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http://zgm.mn/post/2452/

Mongolia’s Foreign Policy: Russia’s interest in Mongolia

The real interest of Russia is nuclear energy

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http://zgm.mn/post/2452/


I assume the readers will receive it as a personal point of view. Both Mongolian and Russian researchers should read this.

Mongolians have been struggling to handle the relation with Russia since the establishment of democracy. Mongolia tends to impose its position or change foreign policy when working with Russia and other counterparts. Russians are patient and they know us well. It is definitely true.

There is a commission on the cooperation of Mongolia-Russia named Intergovernmental Commission. The decision of the committee is extremely challenging for the Mongolian side. If we fail to fulfill the plan, then the authority of departments in charge of Russia's relations often change.

In 2014, Russian President Vladimir Putin visited Mongolia on the occasion of the 75th anniversary of the victory of the Khalkha River. It has been five years since then. I wanted to briefly summarize the progress of projects between Mongolia and Russia.

At that time, the heads of the two countries have agreed on strengthening the military-technical cooperation of both countries. It is important to note that the traditional cooperation of the Mongolian Armed Forces and modernization of the Armed Forces and the preparation of military personnel remain effective.

The goal of intensifying relations between the two countries and creating a balanced development has not achieved yet. The pledge to negotiate a legal basis for Mongolian agricultural products, including meat, meat products, wool, cashmere, leather, sheepskin articles and Mongolian yurts in the Russian market did not implement. Where is the issue of RUB 50-100 billion soft loans to build trade in national currencies, establish related documents, and create the necessary RUB resource in Mongolia? There is also no implementation on the construction of the "Ulaanbaatar Railroad" infrastructure to complete the construction of dual and electrified railroads by 2020. The full potential of Mongolia's railroads would increase the amount of transit transportation between Russia and China.

Mongolia’s railway has clearly defined its policy in 2012 by the Government. At least one-kilometer road remains unfinished today due to the government instability. It has been 10 years since we started discussing the construction of a new railway due to the disruptions in state policy.

Mongolia is the shortest route between Russia-China and Asia-Europe. It is important to note that the Mongolian transit transportation route in the regional network has a great significance. It is also a pleasure to build a two-way electrified dual-lane road between Sukhbaatar, Sainshand, and Zamiin-Uud, which is capable of passing 100m tons of mining goods per year. I hope the feasibility study will be completed.

One of the important results of Putin's visit was the establishment of the "Intergovernmental Agreement between the Governments of Mongolia and the Russian Federation". Both Mongolian and Russian citizens became able to travel without a visa for a certain period of time, and it was a huge boost to Mongolia's business demand in Russia. However, it is only supporting the import of food and tourists. Mongolian businesses are open to East Siberia, at least Buryatia and Irkutsk.

Relations with Russia's organization, companies, and border-regions will develop long-term partnerships. Mongolians must pay attention to it. The talks on exporting some meat and agricultural products to Russia have been the subject to many years of rumors. The Russian ban stopped the meat supply from New Zealand, so the authorities discussed importing meat from Mongolia, and it was our livestock farming. New Zealand has over 40 million sheep and 8 million heads of livestock, and Mongolians were excited about their 60 million livestock in economic trade. Whenever there is a desire to be exported to the Russian market, there must be permission of origin. In the past five years, what kind of cooperation has been made with Russia?

We have to change our mindset and culture of Russia. Mongolians are trying to simplify their traditional approaches as the "brother state", which was only existed during the socialist era and try to solve the problem easily. We do not understand that modern Russians have shifted to market relations since Russia was different from Soviet times.

How do you see Russia at the state level? There is a poor mindset to get help, to resolve Mongolia-Russia relations in Mongolia’s domestic problems, and to put Russia into a state of poverty and unemployment, in particular.

• One of the important results of Putin's visit was the establishment of the “Intergovernmental Agreement between the Governments of Mongolia and the Russian Federation”.

• All the working conditions for quality education, good health and dignity will start from atoms and uranium. 

• Russia's equity interest in Oyu Tolgoi and Tavan Tolgoi will not cross the border and even reject Erdenet.

There was an agreement on improving the level of relations between Mongolia and Russia, deepening political mutual trust, and negotiating a number of important issues at high levels, such as developing the mutual trust of bilateral economics, transportation, infrastructure, finance, border, culture, and humanity. I have a suspicion that the Mongolian side, our organizations, and citizens are not taking it seriously.

