In resource-rich Mongolia, debate lingers on China ties
* Mongolia politicians determined to avoid China-dependency
* Govt aims for diversified customer base for minerals
* Split on large industrial park vs. railway construction
ULAN BATOR, June 18 (Reuters) - Mongolia's bid to exploit untapped mineral wealth, build huge infrastructure projects and list its homegrown firms abroad, is hampered by an unresolved dilemma facing the young Asian democracy: the rise of resource hungry China and its influence as Mongolia's major customer.
Consultants, bankers and analysts are flocking to Mongolia, hoping the government values economic priorities more than politics as it tries to pull the bulk of its 3 million citizens out of poverty.
"China is the principal market for the majority of what Mongolia will be producing and, as a result, we expect Chinese investment interest will be strong in Mongolia because clearly the Chinese companies have the market linkages inside China," Graeme Hancock, senior mining specialist at the World Bank, said at the Frontier Securities' Mongolia Capital Raising Conference in Ulan Bator.
"However, I do recognize and have observed during my time in Mongolia some concern about Mongolia being dominated by Chinese investment," Hancock added.
"So, while there will be a lot of investment from China, there will be limits to that investment. There will need to be a lot of partnership arrangements with Mongolian companies to facilitate Chinese investment."
"The Boston Consulting group has identified there are other market opportunities besides China, such as Korea, Japan, India, and Taiwan for both coal and copper," said Ganbat Chuluunkhuu, adviser to the minister for road, transport, construction and urban development
RLPC-BNP,StanChart arranging Ivanhoe debt in Mongolia-sources
June 18 (Reuters) - BNP Paribas (BNPP.PA) and Standard Chartered Bank (STAN.L) have been selected to jointly arrange the debt financing package for Ivanhoe Mines Ltd's (IVN.TO) Oyu Tolgoi mine project in southern Mongolia, banking sources said.
Standard Chartered (2888.HK) and BNP, along with the European Bank for Reconstruction and Development (EBRD) and International Finance Corp (IFC), form the group of lead arranging banks for the financing, now estimated at around $1.8 billion.
Debt was previously estimated at $2.5-$3 billion.
EBRD and IFC were mandated last month and would provide up to $300 million each in the form of an "A loan" for the project, according to an Ivanhoe press release dated May 21.
A further $1.2 billion would come from commercial banks in the form of a "B loan."
Parliament discusses mining-related drafts
June 18 (news.mn) Parliament yesterday discussed draft laws relating to mining. One, developed by MPs D.Gankhuyag and Z.Enkhbold, was not approved, with 62.8 percent of MPs voting against it, while another, initiated by MPs N.Batbayar and S.Byambatsogt got the support of 75.6 percent to be forwarded to the Standing Committee on the Economy for the next stage of discussion. Another draft, restricting issue of mining exploration licenses, submitted by President Ts.Elbegdorj, was also sent to the standing committee.
This failed to convince MPs who did not support further discussion on the draft. The draft that they did wish to discuss more was also one that, its initiators said, was based on the Oyutolgoi agreement experience. They wanted future agreements on deposits explored with private money to be limited to 15 years.
The President’s draft to stop the grant of new exploration licenses was discussed behind closed doors as it involved matters relating to national security. The entire business of granting mining licenses has become chaotic, and the President wanted this to be kept in abeyance until the whole issue was sorted out. However, the working group that had discussed the draft suggested that the ban on fresh licenses should not extend beyond 2010. The head of the group, L.Gantumur, said without a deadline, the whole mining sector might collapse.
The draft will now be discussed by related Standing Committees.
Working group on Tavantolgoi to visit mine sites
June 18 (news.mn) The working group on the Government’s draft protocol on the Tavantolgoi deposit held its first meeting on Tuesday. The group comprises four MPs from DP and five from MPRP. Its head, MP D.Damba-Ochir, later told media that they heard the suggestions of mining experts and will receive suggestions from NGOs and civil movements. It also plans to visit mine sotes such as Tavantolgoi and Ukhaa Khudag by the end of the week.
He clarified that Tavantolgoi has five reserves. Foreign and domestic companies that will operate in Tavantolgoi may also be permitted to make geological exploration of the smaller reserves, something that has not yet been done extensively.
Work on selection of foreign companies will begin as soon as Parliament approves the protocol, he said.
STOCK EXCHANGE WEEKLY NEWS
June 20, Ulaanbaatar, /MONTSAME/ Five stock trades were held at Mongolia's Stock Exchange (MSE) during the week from June 14 to June 18. Overall 259.7 thousand shares of 41 JSCs were sold totaling 127.5 million MNT trade.
Index top-20 is 9323.34 points was decreased by 38.31 units, or 0.4% against the previous week. The total market capitalization was set at MNT 771.3 billion, decreased by MNT 0.8 billion or 0.1%.
Shares of "Hermes center" JSC (103.0 thousand units), "Khokh gan" (36.4 thousand units) and "Monninjbar" (32.4 thousand units) JSCs were actively traded in terms of trading volume, but in terms of trading value "Sharyn gol" (MNT 33.6 million), "Gobi" (MNT 28.8 million) and "APU" (MNT 17.7 million) JSCs were actively traded at MSE last week.
