According to a statement issued on Saturday by the Mongolian National Center for Communicable Disease (NCCD), the overall tally of patients who have tested positive for the novel coronavirus across the state has jumped to 346, as six more cases were reported during the last 24-hour period.

At a regular news briefing, the NCCD's head Dulmaa Nyamkhuu revealed that 33 patients being treated at the National Center for Communicable Diseases are in a serious condition.

The center's statement further included that a number of 313 patients have so far won the battle against the brutal coronavirus infection and been accordingly discharged from hospitals, with the number including five reported in the previous 24 hours, adding that all the confirmed cases in the East Asian nation are imported from the overseas, mostly from Russia.

Ulaanbaatar /MONTSAME/. On October 30, the cabinet convened an irregular meeting and made a decision to close border crossing checkpoints with the Russian Federation – Borshoo in Uvs aimag and Tsagaanuur in Bayan-Ulgii aimag for 21 days, starting from November 2, Monday.

Deputy Prime Minister Ya.Sodbaatar informed that the decision has been made in connection with the possible risk of infection of COVID-19 amid the increasing number of confirmed coronavirus cases in Russia, an immediate neighbor of Mongolia.

In specific, as of now, a total of 30 freight truck drivers have been tested positive for the virus while in Mongolia, including two most-recent COVID-19 cases detected from Russian freight truck drivers, who arrived in Mongolia across the Tsagaannuur border point last night.

“As of today, only freight transportation of staple foods, petroleum products and animal fodder are running through border checkpoints located in the western region of Mongolia, and all border checkpoints of the country are still closed to all passenger movements due to COVID-19. However, given the current situation, the aforementioned border checkpoints will be closed completely for 21 days” says the Deputy Prime Minister.

The total number of confirmed COVID-19 cases in Mongolia is now 340, all of them are ‘imported’ or detected from people who arrived from abroad and were placed under mandatory isolation. No local transmission has been detected in the country.

Ulaanbaatar /MONTSAME/. On 29 October, The Asian Development Bank (ADB) has approved a $410,000 technical assistance (TA) grant to help manage food insecurity risks amid supply disruptions caused by the coronavirus (COVID-19) disease pandemic in Mongolia.

“Together with its severe economic impacts, the COVID-19 pandemic disrupted food supply chains and increased the risks of food insecurity in Mongolia,” said ADB Director for Environment, Natural Resources, and Agricultural Development in East Asia Qingfeng Zhang.

“With this TA, ADB's first focusing on assessing and mitigating the impact of pandemic on food supply chain disruptions, we aim to develop rapid response mechanisms to address food insecurity risks during the pandemic.”

The poor, on average, spend 43% of their household expenditure on food and are particularly vulnerable to increases in food prices. The pandemic’s adverse shocks of increased food prices and reduced household incomes exacerbate the risk of malnutrition among Mongolia’s vulnerable and poor households.

Three in four poor households were negatively affected by the high prices of major food items. The strict quarantine measures and trade disruptions made maintaining food supply chains challenging. In April 2020, 58% of farm households were unable to sell products because of logistical disruptions.

Aside from the COVID-19 pandemic, Mongolia faces a range of food insecurity risks, including extreme weather, natural hazards, pests, and diseases. Mongolia has one short growing season so not having a timely supply of agricultural production inputs would disrupt grain production.

The vulnerabilities of Mongolia’s food supply chain are likely to exacerbate supply disruptions during the crisis including a weak logistical and storage network, weak biosecurity and food safety arrangements, poor access to financial services among small and medium-sized enterprises and small-scale herders, and high dependency on food imports from the Russian Federation and the People’s Republic of China.

In addition to preparing a short-term response, the TA will assess the vulnerabilities of Mongolia’s food supply chains, provide policy advice, build capacity to manage a wide range of food insecurity risks beyond the COVID-19 pandemic, and assist in preparing medium- to long-term strategy and action plan to establish more resilient food supply chains and reduce food insecurity risks.