Economically, there is no direct investment from Russia to Mongolia. Mongolia needs to think bigger when comes to Russian investment. Here is a description of the so-called propriety of our wealth in the third-country market (such as China) as I went to Atomexpo International Forum in Sochi on the invitation of Russia's Atomic Energy Corporation ROSATOM.

I have heard and believed that the world is interested in atomic energy and that interest is growing because of its profitability. This is a technology that will earn USD 3 from every one dollar and the foundation for development is the atomic generation. About 3500 delegates from more than 70 countries attended the two-day meeting, representing one-third of the globe. Many of the countries do not relate to uranium or atomic assemblies, who had not participated in previous meetings sent their delegates.

The Mongolians think atoms, uranium, and nuclear are destructive. The forum’s main theme was the “Nuclear for a Better Life” and I deeply explored it. In general, nuclear technology can be used to eliminate poverty, hunger, the supply of clean water, and air pollution. Do not be afraid of atoms and uranium. Furthermore, the delegates said all the working conditions for quality education, good health and dignity will start from atoms and uranium.

Our country is ranked 10th in the world for its uranium reserves and accounts for about 141.500 tons out of 5.7 million tons of total reserves in the world. However, we did not do anything in the first round of a radioactive mineral in economic circulation, while Canada, Australia, the United States, Russia, and Kazakhstan are leading the socio-economic development. Interestingly, the French nuclear company AREVA started operations with Mongolia and Kazakhstan. This would mean increased foreign direct investment. I will not talk about what our readers know what happened to AREVA. Kazakhstan is now the world's largest player, the first in the top 5 in nuclear power and uranium. Therefore, we need to use our capital and get into economic circulation. We also need to focus on world outlook. The eternal use of mankind is energy, and we have the potential to use that energy and become one of the big players in the world.

The countries that are building their new nuclear power stations are real examples to us. There is a list including, Belarus, Lithuania, Turkey, Vietnam, Jordan, Poland, Bangladesh, Malaysia, and Indonesia. Their representatives are invited to Sochi and are interested in Russian nuclear technology. The Russian President said Russia is leading the nuclear energy sector. It has 35 nuclear reactors which provide 18.59 percent of the country’s total energy production and 8 new reactors. In the future, there are plans to build 25 reactors and add 23 reactors to make nuclear energy account for 23 percent in 2020 and 25 percent in 2030. In addition, foreign countries are in the process of tackling Russia in the same way that China is established in India.

I believe that nuclear-energy cooperation in Mongolia-Russia can be a new page in our country's history. What will be the real interest in Russia in the nuclear energy sector? Understandably, when we come to rivals, copper, coal, gold, and other natural resources to other foreign investors, it is clear that Mongolia will be more interested in Russia. Russia's equity interest in Oyu Tolgoi and Tavan Tolgoi will not cross the border and even reject Erdenet. Our priority is the railway, infrastructure, gas and oil pipelines, but these are the only real interests of Russia in Mongolia. The real interest of it is nuclear energy.

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Miners start the year with revenue growth

Oyu Tolgoi spent USD 296.4 million on underground development in the first quarter

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Mining projects that have a major impact on Mongolia’s economy saw splendid expansion in the first  quarter. The Top 100 Mongolian firms included Erdenet Mining Corporation (EMC), Erdenes Tavan Tolgoi (ETT) and Oyu Tolgoi (OT). These companies paid a total of MNT 2.1 trillion to the state budget last year.

Copper

Oyu Tolgoi, one of the main mining projects in Mongolia, spent USD 296.4 million on underground development in the first quarter of this year. The second shaft is still ongoing and it is expected to end in October.

Xanadu Mines, listed on the Australian Stock Exchange announced the result of additional exploration at Kharmagtai deposit. In the first quarter of this year, the capital balance of the company reached AUD 3.1 million, while post-tax losses nearly halved from the same period last year. The share price of the company reached AUD 0.08 at the Australian Stock Exchange.

Gold

Erdene Resource Development Corp. (ERD), Toronto Stock Exchange (TSX) and the Mongolian Stock Exchange (MSE) listed firm, has conducted drilling at the Khundii field and expanded the mineralization of the Bayan Khundii deposit. The company explained its plans in a report to support the feasibility study of the project. “The exploration of the project on the Midfield area found 5.9 grams of gold per tonne at a depth of 112 meters per. This affirms the high mineralization in the main part of the Bayan Khundii deposit,” said the CEO of the company Peter Akerley. The share prices of ERD at the TSX reached CAD 0.19.

