Mongolia parliament seeks ‘improved contracts’ for Rio Tinto mine www.ft.com

Mongolia’s parliament has delivered its long-awaited verdict on the investment agreements that underpin Rio Tinto’s giant copper project in the country’s Gobi Desert.

The State Great Khural has passed a draft resolution asking the government to seek “comprehensive measures” to improve contracts for the Oyu Tolgoi mine, according to the Parliamentary website.

The resolution also directs Ulaanbaatar to look into swapping its 34 per cent stake in the project for either royalty payments or a production sharing agreement.

The news will be something of a relief for Rio, which feared the parliament might try to completely renegotiate the agreements.

Rio is currently working on a huge underground project at the site, which will be one of the largest copper mines in the world when it is finished.

Oyu Tolgoi also ranks as the company’s most important growth project and is closely associated with its chief executive Jean-Sébastien Jacques.

When Mr Jacques was running the company’s copper business he pulled together the financing package for the underground project.

“We understand that the resolution, which has not yet been officially published, will be finalised according to Mongolian Parliamentary process. Once the resolution is approved and published, we will provide a further update.” the company said in a statement.

The parliamentary working group recommended in April that Mongolia review the 2009 deal, which paved the way for construction of an open pit mine, and revoke the 2015 agreement covering the underground expansion.

Rio has said previously said that it is prepared to tweak the terms of those. Analysts think it could lower the interest rate on the money it has lent Mongolia to cover the costs of developing the mine. If copper prices hold up, they estimate that it will be at least 2030 until the loans are paid off and Mongolia receives any dividends from the mine.

The underground project at Oyu Tolgoi has run into difficulties and could now cost as much as $7.2bn to complete. Rio could also waive the management services fee it charges for running the project. Swapping its stake for royalties, however, would be a much more complex undertaking.

While Rio operates Oyu Tolgoi, it does not have a direct shareholding in the mine. The mine is 66 per cent owned by Toronto-listed Turquoise Hill Resources, in which Rio Tinto has a 50.8 per cent stake, and 34 per cent by the Mongolian government

The Oyu Tolgoi mine is a crucial part of the Mongolian economy. Not only is it the country’s biggest source of foreign direct investment, it also provides thousands of well-paid jobs. The mine, however, has become a political football with members of parliament using it to advance their own interests and agendas.

Earlier this week, an administrative court in Mongolia upheld claims by a non-governmental organisation called Darkhan Mongol that Ulaanbaatar did not follow due process when agreeing the development contracts with Rio.

Rio hit back, saying that it “strongly” refuted any suggestion that its agreements were illegal.

China-funded children's hospital opens in Mongolia www.xinhuanet.com

A China-funded children's hospital equipped with 50 beds and advanced medical equipment opened in the Khan-Uul district of Mongolia's capital of Ulan Bator on Thursday.

Researchers present artifacts proving ancient Mongolians having lived in India www.montsame.mn

Ulaanbaatar /MONTSAME/. Co-organized by the Embassy of India in Mongolia, and the Indian Studies Center of Mongolia, a scientific conference took place under the theme, ‘Culture and traditions of the Indo-Mongoloids of Northern India and the Himalayas, and their ancient relations and similarities with Mongolians’ on November 20.

Intergovernmental agreement on Biocombinat renovation project amended www.montsame.mn

Ulaanbaatar /MONTSAME/ On November 21, Minister of Finance Ch.Khurelbaatar and Ambassador Extraordinary and Plenipotentiary of Hungary to Mongolia Mihály Gálosfai signed the amended agreement on General Programme of Financial Cooperation established between the governments of Mongolia and Hungary on January 25, 2016 in order to increase the budgeted cost of the Biocombinat state-owned factory renovation project.

10 Mongolian companies to export their products to the U.S. market www.montsame.mn

Ulaanbaatar /MONTSAME/ At the initiatives of 'Mongolian Brand Association' NGO, the Mongolian National Chamber of Commerce and Industry (MNCCI), Mongolian Marketing Association and the U.S. Embassy in Mongolia organized ‘Let’s Export to America’ event on November 20 in partnership with the Asian American Chamber of Commerce (AACC).

