Feb. 27 (Xinhua) -- Mongolia registered 320 new COVID-19 cases over the past 24 hours, bringing the national tally to 465,104, the country's health ministry said Sunday.

Meanwhile, one more COVID-19 patient in her 60s died in the past day, bringing the death toll to 2,096, said the ministry.

As of Sunday, 2,676 COVID-19 patients are being treated in hospitals, while 9,457 others are receiving home-based care, according to the ministry.

So far, 66.8 percent of the country's 3.4 million people have received two COVID-19 vaccine doses, while more than 1 million people over 18 received a third shot.

In addition, more than 102,600 people have received a fourth shot.

China's development will benefit its neighbors as well as the whole world, Mongolian Foreign Minister Batmunkh Battsetseg told Xinhua in a recent interview.

"Today, China is developing rapidly, the livelihood of its people is improving day by day," said Battsetseg. "As a neighboring country, Mongolia has always applauded the achievements of the Chinese people."

"I am confident that China's development will benefit its neighbors, regional countries and the world," she said.

The Chinese government has made a significant contribution to overcoming the most difficult time of the COVID-19 pandemic in Mongolia by providing much-needed vaccines, drugs and medical supplies, said Battsetseg.

"It is important that our two peoples sincerely support each other in this difficult time," she said. "The young people of the two countries have exchanged words of encouragement on social media, which is an important expression of mutual understanding between the two peoples."

The foreign minister also spoke highly of China's dynamic zero-COVID policy, which "has been a major factor in reducing the spread of the coronavirus around the world."

Praising the good organization of the Beijing Winter Olympics, she said that as a neighbor with a comprehensive strategic partnership, Mongolia has consistently supported any efforts by China to successfully host the Games.

Mongolian Prime Minister Luvsannamsrai Oyun-Erdene became one of the first foreign leaders to express willingness to attend the opening ceremony of the Beijing Winter Olympic Games in person, Battsetseg said, adding that the prime minister has clearly said that the Olympic Games, a symbol of the unity of humanity and peace, should not be politicized in any way.

The Chinese government, with the warm support of its people, has successfully hosted the Winter Olympics, giving hope and encouragement to the world as it fights the pandemic, Battsetseg said.

"I am impressed by the solution to provide solar and wind energy for the infrastructure of the Olympic Villages. The combination of renewable energy and green technology in the use of the latest scientific and technological advances is unique," she said.

During his visit to China to attend the opening ceremony of the Beijing Winter Olympics, Prime Minister Oyun-Erdene and Chinese leaders exchanged views on a wide range of issues, Battsetseg said.

She added that the two governments issued a joint statement to strengthen bilateral cooperation, including intensifying development projects and programs and strengthening cooperation in trade, investment, finance, energy, telecommunications, infrastructure and green development after the pandemic.

Oyun-Erdene's visit to China has been important in strengthening high-level mutual understanding on bilateral relations and cooperation, bringing cooperation to a new level, and advancing major trade and economic projects, the foreign minister noted.

The two countries should make full use of the mechanisms of bilateral cooperation and enhance their coordination between the relevant organizations in order to promptly implement the issues agreed during the visit and advance major joint projects and infrastructure construction.

Mongolia will establish a working group consisting of representatives of the parties involved to promote the coordination with China, said Battsetseg.

In order to normalize the operation of the border checkpoints, the Mongolian side also plans to improve its organizational work and anti-pandemic measures, she said.

Despite the difficult circumstances caused by the pandemic, Mongolia and China still worked closely together to promote bilateral trade and economic cooperation, said Battsetseg.

Meanwhile, in addition to strengthening bilateral cooperation in traditional sectors such as trade, economy, culture and humanitarian ties, Mongolia and China need to work together to protect the environment, especially in the fight against desertification.

Climate change is one of the most pressing issues in the world and there is great potential to intensify bilateral cooperation in combating desertification and yellow dust storms, she said, adding that leaders of the two countries have paid special attention to this issue and regularly exchanged views during their talks.

Battsetseg expressed confidence that after the pandemic, the two sides will make joint efforts to intensify bilateral cooperation in all fields, focus on the implementation of the consensus of the two countries' leaders and support each other.

Fitch Ratings has revised the rating Outlook on coal producer Mongolian Mining Corporation (MMC) to Negative from Stable, and affirmed the Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B’.

Fitch has also affirmed MMC’s USD440 million 9.25% senior unsecured notes due 2024 at ‘B’ with Recovering Rating ‘RR4’. The notes are co-issued by MMC and its wholly owned subsidiary, Energy Resources LLC (ER), and guaranteed by most of MMC’s operating subsidiaries.

The Negative Outlook reflects the uncertainty about MMC’s business recovery due to periodic restrictions at the border with China to contain the spread of Covid-19. We expect the prolonged border disruptions in 2021 to have caused MMC’s credit metrics to deteriorate from 2020 levels. Border traffic remains restricted at the moment, but the company expects the curb to be lifted soon. However, the credit metrics could remain weak if there is no clear recovery in border traffic.

