Shifting from mining dependence to tourism-driven economy www.theubpost.mn

Tourism has the potential to become the main driver of the economy, and Mongolians should pay more attention to developing the industry instead of digging up resources underground to sell it to China and elsewhere.

In recent years, mining has been playing in a critical role in the national economy of Mongolia.

More than 80 percent of Mongolia’s exports were mineral products last year. This proportion is expected to rise in a few years’ time to 95 percent. Mongolia attracts mining geologists and investors due to its known riches and unexplored potential — for copper, coal, gold, silver, uranium, molybdenum. Some 3,476 mining licenses were issued by 2017, according to the statistics.

The Oyu Tolgoi copper and gold mine is the biggest foreign-invested project in Mongolia with its initial and second phase investment amounting to well above 10 billion USD. The mine is expected to become the world’s third-largest copper operation at peak production in 2025, with an output of over 550,000 tons per year. It is also expected to comprise a large portion of the country’s economy, well over a quarter.
Although the income from mining is increasing with the underground phase of the Oyu Tolgoi project’s in progress, the developments and riches coming into the nation has not reached the large majority of the population, only going to those in the mining sector and industries that complement it.

The International Monetary Fund data shows that the economy only grew one percent in 2016, a sharp drop since the 17.5 percent growth in 2011. This was mainly caused by vulnerability to external factors such as global commodity prices. To prevent future volatility, the country needs good policies and laws that bring long-term profit and business opportunity, not one-time cash handouts and short-term welfare. For instance, after pledges made during the 2008 elections, every Mongolian, rich and poor, received 21,000 MNT in cash handouts for many months, which left the country hungry for more while inflation rates soared giving additional burden to the most vulnerable groups in the country.

Mongolians shouldn’t forget that every economic sector has been receiving foreign loans to some degree and foreign debt has reached as much as 26.2 billion USD as of the third quarter of 2017, according to Mongol Bank.

So far, the public is critical of the benefits mining has brought the nation, becoming increasingly frustrated by the lackluster reach of the country’s development. Herders who rely on the land are increasingly growing hostile to mining development in their area as it drains local water reserves and leaves the environment degraded. Umnugovi is a prime example of this issue, where the major mining developments such as Oyu Tolgoi and Tavan Tolgoi are located. The few water reserves available in the area have become depleted and pollution caused by mass transport of mineral goods have severely degraded the grazing land.

Due to these issues related to mining, Mongolians are becoming disenchanted with the prospects offered by the extractive industry and are increasing looking to other industries to drive the economy.

Many are pointing to tourism as Mongolia’s salvation towards diversifying away from mining. Today, tourism is a major source of income for many countries.

In 2017, a total 542,989 foreign visitors came to Mongolia, with 471,239 coming for tourism purposes. The number of foreign visitors in Mongolia had increased by 71,750 (13.21 percent) in 2017 compared to 2016, and the number of tourists increased by 66,938 (14.21 percent). Currently, the Mongolian tourism is said to be worth at least 400 million USD.

The number of tourists has been fluctuating in recent years, but incremental improvements have been observed. This sluggish growth is nothing compared to the vast potential offered by Mongolia’s abundant natural attractions.

There are many beautiful sceneries and historic landmarks in every province, but tourists have been visiting only a few provinces – mainly Tuv, Uvurkhangai, Arkhangai, Umnugovi and Khuvsgul provinces. It is also important to note that tourists only head to Mongolia during summer, which means tourism companies struggle to sustain operations during colder months. According to latest data, there are around 200 tourism companies actively operating out of 713 registered entities. Over 50,000 people are said to work in the tourism industry of Mongolia.

When discussing the development of tourism, the service industry is of vital importance. Services of taxi companies, hotels, malls, roads, sanitary requirements, safety, and the management of wastes all around the country need to be improved and made friendly to foreign visitors in order to attract and convince them to come back.

Furthermore, winter tourism might be a key economic factor for boosting tourism in general throughout the year as Mongolia’s four seasons offer the potential for drastic growth in outdoor winter sports.

“If we want to try sustainable tourism, we need to have income coming in during all four seasons,” said, the former head of the Department of Tourism Policy Implementation and Coordination at the Ministry of Sports, Culture and Tourism.

In an attempt to increase tourists coming into the country during winter, Mongolia has been boosting efforts to develop winter attractions in recent years.

Mongolia says can build power plant to supply Oyu Tolgoi mine www.mining.com

ULAANBAATAR, Feb 20 (Reuters) – Mongolia can build a power plant at its Tavan Tolgoi coal mine by 2021 to supply the Oyu Tolgoi copper project, energy officials said on Tuesday, as the government seeks to hold Rio Tinto to an agreement to use Mongolian power.

Aspire Mining : reignites coking coal flame in Mongolia www.4-traders.com

Perth-based Aspire Mining is racing towards production in Mongolia with its Ovoot, coking coal project that is expected to churn out high value coal suitable for steel making.

Long-time followers of the company will recall that in 2011, Aspire was a sharemarket darling with a market cap of $600 million, based on the strength of its high-grade coking coal deposit in western Mongolia that lies within proximity of hundreds of Chinese steel making plants.

With a massive JORC resource of 255 million tonnes, Ovoot promised a bonanza for Aspire shareholders, however it would be necessary to first build a US$1.25 billion railway line to take the companys coal 550kms east to the railway hub of Erdenet.

Aspire formed its own infrastructure company, Northern Railway LLC, to build and operate the line and it is continuing to progress that project in partnership with a couple of heavyweight Chinese players.

In 2014 however, a strategy was devised to get into production quickly with the acquisition of the smaller but development-ready Nuurstei coking coal deposit to the east of Ovoot, with product to be trucked 430km to Erdenet and then south by rail to China or possibly north to Russia.

In June 2016, Aspires fortunes changed dramatically after China began closing steel mills to remove overcapacity in the market. Within six months, domestic coking coal prices had doubled, bringing them back within sight of 2011 prices.

Just as significantly, Chinas Communist Party Congress produced the One Belt One Road initiative along with the Governments of Mongolia and Russia which identified a northern rail corridor opportunity that would pass directly by Aspires Ovoot deposit.

In November 2017, Aspire moved to seize the day by raising $16.5 million in a six-for-five entitlement issue, fully underwritten by Patersons Securities. Directors also negotiated a reduction in debt owed to major shareholder Noble Group down to US$1.8 million, completing a transformation of the companys balance sheet.

The funds will be used to bring Nuurstei into production by mid-2019 and generate a cashflow lifeline to sustain the business while it kick-starts the main game of getting the Ovoot deposit to market via rail.

Chinas interest in developing a northern rail corridor through Mongolia to Europe has made it easy for Aspire to attract some very big partners.

In October 2017, Aspires 90%-owned subsidiary, Northern Railway, signed an MOU with Chinese state-owned infrastructure giant China Gezhouba Group to complete the second stage of a bankable feasibility study on the Ovoot to Erdenet railway.

Under the agreement, China Gezhouba Group had until 15 February 2018 to take up an option to purchase a 51% stake in Northern Railway, reducing Aspires stake to 34%.

In an update last week, Aspire reported it had extended the option exercise date to 15 May to allow China Gezhouba Group time to confirm future capacity guarantees for freight from Northern Railways along the Trans Mongolian Railway.

The update noted that the operator of the Trans Mongolian Railway had already confirmed Northern Railways was part of its 2030 development plan.

In other good news, China Gezhouba Group has confirmed the bankable feasibility study will be ready by the end of this month, at least a month earlier than the deadline.

It looks like there will be plenty of news flow from Aspire over the coming months as it seeks to implement a staged strategy that should culminate in a long-term coking coal project being built that is exquisitely wedged between energy hungry China and industrial Russia.

World Bank gives USD 400 million to support Mongolian SMEs www.montsame.mn

Ulaanbaatar /MONTSAME/ In the frame of the Mongolia Export Development Project, the World Bank has rendered financial support to over 20 small- and medium-sized enterprises (SMEs) worth USD 400 thousand.

Commodity prices see some increases in early February www.gogo.mn

The price of coking coal in China's eastern regions was 244 USD per ton (for Australian coal) at the beginning of February.

Putin signs law on extension of capital amnesty for Russian businesses www.rt.com

Russian President Vladimir Putin has signed a package of laws extending a capital amnesty until February 28, 2019. It allows Russians to voluntarily declare assets and accounts in banks.

TOP20 Index raises by 0.44 percent www.montsame.mn

Ulaanbaatar /MONTSAME/ In trading of February 19, the Mongolian Stock Exchange sold 57,754 pieces of shares of 19 companies which are listed in the first, second and third categories.

Rio Tinto weighing power generation options for Oyu Tolgoi, Mongolia www.mining-technology.com

Rio Tinto is considering options to develop domestic energy generation for the Oyu Tolgoi operation after the Government of Mongolia terminated the power sector cooperation agreement (PSCA) for the country’s southern region.

Diesel import increases but drops in gasoline import www.montsame.mn

Ulaanbaatar/MONTSAME/ According to the Statistics Division of the Mongolian Customs General Administration, Mongolia imported 19 thousand tons of auto gasoline last month, with a decrease of 10 thousand tons against the same period of previous year.

Cabinet cancels energy cooperation agreement with Oyu Tolgoi www.gogo.mn

The Government of Mongolia has cancelled a 2014 agreement signed with Oyu Tolgoi (OT) regarding the mine's energy needs.