ADB pledges to provide additional USD 1.5 million aid to Mongolia www.montsame.mn

Ulaanbaatar /MONTSAME/ With the aim of supporting Mongolia's fight against COVID-19 pandemic, the Asian Development Bank (ADB) has granted non-refundable aid of USD 1 million to Mongolia.

Mining Mongolia: what potential does this land-locked country hold? www.mining-technology.com

Mongolia recently cancelled an executive order to fund the giant Tavan Tolgoi coal project through an international initial public offering (IPO), blaming political problems and unfavourable financial markets. Instead, the country is to self-fund the project, with expectations to finish it in three to four years. Such a situation is typical for the country that, though it is said to have billions of dollars’ worth of mineral wealth, has consistently struggled to capture international investors. We report.

The east Asian nation of Mongolia has been striving to tap into its potentially lucrative mining sector for years. According to its government, mineral resources in the region could be worth up to $1.3tn, yet a historically hostile investment climate, due to anti-investment laws and a volatile policy framework, has put pressure on the country’s economy and consistently caused foreign interest to dwindle.

The decision to self-fund transport links for the Tavan Tolgoi coal mine is just the latest in a long-running struggle to attract investors in an unforgiving economic landscape. But what other obstacles is mining facing in this country? And can anything be done to change this?

Tavan Tolgoi is Mongolia’s second largest mining investment following Rio Tinto’s copper-gold mine Oyu Tolgoi, and according to its website, the project has estimated coal reserves of around seven billion tonnes – more than a third of which is high-grade hard coking coal. Yet despite the deposit’s significant size, the recent IPO is only the latest in a series of false starts to take the mine to the next stage. Previous attempts fell through in 2011 and 2015, when the Mongolian parliament blocked an agreement with a group of foreign firms, citing high development costs.

Given the lack of existing transport infrastructure in the area, the latest IPO was intended to raise funds for a new railway to take the coal to China and other international markets. Securing this link was also hoped to lower transport costs and improve the country’s overall competitiveness, with Erdenes Tavan Tolgoi (the state-owned company that holds the license to the deposit) saying that mining capacity could be increased ‘between two- and three-fold’ with the new rail link.
Speaking with Byambajav Dalaibuyan, founder and advisor at the Mongolian Institute for Innovative Policies, he says that the necessity to rely on self-funding for such projects stems from internal political instability, and a lack of assertive action from the government. However, a recent parliamentary election is hoped to afford more stability on this front.

“Mongolia’s recent constitutional amendments should improve political stability and the incumbent MPP’s supermajority in parliament,” he says. “Prime Minister Khureksukh’s strong leadership will likely result in consistent policy on mining and investment. The question is whether the government will increase its involvement in managing mining projects or not.”

The need to turn away once more from public investment opportunities may have given the country bad press, yet the health of Mongolia’s mining sector does not appear to be in jeopardy.

Given Mongolia’s history as an agricultural society, there are some who have voiced fears over mining’s impact on this lifestyle – particularly in its use of land and water traditionally needed for pastoral purposes. A 2016 paper on the matter identified the impact on herder lifestyles as a particular area of concern, with around 30% of Mongolians currently living as herders and ‘relying on animal husbandry as their primary livelihood source’.

Yet speaking with Bruce Harvey, an expert in global community relations policy and practice at social enterprise group Sirolli, he says that many are in fact embracing the blossoming minerals sector.

“Mongolia is coming out of being dependent on pastoralism, which is a tough tough life,” he says. “A lot of Mongolian families have done absolutely everything possible to get their children off the land because it’s grim and it’s hard.”

According to Encyclopædia Britannica, Mongolia has rich deposits of coal and fluorite, as well as copper, gold, silver, and other metallic ores. The presence of such resources, in addition to a perceived necessity to keep up with changing times, led to rapid mining development in certain areas.

Erdenet (in Orkhon) and Oyu Tolgoi (in Umnugovi) are the two current primary mining regions, where industrialisation has had a proven beneficial economic effect. Both areas report significantly higher salaries, lower loan rates, and higher rates of education than other rural election districts, making the case for further industrialisation.