MMC’s rating is constrained by its small scale, single-product focus on hard coking coal and limited cost competitiveness outside of northern China, its main market. However, MMC has flexibility in capex, which should provide a sufficient buffer to continue generating free cash flow (FCF) during business downturns.

KEY RATING DRIVERS

Capex Flexibility: MMC estimates its minimum sustaining capex, mostly for regular maintenance of its mines, mining fleets and coal-hauling trucks, will be around USD2 million in 2022 and USD5 million in 2023. MMC capitalises some of its stripping cost when stripping of the mine results in long-term benefits. The capitalised stripping capex is likely to be USD18 million-70 million a year in 2022-2023. Stripping cost is related to mining volume, therefore MMC can decrease stripping cost during a business downturn.

Moderate Financial Profile: MMC’s financial and liquidity profile is commensurate with its rating. MMC’s funds from operations (FFO) net leverage and net debt to EBITDA ratios exceeded our negative triggers in 2020 and we expect these ratios to remain higher than the negative triggers in 2021. However, MMC’s credit metrics should improve significantly if the border with China opens up in line with our expectation from 2Q22, while demand remains steady and average selling prices are strong.

We expect MMC to have sufficient liquidity in the short term. MMC has USD15 million of senior notes and USD41 million of coupon payments due in 2022. We expect the company to have enough operating cash to settle these payments. MMC also has USD39 million in committed unused bank facilities available.

Border Disruptions, Operating Uncertainties: Traffic at the border between Mongolia and China was disrupted several times in 2021, which is likely to have reduced MMC’s sales volume for the year. We estimate 2021 washed coking coal sales fell to 1.2 million tonnes, a sharp drop from 3.5 million tonnes in 2020.

Before the Covid-19 outbreak, MMC’s average daily throughput to China was around 700 trucks, but this fell to around 500 trucks in 2020 and around 200 trucks in 2021. Current average daily throughput is capped at around 100 trucks per day. MMC expects the border restrictions to be resolved by end-March 2022 and throughput to rise to 500 trucks in 2Q22, then improve to pre-pandemic levels in 2H22. However, the restrictions may continue or throughput may not increase as quickly as we expect, leading to uncertainty over a business recovery in 2022.

Small Scale, Single Product: MMC is small compared with Fitch-rated coal miners globally in terms of revenue. We expect MMC’s revenue to have decreased by more than 50% in 2021 (2020: USD417 million). Hard coking coal accounted for over 90% of MMC’s total revenue in 2020. The latest coal reserve statements show pro forma total run-of-mine coal reserves of 478 million tonnes, giving MMC a reserve life of 30-35 years. MMC’s small scale and product concentration constrain its business profile to the ‘B’ rating category.

Limited Cost Advantage: MMC’s cash cost is in the 1st quartile of the global coking-coal cost curve, but its cost advantage is only in the northern part of China due to the proximity of its mines to steel mills in that area. MMC’s transportation cost by land to its Chinese customers is around USD25 per tonne on average, which limits its cost competitiveness and puts MMC in the higher quartiles of the global coking-coal cost curve. Delivery beyond northern China would raise costs, leaving MMC with customers that are mainly in northern China.

DERIVATION SUMMARY

Compared to rated coal producers such as Yankuang Energy Group Company Limited (BB+/Stable) and PT Golden Energy Mines Tbk (GEMS, B+/Stable), MMC is much smaller in scale in terms of revenues. Yankuang Energy is around 25 times larger than MMC while GEMS is over 2 times larger. However, MMC has a similar EBITDA margin as Yankuang Energy and a higher margin than GEM.

MMC is a single product coal miner, similar to its peers. MMC’s present operational profile in terms of mine life is strong when compared to Geo Energy Resources Limited (CCC+), which has a mine life of less than 10 years, and similar to that of PT Golden Energy Mines, which has a mine life of over 25 years.

MMC’s leverage and financial flexibility profile is weaker than that of GEMS. GEMS has better FCF generation ability, much lower leverage and well-distributed amortising debt. MMC’s FCF generation has been weakened by the border disruptions, which resulted in higher-than-expected leverage. MMC’s debt structure is less smooth with bullet payments.

(The opinions expressed here are those of the author, Clyde Russell, a columnist for Reuters.)

Russia’s invasion of Ukraine will disrupt the global movement of energy commodities, even if Western powers don’t impose sanctions on exports from Russia.

So far none of the retaliatory measures against Moscow have been targeted at exports of crude oil, coal or natural gas, the latter either by pipeline or by ships as liquefied natural gas (LNG).

That’s perhaps tacit acknowledgment of Russia’s importance to the global supply of these commodities, and especially with regard to natural gas, with Russia meeting about 40% of Europe’s annual demand.

