location for several weeks to ensure Company policies in relation to environmental protection and safe working practices are followed during the unloading and rigging-up process. They will remain on location throughout the drilling programme, augmented by the Company's technical and supervisory specialists.

The Snow Leopard-1 well, which is targeting 90 MMBO, is planned to drill to a total depth of circa 3,350 metres and is expected to take up to 70 days to complete.

Immediately following the drilling of Snow Leopard-1, the rig will be moved circa 300 kilometres West to the Wild Horse-1 well location in Block IV. The Wild Horse-1 well, which is targeting 480 MMBO, has been named by industry specialists Wood Mackenzie as one of the top 20 exploration wells worldwide to watch in 2018. Well-site construction is due to commence in August 2018. Wild Horse-1 is expected to spud in September and to be completed before the end of the 2018 drilling season in late November.

Pending shareholder approval of the recently announced fundraise, being sought at the General Meeting on the 3 July 2018, the Company intends to enter into negotiations with Sinopec to extend the rig contract for drilling of the Fox prospect in Block V. Subject to these negotiations the Company anticipates drilling the Fox-1 well at the start of the drilling season in early Q2 2019. The Fox prospect is a large three-way dip closure against normal faults in a basin with a proven petroleum system and has mean prospective resource potential of 200 MMBO. It has been matured to drillable status based upon interpretation of the high-quality 3D seismic survey acquired in late 2017.

The drilling programme scheduled for Block XX remains on track. Contract negotiations with the preferred bidder to supply and operate a rig are in the final stages. Formal award of the contract is expected by the end of July. The selected rig is in country, is operating close to Block XX and is available from Q3 2018. Permitting for drilling is progressing and the first well, on the Gazelle prospect, is planned to spud in late Q3 or early Q4 2018. The target for the second well will be selected shortly, upon completion of detailed seismic remapping. The Company intends to complete both Block XX wells before the end of the 2018 drilling season, which ends in late November, and to retain the services of the rig to drill the Red Deer prospect in Block XX at the start of the 2019 drilling season. Red Deer has 48 MMBO of prospective resource potential in a basin which the Company believes to be stratigraphically analogous to nearby producing basins in Mongolia and northern China.

The Company is also negotiating a contract with a well testing specialist operating in Mongolia. The contractor has a dedicated service rig and equipment that will allow, where appropriate, the drill stem testing of any zones of interest identified in the wells drilled in Blocks IV, V and XX.

In parallel with operational efforts, the farm out process has progressed and discussions are continuing with potentially interested parties. There is no certainty that a deal will be completed at this stage and a further update will be provided as appropriate.

Mike Buck, the CEO of Petro Matad said:

'I would like to thank shareholders for their continuing support. It has been a long road travelled to get to the point of drilling, which is finally upon us. With the funding the Company secured in January and, pending shareholder approval of the fundraise conducted earlier this month, the next twelve months will see us execute a multi-well, high impact drilling programme utilizing two rigs and targeting prospects in a number of risk independent basins. This campaign will tell us a lot about the potential of our extensive acreage portfolio in Mongolia and we are very keen to get started. It is my intention to hold a meeting/conference call for shareholders in the week commencing 9 July to present details of the programme and to answer questions arising. Details of this event will be announced shortly.'

European countries are open for transporters www.montsame.mn

Ulaanbaatar /MONTSAME/ The Ministry of Road and Transport Development is working on establishing intergovernmental agreements on international road transportation with Germany, Poland, Hungary, Slovakia, Lithuania and Georgia.

Mongolia to increase renewable energy capacity by 120 MW this year www.akipress.com

Four renewable energy power plants with a total of 120 megawatts (MW) will be put into operation in Mongolia's southeast province of Dornogovi within this year, Xinhua reported citing provincial governor's office.