The TA will also support a feasibility study to establish a price monitoring system along food supply chains and emergency stock systems, and dialogue among public and private stakeholders to form coordinated actions to build more resilient food supply chains including the application of digital technologies.

The TA is estimated to cost $410,000, of which $400,000 will be financed on a grant basis from ADB’s Technical Assistance Special Fund. The Government of Mongolia will provide counterpart support.

The TA complements other ADB COVID-19 assistance to Mongolia, which includes a $15 million loan to support the wheat supply chain in Mongolia during the COVID-19 pandemic, a $100 million COVID-19 Pandemic Response Option, $30 million in additional financing for the Fifth Health Sector Development Program, and a $26.4 million loan to lessen the socioeconomic impacts of the pandemic through the Shock-Responsive Social Protection Project.

Ulaanbaatar /MONTSAME/ Revenue from gold export has increased by USD 800 million compared to the same period of previous year, the Bank of Mongolia reports. As of October 20, the Central Bank purchased 18.9 tons of precious metals and it is a seven ton rise compared to the same period of last year.

The Central Bank made an estimation to raise foreign currency reserve by USD 1.2 billion this year by purchasing 21 tons of precious metals. The amount of foreign currency reserve reached USD 3 billion and 697 million at the end of September, showing an increase of 1.2 percent from the previous month. The Central Bank is providing soft-loan financing to gold mining companies within the framework of “Gold-2” program.

Ulaanbaatar /MONTSAME/. During its plenary session of October 29, State Great Khural – the parliament of Mongolia ratified a USD 100-million loan agreement between Mongolia and Asian Infrastructure Investment Bank (AIIB).

The USD 100 million loan to Mongolia aims to support its COVID-19 Rapid Response Program and mitigate the adverse health, social and economic impacts caused by the pandemic and to alleviate poverty.

AIIB’s first project financing in Mongolia, the policy-based loan is provided under the Bank’s COVID-19 Crisis Recovery Facility (CRF) and has payback period of 16 years and annual interest of 1.1 percent.

AIIB’s loan is co-financed with the Asian Development Bank (ADB) and will provide budgetary support to the government’s countercyclical development expenditure program, which targets funding for public health, social protection for vulnerable groups, support to businesses and fiscal stimulus measures.

Ulaanbaatar /MONTSAME/. During its plenary session of October 29, State Great Khural – the parliament of Mongolia ratified an agreement between Mongolia and the International Development Association (IDA) on USD 20 million credit for the Mongolia Emergency Support and Employment Support Project.

The project will provide temporary relief to eligible workers and employers in response to the COVID-19 crisis and help provide the country’s jobseekers and micro-entrepreneurs with improved access to labor market opportunities through financial and nonfinancial support.

It will also support upgrading of selected labor and social welfare institutions to help jobseekers find jobs more efficiently. Activities will include modernization of physical infrastructure, streamlined work organizations, improvements to information systems, and better use of labor market information in decision making.

The project will be built on the activities being implemented under the existing World Bank Employment Support Project, which was restructured in early May 2020.

The USD 20 million credit will have annual interest rate of 1.25 percent and payback period of 30 years.

Ulaanbaatar /MONTSAME/. During its plenary session of October 29, State Great Khural – the parliament of Mongolia ratified general agreement between the Government of Mongolia and European Union on taxation and customs regulations applicable for European Development Fund and European Union-funded projects in Mongolia.

A Financing Agreement for the European Union Budget Support programme with a grant of EUR 50.8 million was established, building upon the achievements of past and ongoing EU projects in the two sectors within the 2014-2020 multi-annual indicative programme.

This first budget support programme of EU in Mongolia will support the government in implementing reforms, notably its employment policy and its public finance management sectors, including tax reforms.

In the scope of the programme, the Government of Mongolia and European Union have developed the Mongolia-EU general agreement on taxation and customs regulations applicable for European Development Fund and European Union-funded projects in Mongolia.