But even if the United States, Europe and other allied nations such as Japan and South Korea decide not to impose measures against Russia’s energy exports, it’s likely that private companies will effectively do it for them.

The risks of doing business with Russia will become too much for many companies to bear, even without sanctions.

A clear illustration of this was reports that a coal bulk vessel chartered by commodity trading house Cargill was struck by a shell in the Black Sea in Ukrainian waters on Thursday, just hours after Russia launched a widespread attack on its neighbour.

Very few trading, shipping and insurance companies will be prepared to take the risk of dealing with cargoes from Russia, fearing either physical attack, payment issues because of financial sanctions, the risk of non-delivery if further measures are enacted against Russia, and even public and investor backlash for continuing to do business with a country now largely viewed as conducting an illegal war.

So, how does this play out in the real world of commodity trading?

The first point is that this is likely to be a long, drawn out process that lasts for months, if not years.

Russian energy commodity exports will likely continue for some time pretty much as they are, but will then start to change.

Russia's biggest oil customer - Reuters Graphics

Crude

Russia supplied about 2.66 million barrels per day (bpd) of crude via the seaborne market to Europe in February, according to Refinitiv Oil Research data, and it regularly ships more than 2 million bpd a month.

European refiners will now be reluctant to buy Russian crude, and it’s likely that the main Urals grade will have to be offered at very steep discounts to find any buyers.

Already Urals differentials hit an all-time low, dropping to a discount of $11 a barrel on Thursday as buying interest in northwest Europe evaporated.

Who will be prepared to buy Urals crude? The obvious answer is China, which has so far indicated that it won’t join any sanctions against Russia.

But for Urals to go to China it would have to undertake a long sea voyage through the Suez Canal or around the Cape of Good Hope, adding to the cost of transportation.

This means Chinese refiners are likely to demand even bigger discounts in order to take Urals cargoes, and even then, it’s unlikely that they would take even close to the volumes Russia is likely to lose in Europe.

There are other countries that may be tempted by cheap Russian oil, but it’s likely they will come under pressure from Western nations, especially the United States.

Russia also supplies crude oil to Asia, with the ESPO grade being sought after, especially by Chinese independent refiners.

Russia exported 1.29 million bpd of seaborne crude to Asia in February, according to Refinitiv, with the bulk of it, about 718,000 bpd, heading to China.

But that still leaves about 572,000 bpd of Russian crude that went to other Asian buyers, including some 126,000 bpd to Japan and 355,000 bpd to South Korea.

These flows are under threat in coming months, meaning Russia will be looking for new markets, or trying to put more volumes into China.

Conversely, European refiners, as well as those in Japan and South Korea, will be seeking to boost imports from alternative suppliers, and given the current tight nature of the global crude oil market, this is going to be tricky.

It’s likely that pressure will be ramped up on members of the Organization of the Petroleum Exporting Countries to boost output rapidly, and abandon the current output deal they have as part of the wider OPEC+ group, which includes Russia, especially if global benchmark Brent crude futures hold above the $100 a barrel level breached after the invasion of Ukraine on Thursday.

Coal, LNG

Russia also supplies coal to Europe, with Refinitiv pegging February seaborne volumes at 3.27 million tonnes.

Again, this trade is likely to become poisonous for European utilities, meaning they will be scrambling to buy cargoes from the United States, Colombia and South Africa.

This is likely to tighten global seaborne coal markets, especially if Japan, which bought 1.18 million tonnes of Russian coal in January, seeks to buy from other suppliers.

Benchmark Australian thermal coal from Newcastle port was assessed by globalCOAL at $244.29 a tonne on Thursday, up 1.6% from the prior day and well above the $226.39 from last week.

Natural gas is where matters will get difficult for Europe, given its reliance on Russia and the lack of readily available alternatives.

Europe can seek to buy as much LNG as possible, effectively drawing cargoes away from top-importing region Asia, but this will be expensive, as can be seen by the jump in futures based on the Asian JKM price , which surged 28% on Thursday to a two-month high of $37.01 per million British thermal units.

Over time, Europe can buy more LNG from the United States and Qatar, which are currently building substantial new capacity, and they can seek to maximise the continent’s own output, mainly from the North Sea.

Europe can also invest heavily in renewable generation and battery storage, but in the short to medium term the continent is still dependant on Russia, given President Vladimir Putin a lever he can pull if the sanctions, and voluntary cutbacks on commodity trade, start to cause Russia real pain.

(Editing by Richard Pullin)

Recently, the Mongolian government held a meeting and decided to start the construction of the third cross-border railway connecting China and Mongolia, the Zombayin-Hangji Railway. According to the Mongolian plan, the railway has a total length of 269 kilometers, two stations and four crossings. Construction will start on March 10, 2022, and it will be put into use on October 10, 2022. Mongolian Prime Minister Luo Oyun Erden said: "The construction of this railway will open up Mongolia's second export channel."

