Ulaanbaatar/MONTSAME/. The FATF President Dr. Marcus Pleyer announced that Mongolia is no longer subject to the FATF’s increased monitoring process.

During its virtual plenary meeting on October 23, the FATF congratulated Iceland and Mongolia for the significant progress they have made in addressing the strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing, identified earlier by the FATF and included in their respective action plans. The countries are now no longer subject to the FATF’s increased monitoring process. This comes after both countries received on-site visits despite the COVID-19 crisis. Mongolia will work with the APG of which it is a member, to continue to strengthen their AML/CFT regimes.

The meeting, chaired by the FATF President Dr. Marcus Pleyer, brought together delegates from over 130 countries and international organizations.

Ulaanbaatar /MONTSAME/. A press briefing on COVID-19 situation in Mongolia was organized today, October 26, Monday. D.Nyamkhuu, Director of the National Center for Communicable Diseases reported that 11 new positive cases were detected in Mongolia in the past three days after 1,189 tests were carried out between October 23 and 25.

The 11 newly-detected COVID-19 cases are:

- 14-year old boy who arrived on a charter flight from Frankfurt, Germany on October 24

- Two Russian freight truck drivers, who entered Mongolia through Altanbulag border checkpoint in Selenge aimag on October 23 and 24.

- Eight people who arrived through the Altanbulag border checkpoint on October 22 were also tested positive for the coronavirus.

As a result, the total number of confirmed COVID-19 cases in Mongolia reached 339, all of them are ‘imported’ or detected from people who arrived from abroad and were placed under mandatory isolation.

The total recoveries of those cases are at 312, and currently 27 COVID-19 patients are being treated at the NCCD.

When Jeremy and Roxy Thiessen first served their home-finished beef to friends, their guests declared they’d never tasted anything like it. While this is often how stories of direct-marketing success begin, the Thiessens had a distinct advantage based on their location and market demands, providing a unique opportunity for this family.

At first glance, the arid grasslands surrounding Jeremy Thiessen’s feedlot may bring to mind the Palliser’s Triangle. This landscape, however, has fostered a tradition of herding livestock that dates back thousands of years. The steppes of northern Mongolia are home to Xanadu Razorback, Thiessen’s small feedlot, located at Hutag-Ondor in the province of Bulgan.

What is now a “steppe-to-plate” program began when Thiessen first finished and processed beef for his family’s use. “Most of the animals that are slaughtered here are three- to six-year-old steers,” Thiessen explains. “There was no other intensive feedlots in Mongolia, and in the grocery stores you couldn’t find T-bone steak or ribeye steak or any sort of different types of cuts. It was all just big chunks of meat.”

After trying this beef, produced using management practices similar to those used in Canada, their friends expressed interest in purchasing beef, and then asked if Thiessen would raise beef to carry in their store in Ulaanbaatar, which catered to expatriates. Thiessen focused on Mongolia’s expat community as his first target market based on their desire for recognizable cuts of beef.

“Some of the higher-end restaurants also were wanting to put steaks on the menu, so I started giving samples,” he says. This evolved to his current program, in which he finishes and processes the animals himself to get as much value as possible out of his investment.

“There wasn’t any intermediate company or system that was in place that I could actually market my animals that I had put more money into. In order to make any profit I had to go all the way.”

Thiessen’s background in the Canadian beef industry provided the foundation for his business. He was raised on his family’s ranch north of Fort St. John, B.C. In the 1960s, his father and uncle started their ranch with 20 head of polled Herefords after riding in to select their land and building five miles of road through dense forest. The ranch grew to 200 head of females, and as kids Thiessen and his siblings enjoyed showing their family’s registered Hereford bulls at exhibitions. His two eldest brothers purchased the operation and have since expanded their herds.

Thiessen’s own adventure began in the fall of 1993, when he travelled to Mongolia with a Christian aid organization. While adapting to life in Mongolia was something of a culture shock, he was eager for the challenge.

“I spent the first three years in the capital city of Ulaanbaatar, learning the language and culture, and then also taking weekend trips and week trips out into the different parts of the country and exploring it,” he says.

