Congo shocker fells Ivanhoe Mines stockIvanhoe Mines, headed by billionaire mining financier Robert Friedland, ended down 11.3% on the Toronto Stock Exchange on Wednesday, not far off its lows for the day.

The Vancouver-based company, worth C$2.8 billion after the day's losses, is in partnership with China's Zijin Mining on the Kamoa-Kakula copper deposit in the Central African nation. Kamoa-Kakula is considered the largest high-grade copper project in development globally with a copper resource of more than 30m tonnes.

Ivanhoe is also building a new operation at Kipushi, a past producing zinc-copper mine in partnership with Congo's state-owned Gécamines. Ivanhoe's most advanced project Platreef platinum is located in South Africa.

Firms operating inside the country which includes Glencore, Randgold Resources, China Molybdenum, Eurasian Resources Group, MMG and others will immediately be subjected to higher royalties on metals including copper, cobalt and gold, as well as a new 50% tax on so-called super profits.

Super profits are being defined as income realized when commodity prices rise 25% above levels included in a project's bankable-feasibility study. Given the improvement in the price of most metals over the past couple of years – copper is up 67% since January 2016 and zinc +130% – having to deal with the new levy is more than just a possibility.

As for the cooperation between the International Monetary Fund (IMF) and Mongolian Government, Mr Masa Igata noted that the sides need to negotiate to further the terms to ease public frustration.

We held Mongolian investment forums in Hong Kong, London, Ulaanbaatar and Tokyo last year. The investors had positive approach for Mongolia.

He added, “In order to implement more efficient economic partnership with Japan, it is important for the Government to hear the suggestions of Mongolian and Japanese private sector. Although taxes on several import products have been reduced, business entities are facing more challenges. There is a risk in the legal environment due to fast approval of some bills. It is possible that the laws did not take certain stakeholders’ positions into account.

Law making process has to be complex and consider the interest of policy makers and business representatives. This can prevent possible loopholes. I think certain bills have been rushed; however, I do no think it is increasing risk for the investors. We held Mongolian investment forums in Hong Kong, London, Ulaanbaatar and Tokyo last year. The investors had positive approach for Mongolia.

MNT rate started to stabilize, so the financing cost has reduced. Furthermore, thanks to repaying foreign debts on time, foreign investors are still interested in Mongolia. Presently, the investors are waiting for the asset quality review (AQR) of Mongolian commercial banks. Although it was scheduled to be disclosed last year, it has not been disclosed yet. The investors’ trust will restore further with the transparency that follows the AQR.”

Baigal.G, Bilig.B

Click on the link if you want more detailed information http://www.mongolia-gold.com/
Contact: 7011-1106, 8911-3499, 9191-1383

At the meeting, Isabel Chatterton said that the World Bank and international banking and financial organizations highly recognize actions being taken by the Investment Protection Council established under the Government of Mongolia.

She also expressed a willingness to conduct joint projects and programs to enhance the Council’s activity.
Moreover, the IFC is interested in providing advisory service to a project on construction of new Central Wastewater Treatment Plant of Ulaanbaatar, which will be implemented with Chinese loans.

The IFC intends to cooperate in formulating plans and selecting contractor and in direction of operating the plant efficiently at lowest cost.

M.Unurzul

This mailbox subsidiary enjoyed a very low average effective tax rate of 4.19% over the past years, likely due to a beneficial tax ruling with Luxembourg’s tax authorities. As a result of this tax scheme, Rio Tinto’s subsidiary Movele has paid US$89 million in taxes in Luxembourg, which is US$470 million less than what would have been paid in Canada, if no tax avoidance scheme had been employed. The company reports that this arrangement was approved by Canadian authorities.

In addition, Rio Tinto and the other corporate investors behind Oyu Tolgoi achieved far-reaching concessions from the Mongolian government which severely limit the tax revenues Mongolia can hope to receive from the mine. Under pressure, the government of Mongolia facilitated Rio Tinto’s use of benefits enshrined in tax treaties with Luxembourg and the Netherlands;tax treaties which Mongolia unilaterally rescinded in 2013 due to concerns that they facilitated tax avoidance. Rio Tinto was able to negotiate an even lower tax rate in 2015, after a dispute over the distribution of Oyu Tolgoi’s revenues. As a result, the Mongolian government has missed out on approximately US$230 million in taxes over a five-year period.