Coal

SouthGobi Resources, operating at Ovoot Tolgoi mines increased its coal sales by over 80 percent to 1.1 million tons in the first quarter of the year. The average selling price of the company has decreased from USD 43 in 2018 to USD 34.9. The net profits have doubled from the previous year to USD 13.4 by reducing the cost.




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Tavan Tolgoi JSC: Coal sales totaled 1.8 million tons in 2018

The company's share price fell 36 percent to MNT 6,400 at MSE in a year

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Tavan Tolgoi JSC: Coal sales totaled 1.8 million tons in 2018 Tavan Tolgoi (TT) JSC was planning to sell 5 million tons of coal in 2018, but the amount totaled only 1.8 million tons, earning MNT 226.4 billion in sales revenue. Net profit was MNT 52.8 billion, according to its financial statement.

The company's share price fell 36 percent to MNT 6,400 at the Mongolian Stock Exchange (MSE) over the last year. The decline is mainly due to the Professional Inspection Agency's activity that caused temporary delay in share sales for over two months in connection with the mining operation of the company.

In addition, the companies that are operating at the residual deposits of Tavan Tolgoi have been facing a major problem in the customs sector last year. The Chinese side delayed the import at the Gantsmod port because of the introduction of smart systems, which resulted in the 21-day suspension of the Tavantolgoi-Gashuunsukhait road to reduce the overload at the road.

The government is working to improve the capacity of the border checkpoint

Tavan Tolgoi JSC reported in its financial statements that the road was closed for 18 days due to weather conditions. However, Erdenes Tavan Tolgoi JSC, which operates at the same deposit with TT exported 13 million tons of coal in 2018, while Energy Resources LLC's coal production reached 10.9 million tons.

The government is working to improve the capacity of the border checkpoint. Umnugovi province Governor's Office reported that the Gashuunsukhait is waiting for a transaction of CNY 140 million or MNT 50 billion in part of the Chinese grant.



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Tavantolgoi-Zuunbayan railway to commence this week

MNT 750 billion will be spent on the project

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The Government is planning to inaugurate the construction of 416.6 km railway from Tavantolgoi to Zuunbayan on May 24. The Minister of Road and Transportation Enkh-Amgalan Byambasuren announced that soldiers will help finish the task. Also, it is estimated that MNT 750 billion will be spent on the project.

The domestic transport revenue of the Tavantolgoi-Gashuunsukhait railway is about USD 8, while the transport revenue of the Tavantolgoi-Zuunbayan railway will be USD 20 (per what? Add measure). The Tavantolgoi-Zuunbayan railway line is scheduled to be completed in 2020 starting from May. A total of 3,647 people will work on the construction of the tunnel and dam, while 1,144 people will participate in building the other development works.

There are seven tasks to build a railway:

● Pre-construction work ● Laying bottom ballast 

● Top ballast

● Water supply 

● Electricity

● Connection 

● Building

“The first task, pre-construction activities will be undertaken by the Mongolian Armed Forces (MAF). Ulaanbaatar Railway will be responsible for the construction of the top ballast, the others will be done by the chosen domestic companies, and 36,000-meter cubic soil work will have completed. MAF and subcontractors will do the soil work,” the Deputy Minister of Road and Transportation.

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Erdenet Methane LLC signs Methane Investment Agreement

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Erdenes Methane LLC and Jade Methane LLC of Australia established Methane gas investment agreement to set reserves of coal seams of coal at Tavantolgoi deposit. Executive Director of Erdenes Methane LLC and Executive Director of Jade Methane LLC have signed the contract on May 17, 2019.

CEO of Jade Methane Joseph Burke said “Mongolia is close to the market of key customers in methane gas. It is seen as a major competitive advantage since the natural gas reserves are relatively close to 600km from Ulaanbaatar. China receives natural gas from other countries through its northern port. Instead of that, if they export natural gas and methane gas from Mongolia, China will have the opportunity to deliver at least cost to its core customers.”

The Board of Directors of Erdenes Mongol LLC made a decision to raise funds from the international market by exchanging exploration and feasibility studies for the Coal Seam methane gas project by foreign investors last year. According to this, Erdenes Methane announced an open tender and Australia's Jade Methane was chosen as the foreign investor to cooperate on the project.