Note: All figures in this report are from data released by the National Statistics Office and cover the period 1 January to 15 April. Mongolia’s total foreign trade turnover reached $2.54 billion, a drop of 30.9% YoY.  Exports accounted for $1.18 billion of this and imports for $1.36 billion, down 43.7% and 13.7% respectively. The foreign trade deficit of $175.9 million was mainly because of the dramatic decline in mineral exports. The last days of the period under review showed some improvement in coal and oil exports, but this is only when they are seen against the situation in most of March, when exports were almost stopped. Any return to the pre-pandemic levels is still a long way off. 

In keeping with its position as the world’s second biggest mining company, Rio Tinto has been taking several bold steps to halt contributing to climate change. With the divestment of its last coal project in 2018, it became the first major company to have no fossil fuel asset. This was also when Rio released its first climate change report titled ‘Our approach to the climate change 2018’. This has now been followed by “Our approach to climate change 2019”, which was released in February this year. In this Rio sets out its goal of achieving zero emission from its operations anywhere by 2050. That would cover both direct and indirect emission – in scientific parlance, Scope 1 and Scope 2 emission. CEO Jean Sebastien Jacques has said that the company will spend up to $1 billion in the coming five years on strategizing and getting ready to take up projects to reach the lofty goal. 

The first parliamentary election after the amended constitution comes into force on May 25 has been scheduled to be held on June 24, but there are some who want it to be deferred until the Coronavirus threat recedes. All contesting parties will campaign on the basis of their action plan which have first to be cleared by The National Audit Office. During its check this office found that all three major parties, and several of the others in the fray, had gone overboard in making promises. It promptly rejected their plans and asked the parties to submit by 25 April revised action plans that kept within the parameters of the law.   

Following the success of the 2019 Block XX drilling campaign which resulted in the discovery of oil in the  Gazelle 1 and Heron 1 wells, as well as Heron 1 delivering one of the highest flow rates ever recorded in Mongolia, Petro Matad Limited, the AIM quoted Mongolian oil explorer, is now focused on securing the exploitation licence required under the production sharing contract (PSC) to enter into the development phase on Block XX. The company has been advised by the Mongolian authorities that there is support at the highest levels of Government to grant the licence, as the Government recognises that Petro Matad has been the country’s most active oil explorer in recent years and that the success of its 2019 exploration efforts is very well timed in light of the Government’s commitment to the construction of a domestic oil refinery.

The Mongolian People’s Party promised in 2016 that the 1072 shares of Erdenes Tavan Tolgoi held by every citizen would be “made alive and valuable”. The announcement by the company in February that it would distribute dividends before the parliamentary election was welcomed by shareholders -- most of whom would also vote in the election -- as a step in that direction, but for the MPP promise to be truly fulfilled, it is not enough to pay dividends. To be “alive”, the shares must be free to be traded in the stock exchange. Only then would citizens know that they own something “valuable”.  The “small” Tavantolgoi, a company treated as A-Grade by the Mongolian Stock Exchange, earned a net profit of MNT52 billion in 2018 when it sold 1.8 million tonnes of coal.

Known to speak his mind, B. Lkhagvajav trained as a lawyer and holds a doctorate in business administration. He was President of the Mongolian National Chamber of Commerce and Industry and has been a member of the Supervisory Board of the Bank of Mongolia. In a long-ranging interview with G. Iderkhangai, he peppers his views on the present with snippets from the past, all to express some concern about what the future holds. At one time you used to regularly speak out when something significant happened in the mining sector, but for several years now, we have missed your strongly held and bluntly expressed views. What has kept you silent?          You are right. I have refrained from speaking on mining matters since, say, 2010, after expressing my views regularly between 2006 and 2010 when the OT agreements were being discussed.

I have been in the geological sector for 34 years and have worked in both the state and private sectors, as also in research organizations and foreign investment companies. I never left geology, even in the difficult years of transition to the market economy. After graduating in 1986 from the State University in Irkutsk in the then Soviet Union, I started my career as a specialist in the Institute of Geological and Mining Production and Research in what was then called the Geological and Mining Ministry. Here I did some Mongolia-related research under the guidance of Dr. J.Byambaa. Then I was a researcher with the Institute of Geology of the Academy of Sciences, and a specialist in charge of the Mongolia-related studies when the Mineral Resources Authority was founded. I am proud that I have worked closely with Mongolia’s best of the best scientists. 

Preliminary statistics for the first quarter show that the first turbulence of a coming crisis is being felt in the Mongolian economy. Foreign trade, which had grown slightly in the first two months, declined from mid-March. Exports that bring dollars to the domestic market fell by almost 50 percent. After a two-month standoff, mineral exports, including coal, are unlikely to reach the 42 million tonnes projected in this year’s budget. Due to declining coal supply, copper has become the leading export mineral. Although Oyu Tolgoi’s copper concentrate shipments continued, exports fell by 13 percent. Meanwhile, copper price hit $4,685 on the London Metal Exchange, its lowest since 2016. In the 2020 consolidated budget, copper price was estimated at $5,991. Although mineral exports have declined overall, the supply of iron ore with railway access has retained its growth. Currently, the budget revenue has been disrupted by MNT275 billion.

Discover Mongolia-2019 Minerals and Mining Business Summit. September 27, 2019 Shangri La Hotel, Ulaanbaatar, Mongolia

9th Coal Mongolia 2019 International Coal Trade, Investment Conference and Exhibition, September 5-6th, 2019, Ulaanbaatar

It was heartening to see at the latest PDAC (The Prospectors and Developers Association of Canada) convention how Mongolia commanded the attention of many of the 25,843 attendees from more than 130 countries at the world’s premier annual mineral exploration and mining event, held in Toronto from March 3 to 6. 

Photo by R.Delger /MMJ/