Khurelbaatar Chimed, Minister of Finance, remarked “Since the International Monetary Fund (IMF) staff team’s arrival, we have been negotiating for 5 days. The personal income tax has been raising public frustration. Therefore, we reached a deal with the IMF to revert the marginal tax bracket to effective tax rates. The minimum retirement age has also been reverted for the elders to choose when to retire. We are now working on reforming the General Taxation Law, Laws on Corporate Tax and Income Tax. Business entities are the foundation of the tax system. We will prepare more understanding law for them.”

Prime Minister Khurelsukh Ukhnaa said “We are allowing the elders to choose retirement at the age of 60 for males and 55 for females. If the individual is working under difficult conditions, they can retire at the age of 55 for men and 50 for women. Secondly, tax brackets have been returned back to the previous rates and the taxes paid in January will be refunded. We chose to work with the IMF.

Accordingly, the economy has showed a sign of recovery and we have repaid the Development Bank of Mongolia’s USD 580 million and 5-year Chinggis bond’s USD 500 million debts on time. Mongolia’s economy falls when commodity prices drop due to the heavy reliance on the mining sector. The reputation of our neighbors in the international organizations also have negative impact. Therefore, we will focus on two objectives. First of all, to maintain financial discipline of public services; and secondly, to stop economic downturn. We will accomplish this by reducing budget expenditure and increasing the revenue I note that national producers’ roles are significant in repaying foreign and domestic debts.” According to the PM, Mongolia’s annual domestic consumption of gasoline is around 1.1 million tons, of which 98 percent is being imported from Russia and 2 percent from China. Therefore, the PM announced to start the construction of an oil refinery in 2018.

Furthermore, PM shared that he is planning to submit a bill on prohibiting the transportation of raw coal to Ulaanbaatar city starting from April 2019 and is estimating the bill will reduce air pollution by 50 percent.

Tugsbilig.B

“In addition to the environment, these considerations also include the interests of other parties concerned, such as the shipping and tourism industries.”

Nord Stream 2 still needs to receive permission from other countries whose territorial waters will accommodate the pipeline. They include Finland, Sweden, and Denmark.

Running from Russia to Germany under the Baltic Sea, the Nord Stream 2 would double the existing pipeline’s capacity of 55 billion cubic meters per year. In Germany, it will connect with gas pipelines within the European Union for onwards transportation.

Initially, Russia’s Gazprom intended to have a 50 percent plus one share in the company, with the rest of the shares divided between Germany’s Uniper and Wintershall, Austrian OMV, France’s Engie, and Anglo-Dutch Shell. US sanctions against Russia and European red tape prevented the companies from participating in the project directly, but they have pledged to remain in the project and finance it anyway.

Gazprom recently said that construction of the pipeline was on course to be completed in 2019.

"There are huge trade opportunities in China that we want to help British businesses take advantage of," May said in a written statement ahead of the trip. "My visit will intensify the 'Golden Era' in U.K.-China relations."

Britain, the world's sixth largest economy, sends just 3% of its exports of goods and services to China. Meanwhile, just 7% of its imports are from China.

The total annual value of U.K.-China trade is about $84 billion, much less than the $211 billion in trade between Germany and China.

May, who will be joined by 50 representatives from businesses and trade groups, leads a government that hopes to strike new trade deals following its planned departure from the EU.

Analysts say there are ample opportunities for more trade with China. But a full, formalized trade deal could take five to 10 years to sign after Brexit.

"A post-Brexit China-U.K. trade deal could accelerate trade growth and benefit both economies -- but a deal would unlikely to be struck before 2025," said Ian Mitchell, a senior policy fellow at the Center for Global Development in Europe.

Britain's main exports to China are cars, petroleum products and tourism services, while it mostly imports Chinese manufactured goods, telecommunications equipment, clothing and electronics.

Experts say these imports have put pressure on domestic U.K. industries.

"Rising import competition from China is likely to have hastened the decline of U.K. manufacturing, particularly in those areas of the U.K. that specialized in the production of the same type of goods that we import from China," said researchers at the National Institute of Economic and Social Research.

In order to even out the relationship, experts hope May will focus on improving market access for Britain's vast professional and financial services industry. Language barriers and regulatory differences mean this is a largely undeveloped area.

Jon Geldart, a China expert at the tax and advisory services firm Grant Thornton International, said that May should also promote British design, technology, high-tech engineering, environmental services and craft beer.

"I hope we'll be able to attract further investment and showcase what Britain is good at," he said.

"China was interested in the U.K. as a sympathetic voice inside the EU. Brexit means the U.K. counts for far less," said Peter Holmes, a trade expert at the University of Sussex. The "Chinese [are] unlikely to brush May off, but she can't expect much."