He moved to Bulgan province in 1996 and worked in a community where he and others taught gardening skills. By working on commercial-scale projects to grow vegetables, this has provided a new livelihood for more than 50 families in the community since then.

“We were looking at starting another aid project. However, as we were assessing that, in my mind it was becoming more necessary for the people (to) be given jobs and skills rather than aid,” says Thiessen. “Looking at the agriculture industry in Mongolia, there was so many opportunities because of the lack of development in the industry, so that was what I wanted to target.”

The opportunity came when he found his way to Mongolia’s cattle business after a local producer offered to sell him some calves in 2004. He purchased three calves for around $11 per head, built a small corral and bought local wild grass hay and wheat bran for feed. As the calves started to grow and do well on feed, neighbouring herdsmen had their doubts about Thiessen’s methods.

“As the months went on and the calves kept gaining, their perception changed,” he recalls. “I was given a calf the next fall because they saw I knew what I was doing.”

Challenges to beef industry

When Thiessen established his feedlot in 2009, he was operating within a challenging system. Cattle production in Mongolia has retained much of its traditional nomadic character.

“The local herdsmen move two to three times annually, looking for free-range pasture for their herds,” Thiessen explains. “Most herdsmen will have a winter and summer camp, but they also move in spring and fall depending on the availability of the grass.”

In the 1950s, Hereford genetics were introduced from Russia, and herds were established on state-run farms in the provinces of Bulgan and Selenge. The breed did well in this environment, and breeding programs were well-managed by Soviet-trained livestock specialists. After the fall of the Soviet Union, though, state farms closed, livestock services deteriorated and Mongolia’s cattle industry seriously declined.

As for the traditional herding system, problems began to appear at this time when the Mongolian government actively encouraged producers to expand their herds, putting undue stress on the grasslands. The Mongolian steppes share many qualities with the Canadian Prairies, but the landscape has its own ecological challenges.

“It is a bit of a delicate landscape because of the aridness and the climate and the temperatures,” says Thiessen. “You can go from minus 40 in the wintertime to almost plus 40 in the summertime.”

Stocking rates and overgrazing have become critical issues in the steppes, challenging the future of the Mongolian beef industry. Loss of plant biodiversity and not enough pasture recovery time have put more pressure on the already low feed availability.

“There has to be some kind of management or this delicate landscape is going to be turned into a desert, and once that happens, if that happens, how do you bring it back? It’s very difficult.”

With a lack of supplemental feed in the winter, it’s estimated that native Mongolian cattle generally lose up to 30 per cent of their body weight each winter. With such conditions, it generally took several years to finish a steer. Intensive feeding programs were a foreign concept in Mongolia’s beef industry before Thiessen started his feedlot, and such programs are still an anomaly.

“Traditionally, Mongolian herdsmen will cut wild grass in meadows and valleys in September in minimal amounts because of it being labour-intensive,” he says. “It is cut with small tractors with a sickle bar, putting the hay into piles, then loading them onto trucks by hand, unloading them onto a bigger stack at their winter camps by hand. The amount of hay put up is insufficient and the quality is poor because it is cut after the grass is dried.”

In addition to the size of the market and availability of quality feed, several health challenges face the development of the Mongolian beef industry. Some areas continue to deal with brucellosis and foot-and-mouth disease in herds, and Thiessen treats all his cattle for warbles upon feedlot entry. As well, he notes the difficulty in sourcing good-quality calves due to age, health and body condition. Other issues hindering the country’s cattle business include outdated production technologies and very few processing facilities that meet export standards.

Opportunities for development

Despite these industry-wide challenges, Thiessen foresees Mongolian beef carving out its place in the market. New opportunities are emerging, with domestic markets demanding higher-quality beef and export markets growing in China and Russia.

“I think there’s a huge opportunity for a niche market to sell all-natural, high-quality meat to some of the bigger markets around us,” he says.

He also envisions opportunities for the recovery of Mongolia’s grasslands, further supporting the industry’s development.

“If they were managed properly, and a short period of time of intensive feeding with good-quality feed, a unique, great-tasting beef is possible, which could be exported to niche markets in this region and farther.”