China’s coal decision endangers Mongolian truck drivers’ lives www.news.mn

Once again, a tragedy is waiting to happen as truck drivers have to sit in their cabs for days on end in sub-zero conditions on the road to China. The coal trucks have been struck at the Tsagaan Khad Border Crossing. The reason: Chinese coal demand has already been met. According to representatives of the coal transporting companies, the truck drivers have been waiting on the road for 10-15 days without food and drink since leaving the Tavan Tolgoi mining complex. There is now a 10km long queue of trucks on the bleak Gobi road to the border.

Russia’s Nord Stream 2 gas pipeline to Europe to start operating in mid-2020 www.rt.com

The Nord Stream 2 project designed to deliver Russian natural gas to Germany and other European customers will start working in the middle of next year, Deputy Prime Minister Dmitry Kozak said on Thursday.
He gave no other details about the exact date of the pipeline’s launch. Earlier, Russian Energy Minister Alexander Novak told reporters that gas deliveries via the undersea pipeline could start in the coming months.The offshore and land sections of the pipeline were connected on the German side last year. The project only needed approval from Danish authorities. Other countries on the route of the pipeline – Russia, Finland, Sweden and Germany – have long-since approved it.

Made in Mongolia – North America 2020 www.news.mn

‘Made in Mongolia – North America 2020’, a business forum and exhibition will be held in New York and Toronto in April, 2020. The event is organized by Export and International Trade Center (EITC) NGO.

Against Whom the US Wants to ‘Strengthen Cooperation’ with Mongolia? www.journal-neo.org

Mongolia’s role in international relations and the global economy is largely determined by its location right in the heart of Asia, its impressive reserves of minerals (copper, coal, molybdenum, tin, tungsten, gold), and its common border with two Eurasian giants – Russia and China. Also important is the fact that Mongolia is a natural transport link in land routes between Europe and the Asia-Pacific, which serve as alternatives to the sea route through the Suez Canal.

Therefore, it isn’t surprising that Washington has developed an increased interest in advancing cooperation with Mongolia in recent years. It should be noted that, ironically, the United States was the last major state of the Western world to establish diplomatic relations with Mongolia. The US only got around to it in 1987 and this was largely due not to the ‘diversification of the USA’s diplomatic ties’, but happened because of Washington’s intention to secure a firm footing in one of the strategically advantageous points of Eurasia. Here, China’s New Silk Road and Mongolia’s Steppe Route project converge, the latter being aimed at increasing Mongolia’s importance as a transit state at the junction of China and Russia.

Ever since the successful democratic revolution in 1990 took place in Mongolia, the United States became one of the primary ‘patrons’ of democratic reforms in the country. Political, economic, and cultural relations between the two states are expanding exponentially.

Against the backdrop of the active self-assertion of the US in the political life of Mongolia and its desire to play a key role in the country, the attempt to carry out a ‘color revolution’ in Summer 2008 following Washington’s distinctive patterns stands out. Essentially, Washington is trying to tear Mongolia away from its traditional partners, Russia and China.

But the main thing the US is particularly insistent upon is strengthening its military cooperation with Mongolia. Through this, Washington seeks not only to forge closer ties with Ulaanbaatar, but also to exert influence on the political course of Ulaanbaatar through increased leverage in the country’s military.

As USA Today reported back in October 2005, the Pentagon has far-reaching plans regarding Mongolia. Donald Rumsfeld, then-US Secretary of Defense, even said at a press conference in Ulaanbaatar: “The United States is exceptionally interested in building military bases in Mongolia, which has long been a vassal of the USSR.”

And this is not just an empty phrase uttered by the American Secretary of Defense, but an obvious strategic calculation: the US counts on its medium-range cruise missiles to be able to reach both the PRC and the Russian Federation if situated in Mongolian steppes. From this point of view, the deployment of American INF forces here is the most strategically advantageous move for Washington, as well as the fact that the population of Mongolia isn’t large, mainly nomadic and not used to defending their civil rights. Thus, they will not protest against the deployment of American missiles and perhaps they won’t even notice it. The US also presumes that Ulaanbaatar has taken an openly pro-Western course after the collapse of the Soviet Union.

However, these plans of Washington have failed to pay off so far. In recent years, the Mongolian government has repeatedly rejected the USA’s proposals to create a network of military bases on its territory.

Nevertheless, the United States continues to attach strategic importance to military cooperation with Mongolia, positioning itself as Mongolia’s ‘third neighbor’, clearly demonstrating the desire to assume a leading role in the military cooperation with the Asian state.

Mongolia, if only nominally, participated in US military operations in Iraq and Afghanistan. Since 2003, Mongolian military specialists have been trained in the United States and starting in 2006, major Mongolian-American field exercises titled Khaan Quest have been held, while the U.S. Department of Defense and the Department of State are funding the Ulaanbaatar Regional Peacekeeping Training Center, which was created with American assistance. According to Voice of America, some 230 Mongol soldiers are still based in Afghanistan. The United States also uses Mongolian territory, which is known for its harsh climate, to conduct the military exercises of its special forces in winter conditions for their subsequent combat use ‘in a country with a harsh climate’ (said country is quite obvious, isn’t it?).

Meanwhile, a noticeable intensification of bilateral contacts has taken place recently upon Washington’s initiative. In June, John Bolton, US Presidential Adviser on National Security, visited Mongolia. Then in late July, Mongolian President Khaltmaagiin Battulga paid a visit to Washington and met with Donald Trump. Following that, the State Department issued the Declaration on the Strategic Partnership between the United States of America and Mongolia. The United States thus became Mongolia’s fifth strategic partner, along with Russia, China, Japan and India.

In this context, the official visit of the Pentagon Chief Mark Esper to Ulaanbaatar in early August attracted a lot of attention: Mongolia ended up in the list of destinations on Esper’s first overseas tour. This confirms the US’ increasing interest in making Mongolia a potential strategic bridgehead, considering its convenient location between Russia and China, the United States’ two main geopolitical opponents. According to The Diplomat, in 2019, the Pentagon emphasized the importance of Mongolia for the USA’s strategic interests in its budget for foreign operations. Washington bluntly stated its intention to make sure that ‘the United States remains a more preferable partner for the country than Russia and China.’ Citing a senior US official, the publication adds that America wishes to expand military operations and intelligence cooperation with Ulaanbaatar.

During meetings with the political leadership of Mongolia, Mark Esper expressed a desire ‘to raise the level of bilateral cooperation’ in order to entice Mongolia with the vision for a free and open Indo-Pacific, which Washington intends to actively use in countering China.

As the results of Esper’s visit to Mongolia showed, Washington intends to secure this country as a significant partner in the defense sphere using a complex strategy. Firstly, the US intents to improve the current formats of interaction, including the participation of Mongolian military in the US-led Operation Resolute Support in Afghanistan and the multilateral military exercises Khaan Quest. The US also wishes to ensure the country’s continued participation in global UN peacekeeping operations (about 10% of Mongolia’s armed forces participate). Secondly, the US intends to continue ‘niche’ supplies of military equipment (communications equipment and ammunition worth $2 million per year). The next step is ‘monitoring’ Mongolian military-technological cooperation with Russia and China by sending Pentagon delegations to assess the ‘weapons needs of Mongolia.’

Although these are characterized as important but not ‘breakthrough’ areas in defense cooperation, their focus is on expanding the military presence of the US, as well as the deployment of Pentagon objects, which seemed impassable before from the point of view of Mongolian legislation. The plan is to create Cooperative Security Locations (CSL) with logistical support and a certain number of US military personnel. This would allow the US to establish a presence on Mongolian territory and, if necessary, instantly deploy battle and logistics support bridgeheads of the army in any region. By advancing specifically the option of creating American CSLs, Washington is quite clearly banking on the fact that, unlike their ‘classical’ military bases, such a designation won’t lead to misreading. The term allows the US to maneuver and call them anything but ‘US military bases.’

But, despite all of these efforts on the US’ part, Russia and China will remain the Mongolia’s main allies, primarily because of the foreign policy priorities of the current Mongolian leadership.

Vladimir Odintsov, expert politologist, exclusively for the online magazine ‘New Eastern Outlook’.

Mongolia to cooperate with GGGI in green building www.montsame.mn

Ulaanbaatar /MONTSAME/. On November 20, Minister of Foreign Affairs D.Tsogtbaatar received Director-General of the Global Green Growth Institute (GGGI) Frank Rijsberman.