For now, there is only one China-Mongolia cross-border railway, namely the Zamyn-Uud-Erlian railway; the second Gashunsuhaitu-Ganqimaodu railway has basically been completed and is scheduled to open in July 2022. . However, judging from the current export situation of Mongolian minerals, it largely depends on the Gashunsuhaitu-Ganqimaodu port. As the Mongolian Prime Minister said in his 2022 New Year's message, 2021 will make us more aware of the bitter fact that Mongolia's economy only depends on mining, the national finance only depends on coal, fuel depends on one country, and imports depend on only one port. Obviously, Mongolia is committed to the construction of the Zumbayin-Hangji Railway, which is to open the second export gate of Mongolia.

The reason for this is because the opening of the Zombayin-Hangji Railway will greatly enhance the export capacity of the Hangji (Mandula) port, the second largest mineral product export port in Mongolia, on the one hand; The 1,722-kilometer transportation route from Darkhan and Selenga areas to Zamyn-Uud-Eren-Jining-Hohhot-Baotou will be changed to Shayinshanda-Zongbayin-Hangji-Mandula-Baotou 1404 km. Therefore, the iron ore and coal transportation distance will be shortened by 318 kilometers, and the transportation cost will be reduced by 4-8 US dollars. It can be said that the construction of this railway can not only reduce the transportation cost of raw materials and goods, but also is a construction project that is both environmentally friendly and highly economical.

The main cargo transported by the Zumbayin-Hangji railway will be iron ore, along with a certain amount of other raw materials and products. In addition, 2 to 4 million tons of coking coal and 3 to 5,000 tons of copper concentrate will be exported each year from East Gobi Province, which has proven reserves of about 150 million tons of coal.

In addition, the newly built Zumbayin-Hangji Railway is also capable of transporting 1-6 million tons of oil and 1 million tons of timber from Russia to Baotou, China, 1.5 million tons of goods exported through Hangji Port, Ulaanbaatar The railway network transports 1 million tons of goods to Baotou and Hohhot, and 1 million to 2 million tons of construction materials, metal structures, petroleum products, machinery and equipment, heavy machinery and other materials from Baotou to Zongbayan.

Relevant officials of Mongolia said that the opening of the Zombayin-Hangji railway will not only be another export for Mongolia's mineral resources to open up foreign markets, but also bring more economic contributions to regional development.Editor/Ma Xue

Chelsea's Russian owner Roman Abramovich says he is "giving trustees of Chelsea's charitable foundation the stewardship and care" of the club.

Abramovich, who will remain the club's owner, has made the move amid Russia's invasion of Ukraine.

The decision also comes a day before Chelsea play Liverpool in the Carabao Cup final at Wembley.

"I have always taken decisions with the club's best interest at heart," Abramovich said in a statement.

"I remain committed to these values. That is why I am today giving trustees of Chelsea's charitable Foundation the stewardship and care of Chelsea FC.

"I believe that currently they are in the best position to look after the interests of the club, players, staff, and fans."

His statement did not reference the invasion of Ukraine.

The Chelsea Supporters' Trust said it was "seeking urgent clarification" on what the statement means for the running of the club.

It is not known yet if Abramovich will be sanctioned as part of the UK government's measures against Russia.

BBC Sport understands Chelsea are not for sale, and the £1.5bn loan their owner gave to the club is not being called in.

Abramovich is one of Russia's richest people and is believed to be close to Russian President Vladimir Putin.

He added: "During my nearly 20-year ownership of Chelsea FC, I have always viewed my role as a custodian of the club, whose job it is ensuring that we are as successful as we can be today, as well as build for the future, while also playing a positive role in our communities."

The Chelsea Foundation runs the club's community and education departments as well as other charitable activities. Its chairman is US lawyer Bruce Buck, who is also chairman of the club as a whole.

The foundation's other trustees are Chelsea women's team manager Emma Hayes, the club's director of finance Paul Ramos, British Olympic Association chair Sir Hugh Robertson, Fare (Football Against Racism in Europe) chief Piara Powar and lawyer John Devine.

During Abramovich's time at Chelsea, the club have won the Champions League twice, both the Premier League and FA Cup five times, the Europa League twice and the League Cup three times.

In August 2021, they won the Uefa Super Cup and they recently won their first Club World Cup, meaning the Blues have won every possible trophy under Abramovich's ownership.

Earlier in the week, Labour's Chris Bryant told MPs he had a leaked Home Office document that suggested Abramovich should not be able to base himself in the UK.

Downing Street would not be drawn on the claims about Abramovich made in the House of Commons.

Chelsea manager Thomas Tuchel had said on Friday there were "so many uncertainties around the situation of our club" following Russia's invasion of a neighbouring country.

The Chelsea Supporters' Trust said it was "ready to work with the trustees of the Chelsea Foundation in order to ensure the long-term interests of the club and supporters". It added: "We stand with the people of Ukraine."

Analysis

Football finance expert Kieran Maguire, The Price of Football Podcast

The words Roman Abramovich has used are not ones we would normally use from a legal perspective.

He has said he is handing across control to the club's charitable foundation so he will no longer be the person making the final decisions in regards to the transfer budget, the manager and other key elements of the club.

He does own the club. Chelsea FC is owned by a company called Fordstam, and Fordstam has borrowed £1.5bn from a company called Camberley International, which is based in the British Virgin Islands, and that company is controlled by Roman Abramovich, so it is already a fairly convoluted structure.

How the Chelsea Foundation will be funded, we are not certain.

I think Abramovich will be concerned - if the UK Government try to seize his assets then those assets would include Chelsea Football Club and that could have implications if this conflict drags on for a long period of time in terms of how the club be funded.

Clearly, there would be reluctance for it to be funded by the taxpayer.

By transferring it to the foundation, which is a charitable arm and he is not one of the trustees - although some people with long business connections are on the foundation - his legal team would be able to say Chelsea could not be seized by the government.

Hours before Russian President Vladimir Putin announced a military operation in eastern Ukraine, the US accused Moscow and Beijing of combining to create a "profoundly illiberal" world order.

Yet State Department spokesman Ned Price also said that this was an opportunity for China to use its leverage with Russia to pull back Vladimir Putin, given the new "no limits" pact he signed with China's leader Xi Jinping on the same day as the Winter Olympic opening ceremony.

"You will have to ask the PRC whether they have used their own considerable influence with the Russian Federation to that end," Mr Price said at a press briefing.

The Ukraine-Russia crisis is posing a major challenge for China on many fronts.

The ever-closer diplomatic relationship between Russia and China could be seen at the Winter Games with Mr Putin coming to Beijing as one of only a handful of known world leaders to attend.

Significantly, Mr Putin waited until just after the Games were over to recognise the two breakaway regions of Ukraine and send in troops to back them.

In its public pronouncements, the Chinese government has urged all sides to de-escalate tensions in Ukraine.

But now that Russia has dispensed with all such restraint, where does that leave China's official position as clashes escalate?

The Chinese government thinks it cannot be seen to support war in Europe but also wants to strengthen military and strategic ties with Moscow.

Ukraine's number one trading partner is China and Beijing would ideally like to maintain good relations with Kyiv but this could be difficult to sustain when it is clearly so closely aligned with the government which is sending its troops into Ukrainian territory.

There is also the potential for trade blowback on China from Western Europe if it is judged to be backing Russia's aggression.

Furthermore, a constant refrain from China's leaders is that it does not interfere in the internal affairs of others and that other countries should not interfere in its internal affairs.

In a recent tweet, high-profile diplomat Liu Xiaoming reiterated that China had never "invaded other countries [or] engaged in proxy wars", adding that it was committed to the path of peace.

But as former US intelligence officer John Culver has posted on Twitter: "Russian annexation of portions of Ukraine, or invasion and seizure of Kiev, violate China's position that sovereignty is sacrosanct."

However, Chinese Foreign Ministry spokesman Wang Wenbin has refused to condemn an invasion of Ukraine, or to even refer to what is happening there as an "invasion".

Mr Wang said China still recognised Ukraine as a legitimate state, but did not comment on whether Beijing would recognise breakaway republics in the east of Ukraine.

Joining the dots

For the Communist Party, what will worry it most is where that may leave its own people and their world view.

For this reason, it is manipulating and controlling talk about the Ukraine situation in the press and social media.

It wasn't going to be long before Taiwan was dragged into the mix.

The self-governing island is seen by the Party as essentially a rogue province that must be unified with the mainland.

China and Taiwan: A really simple guide

On Weibo, China's version of Twitter, Chinese nationalists have used Russia's invasion of Ukraine to call on their own nation to follow suit with comments like: "It's the best chance to take Taiwan back now!"

When the Chinese government rejected the imposition of sanctions on Russia in recent days it knew it could face similar treatment if it moves to seize Taiwan by force, in what would be a bloody, costly exercise.

Foreign Ministry spokeswoman Hua Chunying told a regular press briefing in Beijing that China has never thought that sanctions were the best way to solve problems.

A constant refrain from China's leaders is that it does not interfere in the internal affairs of others

But if Chinese citizens start joining the dots with Russia's justification for invading Ukraine and applying it to their own country, this could upend the Chinese government's entire explanation for its current borders.

Vladimir Putin says he's liberating Russian speakers inside Ukraine. What of the ethnic Mongolians, Koreans, Kyrgyz and the like who are now part of China? More potentially explosive for Beijing, what if Tibetans or Uyghurs renew calls for greater autonomy or even independence?

That this does not happen is more important to Xi Jinping's administration than anything.

Given that, you only have to look at the remarks on Chinese social media to see the direction the Party's media is driving the population in terms of the way it should view Mr Putin's moves in Eastern Europe.

The state press has its own accounts on Weibo and controls the responses to its posts about Russia and Ukraine.

