UN Secretary-General António Guterres today arrived in Ulaanbaatar, Mongolia for his 3-day visit.

The Secretary-General was welcomed at Chinggis Khaan International airport by Minister of Foreign Affairs of Mongolia B.Battsetseg.

Within the framework of his visit, the UN Secretary-General will pay a courtesy call on President U.Khurelsukh and hold meetings with Speaker of the State Great Khural G.Zandanshatar, Prime Minister L.Oyun-Erdene and Foreign Minister B.Battsetseg. Moreover, he will take part in a tree planting ceremony to recognize the ‘One Billion Trees’ initiative and learn about Mongolia’s culture and traditions.

It is the first visit by the UN Secretary-General to Mongolia since Ban Ki-moon’s visit in 2009.

China’s State Councilor and Minister of Foreign Affairs Wang Yi today paid a courtesy call on Prime Minister of Mongolia L.Oyun-Erdene.

While underscoring that the development of good neighborly relations and mutually beneficial cooperation with China is the top priority of Mongolia's foreign policy, Prime Minister Oyun-Erdene said that he is satisfied with the fact that the parties have maintained the frequency of high-level meetings and visits, and discussed and resolved issues of bilateral cooperation in a timely manner even during the difficult times of the pandemic.

During the meeting, the sides exchanged views on increasing the capacity of border checkpoints, creating new railway routes, increasing the export of mining products, and creating new sources of energy within the framework of the ‘New Revival Policy’, which is aimed at stimulating post-pandemic economy.

Both parties agreed to intensify the construction of the Erdeneburen hydropower plant project. Also, the Chinese side took into account the request regarding the connection of the Khangi-Mandal border checkpoint by railway.

Foreign Minister Wang Yi expressed his gratitude to Prime Minister Oyun-Erdene for receiving him and conveyed the greetings of Premier of the Chinese State Council Li Keqiang. He noted that China and Mongolia are friendly neighbors connected by mountains and rivers, while expressing his satisfaction with the constant development of bilateral relations and cooperation, the frequency of high-level reciprocal visits, and the deepening of cooperation in all fields.

He then expressed that the Chinese government will provide all-round support to accelerate the implementation of projects and programs being implemented with the grants and concessional loans provided by the Chinese government.

Minister for Foreign Affairs of Mongolia B.Battsetseg and Minister of Foreign Affairs of China Wang Yi have held official talks and made a joint statement today.

At the press conference, Minister B.Battsetseg said, “Within the framework of talks on Mongolia-China friendly relations and cooperation, the parties reviewed the cooperation between the two countries and discussed economic and border issues and regularization of the frequency of visits. The parties agreed to strengthen friendly relations and comprehensive strategic cooperation between the neighboring countries amid the pandemic and unstable international relations situation. Furthermore, the parties agreed to deepen the mutually beneficial cooperation between Mongolia and China in all sectors. Specifically, conditions are being created for the export of mining products in a stable period by connecting the border port with a railway and creating a new gateway.

Both parties agreed to intensify the construction of the Erdeneburen hydropower plant project.

During the talks, the parties emphasized the achievement of a goal of increasing bilateral trade turnover to USD10 billion, and concluded that trade can be further increased. The parties also exchanged views on exporting agricultural products, advancing the progress of joint construction projects, and increasing cooperation in oil products.

Moreover, during the official talks, the issue on connecting Gashuunsukhait - Gantsmod checkpoints by railway has been finalized and a long-term coal supply agreement was signed with China. The issues such as increasing the train exchanges on the Zamyn Uud-Erlian checkpoints, improving the border checkpoints capacity, and developing the checkpoints were discussed.

The parties agreed to jointly implement projects within the framework of the ‘One Billion Trees’ national movement as agreed by heads of state of the two countries. In the humanitarian sphere, an agreement was reached to continue the in-person study of Mongolian students in China and to facilitate mutual travel of citizens. Our two countries are actively cooperating within the framework of the United Nations and other international organizations, and we will continue to cooperate in this direction."