Yet while mining provides some economic and employment opportunities for those in the region, instances of malpractice still destabilise those remaining herders.

“Some miners are behaving very poorly and appropriating land without talking to the herders,” says Harvey. “These herders don’t have any ownership rights, they only have customary grazing rights. We also see a lot of informal mining for gold which can also destroy hundreds of acres of pastoral country. So there is certainly tension between this old and new way of life.”

Resolving such internal conflicts is thus a necessity in Mongolia’s mining development, particularly if it is to prove attractive to potential investors.

Room for improvement?
Speaking with Dalaibuyan, he says that the country’s mining sector needs to pay greater attention to sustainable practice, and to improving land rehabilitation following operation closures.

“Generally, environmental and social impact assessment and management in many mining areas is not adequate,” he says. “For instance, the impacts of coal mining and transportation from Tavan Tolgoi’s state-owned mines on the environment and local communities have not been assessed and managed adequately.”

Indeed, improving the relationship between miners and local communities has been highlighted elsewhere as a necessity to progressing the industry. A post by the University of British Columbia said that local communities ‘feel that they do not benefit’ from mining, and distributing revenue to local areas was identified as a key way of addressing this issue. This solution is one echoed by Dalaibuyan.

“By law, local host communities should receive a share of the revenue [that] mining companies paid to the government, but this has not been implemented,” he says. “Agreements between developers and local governments have been a good mechanism for building trust and having positive contributions to local development, but they are not widely used by companies.”

In addition, he says that good governance of state owned mining companies, comprehensive legal frameworks, and social and environmental safeguards are all avenues through which mining in the country could be improved.

While the recent IPO withdrawal may build the perception that Mongolia is an unappealing mining destination, the wealth of deposits and successes of projects such as Oye Tolgoi show the country has much to offer this sector. In cementing sustainable practice and transport links, Mongolia may be overcoming the final hurdle in eroding this outdated reputation.

Room for Mongolia’s coal exports to grow but with caveat www.hellenicshippingnews.com

Mongolia’s coal exports to China could be poised for growth in the second half of 2020 after exports registered a significant 63% year-on-year decline over January-May, China’s customs data released late June showed.

Profits at China's industrial firms jump 11.5% in June www.reuters.com

BEIJING (Reuters) - Profits at China’s industrial firms in June rose 11.5% year-on-year to 666.55 billion yuan ($95.27 billion), the statistics bureau said on Monday, adding to signs the country’s economic recovery is gaining momentum.

South Korea orders airlines to urgently check their Boeing 737 aircraft following FAA warning www.rt.com

South Korea’s Transport Ministry has told local carriers to carry out emergency inspections of Boeing 737s shortly after the US Federal Aviation Administration (FAA) revealed that the jets could be at risk of dual-engine failure.
In an emergency order released on Saturday, the Ministry of Land, Infrastructure and Transport (MOLIT) said that nearly 150 jets operated by nine companies are subject to the checks. The inspections will target older Boeing 737 models (not Max planes which are still grounded) that are parked for at least seven straight days, or have had less than 11 flights since being returned to service.

COVID-19 means development setbacks for Mongolia: a UN Resident Coordinator’s blog www.news.un.org

Mongolia has recorded very few cases of COVID-19, less than 300 as on date, despite its more than 4,000 kilometre porous border with China. However, the country faces a major economic impact from the pandemic, says Tapan Mishra, the UN Resident Coordinator in Mongolia.

The general picture of the COVID-19 situation in Mongolia is very positive. The Government of Mongolia closed all educational institutions including kindergartens, schools and universities at the beginning of the year. It also introduced strict measures on social distancing, such as a ban on public gatherings, limiting public transportation, closing public spaces such as gyms, and making the wearing of masks in public compulsory. Travel has been very limited, including a complete ban on any international travel by road, rail, or air.

Mongolia has been very vulnerable to the pandemic, not only because of its physical proximity to China and Russia including close links and dependence for economic interests, but also due to its own inadequate health care system.