The general agreement provides exemptions from customs duties, value-added taxes and other relevant taxes levied on projects to be implemented in Mongolia with funding from the European Union.

Institutional investors worth $10.2 trillion have written to the boards of global mining companies to better understand their engagement with First Nations people, in the wake of Rio Tinto Ltd’s destruction of Juukan Gorge rockshelters.

The group of 64 investors and their representatives, including the Church of England Pensions Board and the Australian Council of Superannuation Investors (ACSI), issued a statement on Thursday.

The group has written to the boards of mining companies operating in Australia and internationally to seek assurances about how they gain their social licence to operate with First Nations and Indigenous communities, they said.

“Our collective long-term investment means that we need to have real confidence in how the sector obtains and maintains its social licence to operate with First Nations and Indigenous peoples,” the group said in a statement.

“The events at Juukan Gorge have shown this is a significant risk for investors and have prompted us all to take a deeper look at how relationships between companies and First Nations and Indigenous peoples are formed and function over the long period of mine operation and remediation.”

The letter was sent to the boards of 78 mining companies including Australian iron ore miners Rio Tinto, BHP Group Ltd and Fortescue Metals Group Ltd, as well as to others such as Barrick Gold Corp, Glencore PLC and Brazil’s Vale SA..

Australia has a parliamentary inquiry ongoing into the Juukan Gorge disaster, in which Rio Tinto legally blew up two sacred and historically significant rockshelters in Western Australia to expand an iron ore mine in May.

The inquiry is investigating issues around how mining companies obtain consent from Aboriginal groups in a process that was revealed to have restricted them from objecting to development on their ancestral lands. It will visit the destroyed sites on Monday.

Public outcry over the deep distress of the Puutu Kunti Kurrama and Pinikura people, and a push by institutional investors, saw three Rio executives including Chief Executive Jean-Sébastien Jacques lose their jobs.

Since then, other miners such as BHP and Fortescue have been reviewing their heritage management strategies, while planning laws in Western Australia that allowed for the destruction of the sites is under reform.

(By Melanie Burton; Editing by Tom Hogue and Christopher Cushing)

MONGOLIA: Ulaanbaatar Railway took delivery of two more TEM18DM diesel shunting locomotives from Transmashholding subsidiary Bryansk Engineering Plant on October 22.

Under a contract signed in 2019, Bryansk is due to supply 10 TEM18DMs and 14 2TE25KM two-section diesel locomotives for main line freight services. All are due to be delivered by mid-2021. The national railway already has 15 TEM18DMs delivered in 2011-19 and 15 2TE25KMs supplied in 2017-20.

Owned jointly by the governments of Mongolia and Russia, with the Russian stake managed by RZD, the 1 520 mm gauge Ulaanbaatar Railway reported a total freight volume of 27 million tonnes in 2019, a 4% increase on the previous year.

Fitch Ratings - Hong Kong - 28 Oct 2020: Fitch Ratings has published China-based steel producer Inner Mongolia Baotou Steel Union Co., Ltd.'s (BSUC) Long-Term Foreign-Currency Issuer Default Rating (IDR) and foreign-currency senior unsecured rating of 'BB+'. The Outlook is Stable.

BSUC ratings are derived from Fitch's internal assessment of the consolidated credit profile of BSUC's immediate parent, Baotou Iron & Steel (Group) Co., Ltd. (BISC), which is 77%-owned by the Inner Mongolia Autonomous Region. Fitch assesses BISC's ratings based on four factors set out in its Government-Related Entities Rating Criteria. BSUC's ratings, in turn, are linked to its parent's creditworthiness under Fitch's Parent and Subsidiary Linkage Rating Criteria due to strong legal, operational and strategic ties between the two entities.