Chinese Foreign Minister Wang Yi said, “I am happy to visit Mongolia again in two years. Our two countries are good neighbors, partners and friends who overcome difficulties together and are ready to build strong partnerships in the future.

During the talks, the parties reaffirmed their mutual respect for the sovereignty, independence and territorial integrity of each other. We will also respect each other's fundamental interests. The Mongolian side reaffirmed its strong support for the ‘One China’ policy.

The parties expressed willingness to strengthen border cooperation and cooperate in opening border ports, intensifying infrastructure cooperation such as railway and highways, and maintaining the transport network between the two countries.

During the official talks, the two sides also signed a memorandum of understanding on the cross-border rail line between Gashuunsukhait and Gantsmod ports, which will play an important role in the development of Mongolia.

The parties also agreed to advance the work of the Erdeneburen Hydropower Plant and cooperate in environment sector. An agreement was reached on the joint implementation of projects for the construction of housing complexes in the Ger districts of Ulaanbaatar, the construction of water treatment facilities, a plant for processing meat and meat products.

China and Mongolia have stepped up cooperation to fight the pandemic, protect people's health and life, increase the frequency of direct flights between the two countries, and support Mongolian students in China to study in classrooms."

Mongolia confirmed 179 new daily COVID-19 infections for the past 24 hours.

136 of them were revealed among persons who had contacts with the infected in Ulaanbaatar, 43 cases were confirmed in regions.

No new linked deaths were reported in the country in 24 hours.

The death toll of Mongolia from the virus stands at 2,123 as of Aug 8.

Erenhot, the largest land port on the China-Mongolia border, has logged 10,000 China-Europe freight trains since the cross-border railway service via this port was launched in 2013, according to the local railway authorities.

The 10,000th train passing through the port left for Malaszewicze in Poland at 12:30 p.m. Saturday, fully loaded with 50 40-foot containers.

"It took over eight years for the number of China-Europe freight trains handled by the port to reach 5,000, and only less than two years for it to grow from 5,000 to 10,000," said Qin Zhicang, with the Erenhot rail port under China Railway Hohhot Group.

The port in north China's Inner Mongolia Autonomous Region now serves 58 China-Europe freight train routes. The routes reach more than 60 destinations across 10 countries.

Canada’s Turquoise Hill Resources (TSX, NYSE: TRQ) flagged after markets closed on Thursday a $200 million cost increase for the ongoing expansion of the massive Oyu Tolgoi copper-gold mine in Mongolia.

The Montreal-based company currently estimates its base case incremental funding requirement at $3.6 billion, up from the $3.4 billion forecast at the end March.

Turquoise Hill said the updated cost and schedule for the ongoing underground expansion of Oyu Tolgoi incorporates the known, incremental covid-19 cost impacts, associated taxes and an estimate of further pandemic-related management costs over the remaining development schedule.

It means that the project total cost has climbed to $7.06 billion, almost $1.8 billion higher than the original estimate in 2015.

As of the end of the second quarter, the firm had invested a total of $5.3 billion in the Mongolian asset, leaving the $1.8 billion remaining.

Mining giant Rio Tinto (ASX, LON, NYSE: RIO), which controls and operates Oyu Tolgoi through its 51% stake in Turquoise Hill, is currently trying to buy all the shares it doesn’t already own in the Canadian miner.

Rio’s chief executive Jakob Stausholm has said he believes the acquisition would simplify the ownership structure, and further strengthen the company’s copper portfolio.

The offer followed an agreement between the miner and the government of Mongolia to complete the long-delayed underground expansion.

That deal saw Rio agree to write off $2.4 billion in loans and interest used by Ulaanbaatar to fund its share of the development costs.

Turquoise Hill, which had $500 million of available liquidity by the end of June, said it continues to consider Rio Tinto’s unsolicited C$34.00 per share buyout.

It noted the amount of cash and cash equivalents it holds, together with access to funding under an agreement with Rio Tinto, will be enough for the company to meet its minimum obligations for at least 12 months.