Here is a flavour of the comments:

"Putin is awesome!"

"I support Russia, oppose US. That's all I wanna say."

"America always wants to create mess in the world!"

While there are also a lot of people calling for peace, posts attacking the US are being heavily promoted.

In terms of Chinese people actually questioning Russia's ambitions in Ukraine, you have to seek out individual Weibo accounts not connected to the Party media threads.

One writes: "I don't understand why so many people support Russia and Putin. Is invasion to be seen as justice? We should oppose any form of war!"

According to another: "Putin recognises the independence of Ukraine separatist regions, which is obviously interfering in the domestic affairs of another country."

And there you have it. That last post is expressing precisely the conclusion which Beijing does not want its people coming to.

It is the essence of the minefield the Chinese government is walking through.

Inside Ukraine, China's embassy has sent out a message to Chinese citizens living in the country now locked in a major war.

It has recommended that people post a Chinese flag on their car and "help one another out" while showing "China's strength".

Asked if what is occurring right now in Ukraine amounts to an invasion, Foreign Ministry spokeswoman Hua Chunying told a press conference that the "historical context is complicated" and that the current situation is "caused by all kinds of factors".

There is a major upheaval unfolding in Europe. Xi Jinping has some big choices to make in terms of how his country will deal with it.

Last year, the Cabinet gave the permission to construct the main infrastructure of the Bogdkhan railway project to ‘Tavantolgoi Tumur Zam’ LLC in 2021, with plans to launch its works this spring.

The railroad will connect the stations of Maanit and Rashaant by going around the capital city on its northwest side and passing through the Chinggis Khaan International Airport area in Khushig Valley. In the framework of the project, a railroad tunnel and a large-scale bridge structure are planned to be built.

During the international scientific conference themed, ‘The Pressing Issues in Mongolia’s Railway Sector Development’, CEO of ‘Tavantolgoi Tumur Zam’ LLC N.Udaanjargal said, “The project will be constructing the first railway tunnel in the country. As corresponding studies have been completed, it has now become ready to draft detailed plans and blueprints. In Gashuunsukhait and Zuunbayan, 33 bridges were built, of which total lengths amounted to 3.7 km. As for the Bogdkhan railway project, the bridge will be built with a length of 3,280 meters at 22-39 meters of height,” and highlighted that certain technological advancements will be introduced through its construction.

With the new railroad put into operation, the time spent on stopping the traffic of road vehicles at four railroad crossings in Ulaanbaatar is estimated to be reduced by 84.8 percent from the current daily average of 230 minutes - which in turn, brings down the country’s annual fuel consumption by over MNT 4,400 million. In the 30 years of the project’s implementation, income from exports, imports, and transit transport is also expected to grow twofold by increasing from USD 34.82 million to USD 64.95 million, and accelerate trade flow.

At the scientific conference organized at the initiative of ‘Tavantolgoi Tumur Zam’ LLC, engineers and technicians involved in railroad construction and transport, and scholars and experts shared their knowledge and practices regarding international and domestic railway development. Out of about 70 presentations on railroad construction, technological upgrades in the transport sector, innovation, global trends, green development, sectoral policy, legal reforms, and the impact of the railway sector in the country’s socio-economic development, 22 presentations were selected for the conference that took place on February 25.

Mongolia isn’t just the home of Ghengis Khan and nomadic tribes who hunt with eagles. The country is fast becoming a mining powerhouse, as global players hunt for resources in the stable jurisdiction with access to Europe and China.

You may as well call it Mine-golia. Ha!

(Ed: She’s here all week…)

Seriously though, the country’s mineral wealth includes copper, coal, gold, silver, iron ore and zinc to name a few.

Mining accounts for 20% of the nation’s GDP, which has grown at an average rate of 7.2% per year since the advent of large-scale mining in 2004.

And mining accounts for around 80-90% of exports, which mostly go to China. That means companies that operate there have a strategic advantage when targeting that market.

China is the target market for most exports

Despite selling around 90% of its gold exports to Switzerland, China is still the major market for Mongolian minerals.

As of February 4-10, the country exported a total of 806,700 tons of coal, 124,500 tons of copper concentrate, as well as 165,200 tons of iron ore and concentrate from the beginning of the year.

Bituminous coal and copper concentrates accounted for 36.6% and 48.1% of total exports to China respectively, and in January alone trade with China reached US$520.4 million – which is around 47.5% of Mongolia’s total trade turnover for the month.

Coal is still a major export for now

Despite China’s ambitious goal to reduce consumption, it’s still importing a lot of coal from Mongolia currently.

Before the pandemic, Mongolia used to export over 30 million tonnes of coal annually, but last year it exported 16,138 thousand tonnes.

This sounds like its winding down, but even with the decline in the volume of mineral exports, the income from export in 2021 was equal to those of previous years because of high commodity prices.