KEY RATING DRIVERS

Strong Parent-Subsidiary Linkage: BSUC is 55%-owned by BISC and is the main steel operating subsidiary of the parent. In 2019, BSUC accounted for 80% of total assets and more than 65% of the group's consolidated EBITDA. BISC has absolute management control over BSUC with significant management overlap between the two. BISC provides guarantees to a large part of BSUC's bank debt and has injected numerous operating assets into BSUC. We rate BSUC on a top-down basis from our internal assessment of BISC's credit profile under our criteria.

Funds Parent's Rare Earths Operations: BISC is the largest rare earth producer in the world and receives around 50% of the annual rare earth ore production quota issued by China's Ministry of Industry and Information Technology (MIIT) each year. China has a near-monopoly of the global rare earth market, and the Chinese government sees the industry as strategically important. While the majority of BISC's rare earth resources and production are not in BSUC, BSUC's profits help to fund BISC's mining and rare earth development operations, which have been historically unprofitable.

Leverage to Remain High: Fitch has assessed that BSUC's Standalone Credit Profile will stay weak as we expect leverage to remain close to the 2019 level in the medium term. In 2019, BSUC's FFO net leverage rose to 5x from 3x in 2018, mainly due to lower steel profitability. We expect leverage to remain at 5x-6x in 2020-2022.

However, Fitch expects BSUC's financial profile to be stable in the near term as the company does not have major capex plans in the next few years. BSUC's financial flexibility metrics are likely to remain intact, with FFO fixed-charge coverage maintained at just below 3x.

Adequate Liquidity, Reliable Funding Access: At end-June 2020, BSUC had CNY18 billion in short-term debt outstanding, compared with CNY4 billion of cash on hand and CNY9 billion in unused available credit facilities. Over 50% of BSUC's debt is short-term. We expect BSUC to be able to roll over its short-term debt given support from BISC. BISC, excluding BSUC, had CNY14 billion in available credit facilities at end-June 2020 and has reliable funding access due to its strong government support and long-term relationships with major commercial and policy banks.

DERIVATION SUMMARY

BSUC is rated on a top-down basis from its parent BISC, as per Fitch's Parent and Subsidiary Linkage Rating Criteria. Fitch's internal assessment of BISC's credit profile is based on Fitch's Government-Related Entities Rating Criteria. BISC is 77%-owned by the Inner Mongolia Autonomous Region government and plays a strategically important role in rare earths production for China. BSUC's ratings are derived using the same methodology used for Sinochem Hong Kong (Group) Company Limited (A/Stable) and COFCO (Hong Kong) Limited (A/Stable).

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Our Rating Case for the Issuer:

- Low single-digit revenue decline in 2020, then revenue to rise by 1% on average annually in 2021-2023

- EBITDA margin of 9%-10% during 2020-2023

- Annual capex of around CNY2 billion during 2020-2023

- No major acquisitions or divestitures during 2020-2023

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

- An upgrade of Fitch's internal assessment of the creditworthiness of Inner Mongolia Autonomous Region.

- Increase in the likelihood of support from the Inner Mongolia government

Factors that could, individually or collectively, lead to negative rating action/downgrade:

- A downgrade of Fitch's internal assessment of the creditworthiness of Inner Mongolia.

- Weakening of likelihood of support from the Inner Mongolia government.

- Weakening linkages between BISC and BSUC.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

LIQUIDITY AND DEBT STRUCTURE

Adequate Liquidity: At end-June 2020, BSUC had CNY18 billion in short-term debt outstanding, compared with CNY4 billion in cash on hand and CNY9 billion in unused available credit facilities. The credit facilities were uncommitted, but we believe they are adequate, as committed facilities are uncommon in China. BSUC's debt maturity is concentrated, with short-term debt accounting for over 50% of total debt. We expect BSUC to be able to continue rolling over its short-term debt given its support from BISC.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

BISC is 77% owned by the Inner Mongolia Autonomous Region and Fitch assesses BISC's ratings based on four factors set out in its Government-Related Entities Rating Criteria

BSUC's ratings are notched down from BISC's ratings under Fitch's Parent Subsidiary Rating Linkage Criteria.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg