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http://zgm.mn/post/3166/

MRPAM: 39 more licenses revoked in September

Exploration licenses account for 48.57 percent of the total licenses in Mongolia and mining licenses account for the remaining 51.43 percent.

MRPAM: 39 more licenses revoked in September
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http://zgm.mn/post/3166/

A total of 39 mineral licenses were revoked in September alone, according to the Mineral Resources and Petroleum Authority of Mongolia (MRPAM), in a mass anti-mining act by the Government of Mongolia. In terms of the motive, 16 licenses were dismissed due to the license payment, informed MRPAM.

This follows revocation of 57 licenses in the prior month, 24 of which were based on complaints from local authorities concerning negative effects on the environment, rehabilitation and environmental management plans. However, two of the licenses, considered as eco-unfriendly, were unexploited fields and pasture land.

Mongolia earns 94 percent of its annual export revenue from mineral commodities. Despite the fact, three licenses held by Mongolia’s main exporter Southgobi Sands, which accounts for nearly half of total coal exports, have been annulled.

During a forum on domestic business environment organized by Bloomberg TV Mongolia late last week, economists have expressed major concerns on sudden decisions made by the government, saying it may pose significant risk for foreign investment climate.

“The legal environment of the mining sector is inadequate. Policies need to be stable to attract foreign investment. Companies and mining sector are not guilty, but the government is performing ineffectively,” highlighted Zoljargal Jargalsaikhan, Executive Director of Mongolian Coal Association, during the event.

Exploration licenses account for 48.57 percent of the total licenses in Mongolia and mining licenses account for the remaining 51.43 percent.

Former Prime Minister of Mongolia, Amarjargal Rinchinyam also addressed, “We need to look closely at the reason why the legal environment of business is not improving. Economists have to examine every factor that affects it. Also, the government’s decision to revoke multiple mining licenses simultaneously is not right.”

The timing of the decision is significant as Mongolia awaits major bond repayments starting in 2021. The year 2020 is detrimental for the country as it’s Mongolia’s last chance to collect substantial funds to cover the repayments. The parliamentary election also due next year is seen as a major risk that the country needs to tackle to avoid bankruptcy

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Batmunkh Batkhuu: We need to create a reserve without halting coal mining

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Domestic coal export companies have faced great challenges these days. One of the representatives of those companies, Batmunkh Batkhuu, Chairman of Big Mogul Fund, emphasized that as a mining dependent nation, the government of Mongolia should pursue trade policies and implement a program to support private sectors. Additionally, he noted that companies need to stock up coal during the quarantine. 

-Big Mogul Fund exports coal through the border crossing in Zamiin-Uud. How did China's procurement affect the import of Mongolia? 

-Currently, the ports of Erlian and Zamiin Uud have not been suspended for export and import transportations. However, restricting the movement of citizens tend to affect export. We were planning to export nearly 300,000 tons of coal concentrate this year however, the situation is unpredictable as China’s economy continues to shrink. 

-The researchers believe that imports will increase significantly to recover the industry loss when the Covid-19 stops. How does your company estimate the risk? 

-China’s economy has not been collapsed with decline in both supply and demand before. The country’s supply and demand had declined simultaneously. As of today, China is the largest exporter in the world and the second-biggest importer. It seems that economic conditions are being measured as with the SARS, which happened about ten years ago. But at that time, China’s economy was much smaller than it is now and its impact on the global economy was negligible. Also, China’s large labor force migrates through Wuhan, from north to south. The cessation of millions of labor migration has made it impossible for a coastal industrialized zone to be restored quickly. 

-How long do steel factories and power plants take to restore after infection ends? 

-Our company is a thermal coal exporter. But we are not big enough for China’s market. It is impossible to live without electricity so that the industry is likely to be recovered quickly. 

-After quarantine, how will the commodity price effect on the regular operation of the plant? 

-Obviously, it positively affects commodity prices and creates growth. Thus, we have to prepare the amount of material reserve.

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Erdenes Mongol's bond to settle pension loan debt

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  • The company is planning to sign agreements of MNT 695 billion with commercial banks shortly
  • Bank of Mongolia informed that an outstanding pension loan balance amounted to MNT 776 billion, as of November 2019.

Erdenes” bonds have been issued under the guarantee of the Development Bank of Mongolia in connection with the pension loan payments, said CEO of Erdenes Mongol LLC, Gankhuu Purevjav. Within the framework, the company is planning to settle agreements of MNT 695 billion with commercial banks shortly. Erdenes Mongol’s bond has a 6 percent yield which will mature in six years. Following the President of Mongolia Battulga Khaltmaa’s announcement in his New Year’s address, the Parliament, on January 10, approved the law on one-time cancellation of pension-backed loan debts. The law approved elders who took a loan to continually receive their pensions from the beginning of this year. According to the law, the Government of Mongolia (GoM) decided to repay the pension loan debts up to MNT six million at once. “The relevant research on interest rates differences and losses has been made. Sides have concluded their decision,” said Governor of the Bank of Mongolia Lkhagvasuren Byadran. Khan Bank and State Bank of Mongolia have represented other commercial banks in the several meetings on one-time cancellation of pension loan. Khan Bank sought to resolve issues without harming the interests of its 2.4 million depositors and pledged to settle the pension loans as required by law by February.

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General budget revenue amounts to MNT 67.2 billion in January

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In January, state budget revenue reached MNT 67.2 billion which had a deficit in 2019. Budget revenue increased however, its surplus declined compared to the previous year. Government expenditure turned MNT 40 billion eliminating budgets of local, social insurance and human development. The total of grants and income amounted to MNT 767.7 billion while expenditure and net lending reached MNT 641.3 billion. The tax revenue went upward mainly affected by budget exceed expenses. Tax revenue reached MNT 656.4 billion, increased by 4.8 percent compared to the same period of the previous year. This growth was mainly driven by a rise of 63.9 percent in value-added taxes, and 4.1 times increase in the property tax year on year. It is estimated that the budget deficit is MNT 2 trillion to 5.1 percent of GDP in 2020. After that new risk has followed up. According to the government’s decision, coal export completely suspended through ports of Gashuunsukhait, Shiveekhuren, Bichigt, and Bulgan until March 2, 2020. In the first two months of 2019, Mongolia exported 1.9 million tons of coal, gaining export revenue of USD 163.4 million. Both Mongolia and China’s traditional celebrations occurr in February. Same as last year, it is estimated that Mongolia will lose USD 163.4 million in coal exports due to government sanctions.

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TRQ announces FS submission for TT Power Plant Project

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  • OT is obliged to secure a long-term domestic source of power for the Oyu Tolgoi mine
  • The power plant would be majority-owned Oyu Tolgoi LLC and situated close to the Tavan Tolgoi Coal-minning district located approximately 93.2 miles from the Oyu Tolgoi mine

OT has made significant progress to develop a cost-competitive and optimal solution for TTPP with a fully negotiated EPC contract that is now ready for signature.

Turquoise Hill Resources (TRQ) Ltd. on Tuesday announced the submission of the Feasibility Study for the Tavan Tolgoi Power Plant (TTPP) Project to the Government of Mongoliaby Oyu Tolgoi (OT) LLC. OT is obliged under the 2009 Oyu Tolgoi Investment Agreement to secure a long-term domestic source of power for the Oyu Tolgoi mine. The Power Source Framework Agreement (PSFA) entered into between OT and the Government of Mongolia on December 31, 2018, provides a binding framework and pathway for the construction of a Tavan Tolgoi-based power solution for the Oyu Tolgoi mine by June 30, 2023. The power plant would be majority-owned by Oyu Tolgoi LLC and situated close to the Tavan Tolgoi coal-mining district located approximately 93.2 miles from the Oyu Tolgoi mine. TTPP Feasibility Study is based on a 300 MW coal fired power plant to be located in Tsogttsetsii soum of Umnugovi province, with a total project cost estimate of up to USD 924 million, pending consideration of certain amounts yet to be finalized such as government fees, licenses and certain reimbursements per the Tavan Tolgoi Investment Agreement.OT has made significant progress to develop a cost-competitive and optimal solution f o r TTPP with a fully negotiated EPC contract that is now ready for signature. The current schedule targets two units of the TTPP to be operational by June 2024. This will allow Oyu Tolgoi to spend around USD 200 million, which spent on importing energy from China to pride domestic spending power consumption.“Certainty of safe, reliable and stable long term power supply is fundamental to the development of an underground mining project like Oyu Tolgoi. We will continue to work with the Government of Mongolia and Rio Tinto on behalf of all stakeholders to determine the preferred power solution for Oyu Tolgoi,” stated Ulf Quellmann, Chief Executive Officer of Turquoise Hill.