For instance, the country exported 36.2 million tonnes of coal and earned US$2,803 million in 2018, exported 36.6 million tonnes of coal and earned US$3,079 million in 2019, and exported 28.6 million tonnes and earned US$2,127 million in 2020.

But in 2021 it exported 16,138 thousand tonnes and of coal and still earned US$2,779 million.

But copper is the main contender

The same goes with copper prices and demand: Mongolia exported 1,447 thousand tonnes of copper concentrate and ore in 2017 and earned US$1,613 million from it. Last year the country sold 1,283 thousand tonnes and earned US$2,900 million.

Plus, China is the world leader in manufacturing lithium batteries, and continues to outpace the globe in demand for EVs.

It also dominates megafactories, with 89 of 123 of the world’s megafactories in the pipeline.

And then there’s the general ESG shift in investment which some experts say will lead the shift from coal to copper.

Government building new rail infrastructure

Mongolia’s Ministry of Mining is working to entice explorers to the country by digitising the issuance of mineral exploration licences to allow companies to electronically apply and receive responses within a month.

So, it makes sense that the Government is gearing up to make exports easier, with plans to build a separate railway from the massive Tavan Tolgoi coil mine to expedite coal deliveries through the South Gobi corridor.

The commissioning of the 416km long Zuunbayan–Tavan Tolgoi Railway is expected in March 2022, and the 281km railway from Zuunbayan to Khangi\Mandal is expected to be completed in 2023 – and will remove a significant bottleneck that currently exists in the railway from Sainshand to Zamyn-Uud\Erlian.

Added to this, Chinese rail authorities intend to extend the Erlian border checkpoint after the 2022 Lunar New Year celebrations, boosting Mongolian export capacity through Zamyn-Uud.

And the Tavan Tolgoi–Gashuua Sukhait railway will be completed in July 2022, with the construction of the much shorter Gashuua Sukhait to Grants Mod railway that will deliver Mongolian coal directly into China to start May 2022.

Just last month, the Mongolian Government and the mining giant settled a long-running dispute over the $6.93 billion expansion project for the Oyu Tolgoi copper-gold mining project.

The Oyu Tolgoi mine is expected to be among the top five largest copper mines in the world by 2030.

Operations will soon start on the underground portion, with first production expected in the first half of 2023.

It’s expected to produce around 500,000 tonnes of copper per year on average from 2028 to 2036 from the open pit and underground, and an average of around 350,000 tonnes for a further five years, compared to 163,000 tonnes in 2021.

And it could account for as much as 30% of Mongolia’s GDP, with the Government owning 34% of the project.

Rio controls the rest through its 51% stake in Toronto-listed Turquoise Hill Resources (NYSE:TRQ) and operates the mine.

As part of the deal, Turquoise Hill will waive $2.4 billion in debt owed to it by the Mongolian government.

Interestingly, the original agreement called for the construction of a new coal-fired power plant to supply electricity to the mine, but this was back in 2009 before the ESG boom we’re seeing today. Rio says the plan is now to source wind power for the project.

Kincora Copper (ASX:KCC)

Earlier this month the $15m market cap company delivered an update on its Mongolian portfolio which highlighted several positive aspects of recent exploration in the country’s world-class porphyry region – right on China’s doorstep.

CEO Sam Spring said 2021 activities had identified a new intrusive system, Shuteen North, with initial work generating three new porphyry targets and one epithermal gold-base metal target with “significant scale potential”.

Kincora’s portfolio in total covers three large-scale and underexplored porphyry systems, and is located in the Southern Gobi copper-gold belt.

At the most advanced project – the Bronze Fox mining licence – an independently defined 1.3-1.5Mt copper metal equivalent exploration target has been defined with plans to convert this to a JORC resource.

Spring told Stockhead that Oyu Tolgoi was a good demonstration of the largely untested geological potential of the belt, but also the various significant advantages the Southern Gobi provides from an exploration and development perspective.

“For example, it only took five years for Oyu Tolgoi to go from discovery to initial production from the open pit, which is pretty remarkable, particularly relative to many other copper jurisdictions,” he explained.

“This helps demonstrate many of the favourable attributes of the Southern Gobi desert, which is sparely populated and one of the world’s fastest growing mining and infrastructure regions, noting over 27Mt of coal was exported to China in 2020.”

He also said that despite the relatively limited modern systematic exploration in the Southern Gobi, the discovery of Oyu Tolgoi, plus part development of Tsagaan Suvarga and exploration success at Kharmagtai, helps illustrate the geological prospectivity of the belt.

“It is estimated to already host over 85 million ounces of gold and over 50 million tonnes of copper,” he said.

Looking forwards, the company is planning to spin-out its Mongolian portfolio, with a larger $7.5-10m IPO (up from $5m) and subsequent listing on the ASX of Resilience Mining Mongolia (ASX:RM1).