Despite these challenges, there has been no local transmission reported (cases have been limited to patients importing the virus), and I would say that the leadership of the country has dealt well with the pandemic.

Another factor that has helped in making Mongolia’s response a success story, is that the citizens of the country have diligently complied with the government’s directives and regulations. The requirements to wear masks, ensure good hygiene, such as frequent hand-washing, and physical distancing, have been seriously adhered to. Even during the Tsagaan Sar, the Mongolian Lunar New Year in February, they complied with government orders, and did not even visit their extended families and elders, which is a tradition for Mongolian families.

Mongolian students adjust to remote learning　
Several UN agencies are physically present in Mongolia, with more providing support from outside. In response to the COVID-19 crisis, the UN bodies came together under the leadership of the office of the Resident Coordinator, and we have been following the World Health Organization’s response plan, and the UN’s humanitarian and socio-economic response plans. This has involved setting up a socio-economic task force, and identifying the needs and priorities of the most vulnerable people in Mongolian society.

The UN Country Team has utilized well the $1 Million UN Secretary-General's COVID-19 Response and Recovery MPTF (multi-partner trust fund) allocation, for supporting the Government of Mongolia in improving the national testing capacity, and have more supplies of personal protective equipment. We have been also supporting development of the digital learning curriculum to enhance the quality of online learning, as children have not been able to go to school for around six months.

We stand ready to support the Government in every possible way, from their health, humanitarian, and socio-economic response plans, to their longer-term economic recovery.

The economic fallout
We do not know the full impact the pandemic is having yet, but we know it is significant. For instance, in the first quarter of 2020, the economy contracted by 10.7 per cent, and government revenue fell by 8.6 per cent year on year, whilst expenditure went up 19.3 per cent.

National Center for Communicable Diseases (NCCD) team.
Mongolia has a large amount of debt , which means that there is an increased risk of defaulting on debt. According to the IMF, GDP is also expected to fall sharply to minus one per cent this year, down from 5.3 per cent in 2019.

To bolster the economy, the Government approved economic stimulus packages, worth over 10 percent of GDP, which included several measures to support vulnerable groups, including cash benefits; mortgages, consumer and business loan repayments were deferred; and the mortgage rate was reduced.

Development setbacks
Unfortunately, it is highly likely that the pandemic will set back the progress we have been making in Mongolia. The Government took early, effective action against the spread of COVID-19, but the increased borrowing, amid an economy hit by reduced exports, means that it will be difficulty to recover from the socio-economic impacts of the crisis.

In collaboration with the IMF, World Bank and other partners, we are conducting detailed studies to look at the real impacts, but we are also working with the Government of Mongolia to ensure that the recovery plans do not leave anyone behind.

I only hope that donors provide the funding that is needed to support the most vulnerable people in Mongolia, and help to ensure that the post-pandemic recovery benefits all members of society.

District in Western Mongolia on Quarantine Over Suspected Bubonic Plague Case, Reports Suggest www.sputniknews.com

MOSCOW (Sputnik) - Mongolia has put a district in western Zavkhan Province on indefinite quarantine over a suspected bubonic plague case, the Xinhua news agency reported on Sunday, citing local authorities.

Former Mongolian PM sentenced to five years for abuse of power www.news.mn

Former Mongolian Prime Minister S.Bayar was sentenced to five years in prison on Thursday (23 July) for abuse of power.

Former spy chief sentenced to three years in prison for torture www.news.mn

The trial of nine people including B.Khurts, the controversial former director of Mongolian’s General Intelligence Agency (GIA) and former Attorney General G.Erdenebat concluded yesterday (22 July) at the Tuv Province Criminal Court after five days of hearings. B.Khurts was sentenced to three years in prison for using torture to obtain confessions in the investigation of the murder of politician S.Zorig and others.

Ongoing energy projects discussed with WB www.montsame.mn

Ulaanbaatar /MONTSAME/ Minister of Energy N.Tavinbekh together with some officials of the energy ministry held a virtual meeting with World Bank representatives headed by WB Senior Energy Specialist, Task Team Leader Peter Johansen.