Leighton pushes into the Gobi
June 19 (The Age) WHEN billionaire mining magnate Robert Friedland had his effigy piled on to an oil drum, doused with petrol and lit in Mongolia's Sukhbattar square, it sent a chilling message to the mining world that the Mongolian government and its nation of largely nomadic herders would not condone foreign exploitation of the world's most promising new mining resources.
Mr Friedland, also known as the ''Grave Digger'' in Mongolia, was one of the first people to recognise its immense natural resources, which include the world's fourth-largest proven coal reserves, the world's second-biggest copper reserves and one of the biggest gold mines.
In sharp contrast, when Leighton Holdings boss Wal King flies to Mongolia, government officials put out the welcome mat. It is not hard to see why. From the outset, Mr King and other Leighton executives have made it clear the company has no interest in owning Mongolia's mineral deposits. As the world's biggest mining contractor, Leighton's strategy is to make its money providing mining services to companies, including load and haul of waste, load and haul of coal, drill and blast, mine planning, technical support, site camp management and catering services. To this end, it is using mainly Mongolians to work on the projects, and this involves training them up for specific projects.
''We don't want to compete with Mongolian companies,'' King said. ''We are there to provide a service to them. We work closely with our clients and suppliers, and we want to be clear that we don't want to own the mines.''
As one mining executive said: ''Mongolians are distrustful people. If you consider their history, they have every right to be. They are also very nationalistic. Leighton has played their cards right. As a mining contractor Leighton is seen as a supporter rather than a competitor. It explains why they have won three out of three tenders.''
In a presentation to the Leighton board in the capital, Ulaanbaatar on June 2, Tyrwhitt forecast that by 2013 Leighton's market share of Mongolian coal output would be 57 per cent, compared with 21 per cent in 2010.
Indian Mines delegation calls on Mongolia PM
New Delhi/Mongolia, June 18 : A high level government and business joint delegation on mines sector, led by Ministry of Mines Secretary Santha Sheela Nair, visited Mongolia and China recently.
It was also discussed in the JWG that five different forms of cooperation could be pursued for achieving mutually beneficial results.
They are: first, technical cooperation between the Geological Survey of India and its Mongolian counterpart in the areas of training, satellite based mapping, targeted surveys and studies; second, technical cooperation between the Indian Bureau of Mines and its Mongolian counterpart in the areas of mineral processing, laboratory scale studies and training, information sharing and computerized ore body modeling.
Third, formation of Government of India backed consortium of Indian companies from public and/or private sector for seeking mining and mineral concessions from Mongolian authorities for exploration and/or development; fourth, possible formation of joint venture companies among Government of India backed companies and development of mineral and mining assets including uranium and coking coal and , fifth, conduct studies on infrastructure issues associated with development of mineral resources.
The Mongolian Minister for Mineral Resources and Energy, D. Zorigt wanted participation of Indian companies in different sectors. The Indian side mentioned that Indian consortia would be interested in these sectors.
India eyes stake in Russian uranium field
New Delhi, June 20 (Hindu Business Line) India is evaluating the option of picking up stake in one of the world's largest uranium fields in Russia.
ARMZ Uranium Holding, which also has licences for uranium fields in Kazakhstan and Mongolia, had earlier said it is looking for a strategic partner to help it develop the Elkon mine.
Jindal Steel & Power (Mauritius) Ltd, in 2008, had bought the entire stake in a uranium asset in Mongolia jointly owned by Canadian firms Bluerock Resources Ltd and Uranerz Energy Corp for $2.6 million. Mongolia has about 2 per cent of the world's uranium reserves. …
Mongolian president speaks highly of relations with China
ULAN BATOR, June 19 (Xinhua)-- Mongolian President Tsakhia Elbegdorj said here Friday that the good-neighborly partnership of mutual trust between his country and China is developing across all areas.
Sun shines for shares
June 21 (Business Day) Australian shares jumped 1.3 per cent today, buoyed by phone giant Telstra and news that China will allow its currency to appreciate slowly.
At the close, the benchmark S&P/ASX200 index was 60.7 points higher, or 1.3 per cent, at 4612.6, while the broader All Ordinaries index rose 58.6 points, or 1.3 per cent, to 4632.7.
All the major sectors in the sharemarket rose, with materials gaining 2 per cent and financials 1.3 per cent higher.
Much of today's increased risk appetite came from news over the weekend that China was looking at a more flexible arrangement between the US dollar and the yuan, which would provide Australia with more stimulus, said CMC Markets analyst David Taylor.
Major resource stocks held onto Friday’s gains with Rio Tinto adding another $1.35, or 1.9 per cent, to $72.20, while BHP Billiton gained 70 cents, or 1.8 per cent, to $39.83.
Sundance chief financial officer Peter Canterbury has been appointed acting chief executive of the iron ore miner. Sundance shares last traded at 13 cents.