S. Korean fast-food chain Lotteria opens in Mongolia www.koreaherald.com

South Korean retail giant Lotte's fast-food chain, Lotteria, opened its first Mongolian store in the country's capital city of Ulaanbaatar last week, its operator said Monday, as the company moves to expand its presence in the global market.

Lithium demand from battery makers to almost double by 2027 www.mining.com

The outlook for lithium continues to shine, with demand from companies that produce batteries to power electric cars, laptops and other high-tech devices, expected to increase more than thirtyfold by 2027, a new study shows.

BoM: Foreign currency reserves sufficient to limit sudden exchange fluctuations www.gogo.mn

On June 22, Bank of Mongolia held an irregular foreign currency auction and supplied 88.7 million USD to commercial banks.

Summer, halts at mines hurt coal www.chinadaily.com.cn

Coal supplies in China will continue to be tight and prices will stay high due to suspension of production at mines and tighter import controls since April, analysts said.

"The price of thermal coal has been driven up by rising demand and tight supply," said Zhu Yi, a Hong Kong-based analyst at Bloomberg Intelligence.

"While demand from power plants increases on hot weather and will continue to be high in the peak season of summer, supply has been tight due to production suspension as the government implements stricter environmental checks."

Zhu estimated that supplies may improve in the second half of this year, and high demand will likely ease after the peak season, so coal companies may yet post profits this year.

China's power producers have been challenged by extreme weather this year, including the cold snap in January and the heat wave in May. This increased coal imports by 8.2 percent to 121 million metric tons in the first five months of this year.

Coal prices kept surging as a result. Thermal coal prices at ports along the Yangtze River Delta reached 700 yuan ($107.7) per ton as the heat wave stoked demand in China.

The National Development and Reform Commission, China's top economic planner, said earlier coal prices ranging between 500 yuan per ton and 750 yuan per ton can be considered reasonable.

The commission has vowed steps like increased supply and regulatory efforts to stabilize coal prices. It said the recent rally in coal prices was not supported by market fundamentals.

Two major coal-fired power producers have banned spot purchases of thermal coal above certain prices amid a bearish outlook for the market in the coming months, a Reuters report said.

Adequate stocks of coal at power plants and consumption of more clean energy will help prevent a surge in coal prices, while China will also take multiple measures to stabilize coal prices, like augmenting production and introducing more efficient capacity, said the commission.

Plans are also being made to improve rail capacity for coal transportation from miners in the western regions to coal-fired power plants in eastern parts of the country.

The state planner expects coal output in Shaanxi, Shanxi and Inner Mongolia autonomous region, the country's main coal producers, to increase by about 250 million tons this year.

The three regions saw their combined coal production reach 2.3 billion tons in 2017, or two-thirds of China's total coal output.

Strong demand and rising plant utilization have driven up coal consumption, brightening China's power-sector prospects this year, said Joseph Jacobelli, a senior analyst of Asian utilities at Bloomberg.

"We think demand will rise at least 6 percent this year, slower than last year's 6.6 percent but enough to allow average utilization rates to increase," he said.

"Coal generators will continue and even accelerate their investments to build renewable energy assets, bolstering utilization of hydro, nuclear, solar and wind resources, so as to ensure top-line growth and boost profitability."

Ministry of Food, Agriculture and Light Industry to cooperate with OECD www.montsame.mn

Ulaanbaatar /MONTSAME/ Minister of Food, Agriculture and Light Industry, B.Batzorig received representatives headed by William Tompson, the head of the Eurasia Division, the Organisation for Economic Co-operation and Development (OECD) .

India, Mongolia to Cooperate in Air Connectivity, Trade www.india.com

New Delhi, June 25: India and Mongolia have agreed to step up cooperation in areas like air connectivity, trade and economic cooperation, energy security, mining and traditional medicine as part of sustained high-level bilateral exchanges, an official statement said. The decision was taken during Union Home Minister Rajnath Singh’s official visit to Mongolia from June 21-24, said the Home Ministry statement.