In developing his own operation, Thiessen currently sources two-year-olds from local producers for his 90-day feeding program and generally has around 150 head on feed at any time.

“I like the numbers to be closer to 200,” he says. “If I go too much more than that I end up feeding them for too many days, and my profitability starts to go down.”

With 10 employees at Xanadu Razorback, Thiessen and his team take the animals from feeding through the rest of the supply chain. This year, they aim to process 60 head per month. After slaughter, the beef is dry-aged and processed. Profit margins have been minimal due to the nature of a steppe-to-plate program, but Thiessen reports this is beginning to change. Xanadu Razorback supplies beef to several high-end restaurants, promoting the feeding program, animal health standards and management practices that contribute to great-tasting beef.

“One of my objectives in feeding cattle is to encourage quality to the livestock: bringing them off of the pasture earlier, putting them into a more intensive feeding program where they can gain weight, improving their health and quality of meat,” he explains.

While Thiessen sees further opportunities for the use of production technologies from Canada, he’s found it’s important to understand the culture and history of Mongolian herding traditions when introducing new methods.

“Sometimes expats come in with expectations that we’ll just copy-paste our system into this other context, and it doesn’t work — not all the time — the way it’s supposed to because of logistics, of culture,” he says. “There’s a host of things that people need to be considering if they go cross-culturally and get involved directly into people’s lives.”

Xanadu Razorback’s approach to finishing beef has attracted attention from the Mongolian government and businesses who want to help develop the country’s beef industry.

“In 2014 we had the parliament speaker of the house come visit our farm, and since then we’ve had multiple government officials come through. We’ve had multiple Mongolian businesses come and see our feedlot even though it’s really small, and just recently the minister of agriculture has recognized that this type of intensive feeding needs to be supported and developed in Mongolia,” he says.

“Even though it’s a small company and a small business right now, I’ve been able to have an impact not only in developing a business but also working to try and help the whole cattle industry develop here in Mongolia.”

Mongolia has joined the Asia-Pacific Trade Agreement (APTA) and is expected to implement tariff concessions with member countries staring next year, allowing both Chinese and Mongolian companies and people to enjoy more benefits.

According to a statement by China's Ministry of Commerce on Monday, Mongolia will reduce tariffs on 366 items, including seafood products, vegetables, fruits, animal and vegetable oil, minerals, chemical products, woods, cotton yarn, machinery and other items. The average tariff reduction level is 24.2 percent.

In return, Mongolia can enjoy relevant tariff reduction policies by other member countries under the APTA, including China.

"Mongolia's joining will further push forward the regional integration of developing economies in the Asia-Pacific region, promote the Belt and Road Initiative and enhance the level of bilateral trade liberalization and facilitation," the ministry said.

For years, China has become Mongolia's largest trade partner and the second largest source of investment.

Last year, China-Mongolia trade value grew 2.1 percent year-on-year to $8.16 billion. China's investment to Mongolia grew 132 percent year-on-year in 2019 to $270 million.

The APTA is the first regional preferential trade pact that China joined. Its member countries include Bangladesh, India, South Korea, Laos, Sri Lanka and Mongolia.

So far, the pact has implemented four rounds of tariff reductions. Six member countries have reduced tariffs on more than 10,000 items with the average reduction of 33 percent.

Mongolia shipped twice as much metallurgical coal to the Chinese market than Australia in September, confirming its position as the key supplier of the steelmaking raw material to China.

Mongolia sent 3.89 million tonnes of coking coal to China in September, while Australia shipped 1.98 million tonnes. In August, China imported 3.07 million tonnes of coking coal from Mongolia, and 3.02 million tonnes from Australia.

A buyer source from China said that imports from Mongolia will continue to be sizable in October, especially since imports from Australia were halted in early October.

China imported a total of 6.72 million tonnes of coking coal in September, down 15.6% from 7.96 million tonnes in the same month in 2019 and down by 6.3% month on month.

Coking coal imports in September were valued at 4.2 billion yuan ($631 million), down by 45.1% year on year and 20.2% lower month on month, according to customs data.

Fastmarkets’ index for premium hard coking coal, cfr Jingtang averaged $130.26 per tonne in September, down by 20.1% from $163.09 per tonne a year earlier, but up by 12.9% from $115.37 per tonne last month.

In early October, steel mills in China received an official verbal notice to halt imports of Australian coal, which led to the slump in seaborne coking coal prices, especially for premium hard coking coal.

Fastmarkets’ index for premium hard coking coal, fob Australia stood at $113.25 per tonne on October 23, down $21.30 per tonne from $134.55 per tonne on October 1.

Sh.Batkhuu, former director of the ‘Just Group’ was sentenced on 22 October to eight years in prison and ordered to pay MNT 140 billion to compensate the government after years of investigation and court delays. However, the Khan-Uul District Court dismissed charges against five others involved in the notorious case of South African Standard Bank.

Back in 2013, Mongolia’s anti-corruption agency begin investigating Sh.Batkhuu in connection to his offering up the Erdenet Mining Corporation as collateral for USD 110 million loans obtained from the South African Standard Bank.

The case began to be heavily publicised after the London Court of International Arbitration ruled in favour of the South African Standard Bank. According to Deputy PM U.Enkhtuvshin, the Mongolian Government has paid USD 40 million to the Standard Bank from EMC’s Emergency Fund.

Ulaanbaatar /MONTSAME/. The State Emergency Commission today, October 26, convened to decide on whether to extend the heightened state of readiness amid the COVID-19 pandemic.

At the meeting, it was resolved to extend the duration of the restriction imposed to all passengers, including Mongolian nationals, on the movement across the country’s all auto road, air and railway border crossing points until the end of this year or December 31.

Moreover, the regime of ‘heightened state of readiness’ will remain effective through December 31, 2020 to prevent from the spread of COVID-19, as decided by the SEC.

The cabinet is expected to discuss and approve today’s decision by the State Emergency Commission on Wednesday, October 28.

As a measure to prevent from COVID-19 outbreak, Mongolia started gradually closing its borders to all passengers, including its own citizens, since early February this year. All people returning from abroad either on government-arranged charter flights or across border crossing checkpoints in an organized manner are being placed under 21-day mandatory isolation at government-designated facilities.

Thanks to these measures, all 339 cases of COVID-19 confirmed in Mongolia are imported and no local transmission of the virus has been detected.

Domestic public events, activities and businesses and all levels of educational institutions were allowed to return to normal operations after different levels of restrictions that had been imposed on their operations since January 2020, were lifted on September 14, 2020.

Russia's largest gold miner Polyus said it is working on securing 100 percent ownership of the Sukhoi Log gold deposit in Siberia, which has estimated reserves of 540 million tons of ore, containing 40 million troy ounces of gold.

According to the firm, the undeveloped Siberian deposit is the largest in the world. “As of May 31, 2020, ore reserves are initially estimated at 540 million tons with an average gold grade of 2.3 grams per ton. This is equivalent to 40 million ounces,” said Polyus chief executive Pavel Grachev. “This confirms Sukhoi Log's status as the world’s largest new and active gold mine.”

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Grachev explained that the new deposit secures Polyus’ position as the world’s second-biggest gold mining company by attributable reserves. Last month, Polyus agreed to pay $128.2 million to buy the remaining 22 percent stake in the giant deposit.

Polyus is the largest gold producer in Russia with assets in the Krasnoyarsk territory, Irkutsk and Magadan regions, and in the Republic of Sakha (Yakutia). In 2019, the company produced 2.8 million ounces of gold, and plans to produce the same amount in 2020.

Ulaanbaatar/MONTSAME/. On October 21, the Asian Development Bank (ADB) has approved up to $420 million for a multitranche financing facility (MFF) to improve economic opportunities and living conditions among communities along the border between the Inner Mongolia Autonomous Region (IMAR) in the People’s Republic of China (PRC) and Mongolia.

“The IMAR-Mongolia border is one of the world’s longest and the setting for a remote and often hostile environment for the communities at border crossings,” said ADB Senior Financial Sector Specialist Seung Min Lee. “The ADB program will upgrade and modernize facilities at five border communities to ensure that the benefits of growing bilateral and regional trade can be shared by both sides of the border. The program’s technical design, environmental improvements, and robust economic and financial returns will ensure its long-term sustainability and benefits.”

Although the border communities serve as the main cross-border focal points for the rapidly expanding trade between the PRC and Mongolia, they lack access to basic infrastructure and services, including medical facilities, as well as job opportunities.

The poor infrastructure and inefficient processes at the IMAR border crossings stifle the potential for development and international trade on both sides of the border. Storage and quarantine facilities are lacking, a deficiency compounded by outdated and inefficient management systems, customs procedures, and standards. A one-stop customs process has not been established, and goods clearance is not yet automated or integrated with sanitary and phytosanitary measures.

Trade doubled between the PRC and Mongolia from $4 billion in 2010 to $8 billion in 2018, and about $5 billion of this total was between Mongolia and the IMAR alone. Greater efficiency at the IMAR border crossing points could further accelerate this trade growth. Trade by the PRC and Mongolia with third party countries, including those in Europe, would also grow.

The program will enhance living conditions and sustainability of target border regions by supporting the use of such advanced technologies as smart drip irrigation with reclaimed water for forestation, smart port management based on information and communication technology, and smart waste collection and transfer.

Expanded financial and business support to small and medium-sized enterprises (SMEs) will spur local income growth. International best practices in gender equity will be applied through targeted support for women-led SMEs, the gender-sensitive design of border town facilities, and poverty alleviation program support for low-income households headed by women.

The program will also address the climate change and adaptation challenges that confront both the IMAR and Mongolia. This will include support for carbon pollution reduction by building protective forest strips and the use of renewable and clean energy for heating supply. The establishment of an agricultural value chain will enhance livelihoods on both sides of the frontier.

Three tranches are envisaged for the MFF. The first of $196.3 million will help finance the delivery of a smart port management system in the Erenhot–Zamyn-Uud economic cooperation zone (ECZ), a service area and customs supervision center at the Mandula port, and upgrade of equipment at the international hospital in Erenhot. Ecological restoration will be carried out in the ECZ, and a smart waste collection system established in Erenhot. SME financing support, the construction of a quarantine station at the Mandula port, and the establishment of a product tracing and management system and Poverty Alleviation Program (PAP) will contribute to expanding income-generating opportunities.

These first tranche activities will benefit 2.95 million people in Erenhot and Baotou municipalities by providing greater livelihood opportunities for the poor and the overall population. The program will have strong regional spillover benefits for Mongolia, with expanded trade creating about 3,300 direct and indirect jobs in Mongolia. Health and other services will benefit disadvantaged communities on both sides of the border.

The project also closely complements other ADB projects in Mongolia, including an Economic Cooperation Zone project at Zamyn-Uud free zone approved in June 2020 that will create jobs and serve as a catalyst for diversifying Mongolia’s economy and additional financing for Regional Improvement of Border Services approved in 2019.

The total cost of the investment program is $888.35 million, of which the government will provide $351.42 million, and $116.93 million will come from other sources. The closing date for the third tranche is the end of September 2031.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

Source: ADB

Ulaanbaatar/MONTSAME/.The 3rd economic policy consultation meeting between Mongolia and the USA has taken place virtually today, October 23.

From the Mongolian side, Deputy Minister of Foreign Affairs B. Munkhjin has made an opening address at the consultation meeting. In his speech, Mr. Munkhjin underlined the importance of U.S. participation, investment, and cooperation in infrastructure development projects to expand Mongolia-U.S. trade and economic relations.

In addition, he said that it expects U.S. Congress to approve the Mongolia Third Neighbor Trade Act that will grant Mongolian cashmere duty-free access to the United, and it is possible to develop bilateral air transport relations and carry out direct flights.

Representatives of the Ministry of Finance, the Ministry of Justice and Internal Affairs, the Bank of Mongolia, and the Ministry of Food and Light Industry expressed positions on the cooperation and provided presentations at the consultation meeting.