Three-year delay and counting

The ongoing expansion of Oyu Tolgoi, located is 550 km (342 miles) south of Mongolia’s capital Ulaanbaatar, has been plagued by delays and costs overruns.

At time the situation has triggered the Mongolian government’s ire to the point of threatening to revoke the 2009 investment agreement, which underpins the mine development.

First production, initially expected in late 2020, was rescheduled for October 2022 and later to the first half of 2023.

Oyu Tolgoi is Rio Tinto’s main copper growth project. Once completed, the underground section will lift production from 125,000–150,000 tonnes in 2019 to 560,000 tonnes at peak output, which is now expected by 2025 at the earliest.

According to the miner, this would make it the biggest new copper mine to come on stream in several years and, by 2030, the operation would be the world’s fourth largest copper mine.

Oyu Tolgoi is expected to produce 110,000-150,000 tonnes of copper and 150,000-170,000 ounces of gold in concentrates in 2022 from processing ore from the open pit, underground and stockpiles.

A group of Chinese companies are investigating why a commodities storage site in northern China is holding only one third of the copper concentrate they were financing, according to people familiar with the situation.

Traders from more than a dozen mostly state-owned firms gathered in Qinhuangdao city this week after becoming aware of the missing material following concerns into the borrower’s finances, said the people, who asked not to be identified as they aren’t authorized to speak publicly.

The group has a total claim on 300,000 tons of concentrate worth about 5 billion yuan ($740 million), but there’s only 100,000 tons at the depot, the people said. That puts the dollar value of the missing material at about $490 million.

The copper discrepancy in Hebei province comes just months after a separate dispute, spanning several locations in southern China, over missing aluminum tied to $1 billion of lending. Scrutiny of commodities financing and warehouse operations in China is growing, especially as volatile global markets expose some of the more opaque funding arrangements to greater risk.

At the center of this latest case is Huludao Risun Trading Co., a medium-sized merchant that purchases between 800,000 and 1 million tons of imported copper concentrate a year for distribution to domestic Chinese smelters, said the people. The company typically relies on larger counterparties to finance the materials, and then repays the loans with interest and fees after finalizing the trade.

Nobody picked up several calls to the company’s main number, and there was no immediate reply to an email seeking comment.

Risky business

Commodities traders have faced a tougher environment this year as banks turn cautious in the wake of high-profile losses — especially in the nickel market — and huge price volatility exacerbated by Russia’s invasion of Ukraine. That’s encouraged alternative financing, in which smaller, privately-owned firms pledge their goods to large state-run traders to get funding for operations.

But that route is also exposed to risk as the growth model that’s sustained China’s economy for decades shows signs of strain. Some state-owned enterprises, including the country’s top steel mills, have asked units to cut back on operations — including third-party trading — to preserve cash and avoid liquidity crunches.

The impact on the spot concentrate market of the Qinhuangdao copper dispute could be limited, consultancy Mysteel said in a note on Wednesday. Chinese smelters who take material from this merchant should be able to use their existing inventory, while traders could re-route cargoes due to arrive at the Qinhuangdao site to other destinations, it said.

Rio Tinto is not concerned about China’s plans to centralize iron ore purchases and has strong ties with its customers, the Australia Chief Executive Officer for the global miner said on Friday.

Kellie Parker’s comments were in response to questions from the media about China Mineral Resources Group, a state-owned agency registered last month to centralize the import of raw materials required by its steelmaking industry.

The plans are aimed at gaining more clout with suppliers like Rio, BHP Group, Fortescue Metals Group, Vale and others over pricing.

“How the Chinese are organising themselves – they want some certainty about price and around what does that look like for them. And they’re very exposed to that price. So they’re organising themselves,” Parker told reporters after speaking at the Melbourne Mining Club.

“Of course the short-term price hurts them, so they want some certainty – as we want on our input products as well. So not concerned, but certainly working with them,” she said.

Parker said the company has good relationships with its customers and shareholders in China.