Xanadu Mines (ASX:XAM)

In December last year the $34m market cap explorer announced it had grown its ‘Kharmagtai’ porphyry resource to a massive 3 million tonnes of copper and 8Moz of gold.

This covers only ~30% of the 8km long mineralised complex, and positions Kharmagtai as one of the largest undeveloped copper assets held by a listed junior globally, XAM says.

There are a few other things that set the project apart.

“The higher-grade zones (>0.8% CuEq) have grown from approximately 58Mt in the previous estimate to just on 100Mt with this update,” CEO Dr Andrew Stewart said.

“This could be a real game-changer for project economics, with better defined and larger high-grade zones, setting the project apart from similarly sized orebodies, with the higher-grade component potentially unlocking project scenarios that could pave the way to put Kharmagtai into production.”

“A significant increase in gold to copper ratios has resulted in a greater than 80% increase in contained gold, which means higher by-product credits that will be reflected in lower all-in sustaining costs.”

Stewart also commended the resolution between the Government and Rio and Turquoise Hill.

“This demonstrates Mongolia’s commitment to being a stable and business friendly mining jurisdiction, and it significantly reduces uncertainty for future mining projects,” he said.

Aspire Mining (ASX:AKM)

The coal explorer is looking to develop the Ovoot coking coal deposit which contains a JORC 2012 compliant total Coal Reserve of 255 Mt of high-quality (fat) coking coal.

And Aspire welcomed the recent resolution of the Oyu Tolgoi agreement and underground development approval.

The company said the circumstances of Aspire and its OCCP are vastly different to that of Rio and Turquoise.

“Nevertheless, Aspire sees this as a watershed moment in revitalising the attractiveness of Mongolia as a standout destination for foreign investment combined with its excellent geological prospectivity and its strategic location in Asia,” the company said.

The plan is to truck the coal to a company owned terminal facility in Erdenet, and then deliver to customers in China and Russia via the existing Mongolian rail network.

The $42m market cap company is also pretty happy about recent developments in Mongolia’s rail network plans, which it says will “significantly enhance the capacity of Mongolia to export to China.”

“Chinese border officials have recently been encouraging Mongolian iron ore and coal exporters to use containers through the Zamyn -Uud\Erlian border which we expect will also be extended to the Khangi\Mandal border once the railway connection has been completed,” Aspire said.

The company is also planning to export coking coal to markets accessible through the Russian rail system to the north.

by: Emma Davies

A wider array of sanctions against Russia are projected to deepen non-dollar denominated trade relations between Russia and China, according to former US trade negotiator and World Bank official with China and Russia experience, Harry Broadman.

“The problem with sanctions, especially involving an oil producer, which is what Russia is, will be leakage in the system,” Broadman said as quoted by Reuters.

“China may say, ‘We’re going to buy oil on the open market and if it’s Russian oil, so be it.’”

Since lesser punitive measures were introduced in 2014 after the reunification of the Crimea peninsula with Russia, China has reportedly emerged as its biggest export destination.

Washington and Western nations are poised to impose a wider range of economic penalties against Russia if Moscow escalates the current conflict in the breakaway republics of Donetsk and Lugansk. The Kremlin recognized the independence of both earlier this week.

By the follow-up decree, Putin ordered the Russian military to “secure the peace” in the newly recognized republics, which were formerly considered part of Ukraine.

The recognition prompted the White House to unleash the “first tranche” of new sanctions against Russia. On Tuesday, US President Joe Biden signed an executive order that is supposed to target “Russia’s elite and family members.” Biden also claimed the Nord Stream 2 pipeline project “will not move forward,” and that the sanctions would help “cut off Russia’s government from Western financing” by banning trade in its sovereign debt.

Under the executive order, any institution in the Russian financial services sector is a target for further sanctions, US officials claimed, saying that over 80% of Russia’s daily foreign exchange transactions and half its trade are settled in US dollars. Biden pledged to “take robust action to make sure the pain of our sanctions is targeted at the Russian economy, not ours.”

However, several experts say that cutting the $1.5 trillion economy out of global commerce is not an easy task since Russia is among the world’s top exporters of oil, natural gas, copper, aluminum, palladium and other vital commodities.

Biden’s announcements sent oil prices to highs not seen since 2014.

Russia accounted for nearly 2% of global trade in 2020, down from 2.8% in 2013, according to World Bank data. The country’s 2020 GDP was ranked 11th globally, between Brazil and South Korea.

According to the World Bank’s World International Trade Solution database, Russia’s dependence on trade has declined over the past 20 years. Meanwhile, its export destinations have also changed. The Netherlands was the top export destination a decade ago, due to oil trade, but it has been replaced by China. Germany and Britain’s purchases from Russia have held largely steady, while Belarus’ imports have been growing.

China remains Russia’s number one supplier of imports, with mobile phones, computers, telecommunications gear, toys, textiles, clothing, and electronics parts among top categories. Its share of Russian imports has grown since 2014, while those from Germany have dropped markedly.