“We’d certainly like to meet them face to face when borders come down,” she added.

China is exposed to international iron ore prices as it must import nearly 80% of its annual consumption, a big share of it coming from Australia.

But a diplomatic spat between Australia and China over the pandemic has hurt relations, and increased Beijing’s concerns over resource security. The tensions have since eased, according to media reports.

“I think the other thing we have very much noticed in business is the thawing of the relationship between the two countries,” Parker said.

She said it was up to the two governments to work on those ties.

“But we are very appreciative of that thawing relationship so we can find new ways to work together,” she added.

(By Sonali Paul and Praveen Menon; Editing by Christopher Cushing)

On August 3, Deputy Minister of Food, Agriculture and Light Industry G.Batsuuri received Ambassador Extraordinary and Plenipotentiary of the European Union to Mongolia Axelle Nicaise.

During the meeting, Deputy Minister G.Batsuuri expressed interest in further expansion of economic, business, and investment cooperation with EU member states, and stimulation of bilateral cooperation in food safety, food production, agriculture, and animal husbandry, specifically;

- To export fermented product (water, drinks, Mongolian alcohol, fermented milk, etc.) and meat products to the European Union and get technical assistance,

-To develop cooperation with the EU countries, expand investment and technological cooperation, and support the implementation of joint projects, including the establishment of a factory to process baby milk, milk nutrition, fruit and berry nutrition, introduction of technical technology, registration of livestock and inclusion of prominent products such as Uvs seabuckthorn and honey in the list of geographical indication in the European Union,

- To cooperate in directions of training personnel and improving professional skill in order to fully analyze food safety indicators,

- And to support the implementation of a joint research project to improve the competitiveness of the leather industry, and the establishment of a technical service and technology transfer center for the leather industry in Mongolia.

13 measures and 22 development projects are planned to be implemented in phases as part of the implementation of the Energy Recovery, reflected in the New Recovery Policy. In this context, the construction work of the project ‘Grid energy storage’ is commencing today.

The project will be financed through a soft loan of USD 100 million and a grant of USD 3 million by the Asian Development Bank. Construction of the project will take 14 months and will be complete before the 2023 winter peak.

Within the scope of the project, a storage facility using Lithium-Ion type batteries with a capacity of 200 MWh, which is considered the largest in the world, will be installed and connected to the 110 kW ‘Songino’ substation. This will improve the stable and reliable operation of the energy system in the central region of Mongolia. It will also cover the shortcomings of the integrated grid, supply up to 200 MW of power, and reduce imported energy.

While participating in the opening of the project, Prime Minister L.Oyun-Erdene said, "Once this construction is put into operation, the independence of the central power system will reach a new level. In the context of energy recovery, renewable energy sources, including the construction of hydropower plants, will be made a priority, and we will make every effort to complete the construction of the Erdeneburen hydropower plant and start the Eg River hydropower plant project. Also, construction projects such as the expansion of Thermal Power Plant 3 to increase its capacity by 75 MW and upgrade to 250 MW, Tavantolgoi thermal power plant, Baganuur power plant, and Choibalsan thermal power plant to increase capacity by 50 MW will be kicked off without delay. Most recently, the construction of the 116 MW Amgalan thermal power plant, which will provide thermal energy for the eastern region of Ulaanbaatar city, has been started."

Minister of Energy N.Tavinbekh said, "The 200 MWh capacity rechargeable grid energy storage not only increases the capacity of the source, but also adjusts when fluctuations occur. It's a much-needed technology that our energy system never had before. There is a risk that the energy sector will have a hard time this winter. Preparations for this winter are ongoing at 60 percent”.

The contractor of the project was selected through an international open tender, and a turnkey contract was signed with the joint consortium of China's Jiangsu Zhongtian Technology Co.,Ltd and Zhongtian Energy Storage Technology Co,.Ltd, and consulting services are provided by Germany’s RWE Technology International GmbH.

120 temporary jobs will be created during the implementation of the project and 25 permanent jobs will be created after the project is operational.