Dollar pares gains as China holds Yuan line
The Australian dollar was higher in early afternoon trading, despite paring some of its morning gains as hopes for an early Chinese revaluation of its currency appeared overly optimistic.
The Australian dollar was trading at $US0.8778/80, up from Friday's close of $US0.8674/77.
It was also buying 59.2 pence, 70.8 euro cents and 79.7 euro cents in recent trading.
Billionaire Talbot among missing miners in Africa
June 21 (AAP) Iron ore exploration company Sundance Resources is fearing for the lives of its executives, including billionaire Ken Talbot, two weeks after discovering its African iron ore deposit is 93 per cent bigger than initially thought.
Sundance Resources chairman Geoff Wedlock has been confirmed among those missing together with Talbot Group owner and Sundance non-executive director Mr Talbot after their plane from the Cameroons to Congo disappeared.
Talbot Group is Sundance's biggest shareholder with a 16 per cent ownership stake.
The operations of Australia's 11th biggest iron ore producer is focused solely on developing its Mbalam iron ore project spanning Cameroon, Equatorial Guinea and the Republic of Congo in West Africa.
Sundance has a market capitalisation of $352 million, is debt-free and has $85 million in cash.
Its shares have traded at between 12 cents and 20 cents on the local bourse over the last 12 months.
Yuan Loosened May Aid China Shift to Domestic Demand
June 21 (Bloomberg) -- China’s signal of an end to the yuan’s fixed rate to the dollar may accelerate a shift toward domestic demand as the prime driver of growth as President Hu Jintao seeks to strengthen household incomes.
The People’s Bank of China two days ago indicated it’s abandoning the 6.83 yuan peg to the dollar adopted during the global crisis to shield exporters. The central bank said while there’s no basis for “large scale” moves in the currency, the exchange rate will be allowed increased “flexibility.”
“Over a longer time, today’s announcement opens the door for increased yuan appreciation that will help adjust China’s economy towards a consumption-driven economy,” said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong, who is a former researcher for China’s State Council, or Cabinet, and used to work at the International Monetary Fund.
“It’s a win-win for China,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said on Bloomberg Television. It may ease trade tensions, while also supporting “the structural adjustment that they’ve wanted now for several years -- less investment going into the export sector, more to satisfy domestic demand.”
The move to allow a stronger yuan means authorities may not need to tighten domestic monetary policy as much as previously was the case, according to Morgan Stanley.
International community react positively to China move on yuan reform
June 21 (Xinhua) BEIJING - The international community has reacted positively to the pronounced move by the People's Bank of China to proceed further with its reform of the exchange rate regime so as to enhance the flexibility of the renminbi's or yuan's exchange rate.
US President Barack Obama described the move as a "constructive step" while IMF Director-General Dominique Strauss-Kahn rated the move as "a very welcomed development."
The European Union said "such a move will be beneficial for both the Chinese economy and the global economy," adding that the move would not only benefit China's own economy but also the economy of the world as a whole.
His views were shared by Canadian Prime Minister Stephen Harper. "This is an important step forward and its full implementation will contribute to strong, sustainable and balanced global growth," Harper said.
The People's Bank of China, the country's central bank, made the announcement ahead of the G20 summit which focuses on bettering international economic governance
China becomes world's third largest stock market: securities regulator
BEIJING, June 18 (Xinhua) -- China has become the world's third largest stock market as total market value of the Shanghai and Shenzhen markets hit 20.96 trillion yuan (3.07 trillion U.S. dollars) as of the end of May, the country's securities regulator said Friday.
The total market value so far was up 393.76 percent compared to the 2003 level, the China Securities Regulatory Commission said.
Asian Stocks Climb Most in Seven Months on Yuan Policy Change
June 21 (Bloomberg) -- Asian stocks climbed, driving the MSCI Asia Pacific Index up the most in almost seven months, on speculation China’s relaxing of its currency peg to the dollar will bolster growth in the world’s third-largest economy.
BHP Billiton Ltd., the world’s biggest mining company, increased 2.3 percent as investors bet commodities demand will rise.
The MSCI Asia Pacific Index gained 2.7 percent to 119.35 as of 2:48 p.m. in Tokyo, the biggest advance since Nov. 30. The gauge is down 7.8 percent from its high this year on April 15 amid concern Chinese measures to curb property prices and Europe’s debt crisis will hurt the global economy.
China’s Shanghai Composite Index gained 2.6 percent and Hong Kong’s Hang Seng Index climbed 2.8 percent after the Chinese central bank pledged on June 19 to make the yuan more flexible. The People’s Bank of China ruled out a one-time revaluation of the currency that’s been held at about 6.83 yuan per dollar since mid-2008. The yuan today advanced 0.21 percent to 6.8120 per dollar, the biggest gain since Dec. 30, 2008.
The Nikkei 225 Index increased 2.4 percent, while South Korea’s Kospi Index gained 1.4 percent. The S&P/ASX 200 Index rose 1.6 percent in Australia, where Telstra Corp. advanced 4 percent after signing a broadband deal with the government.
The Hong Kong Monetary Authority said June 15 that local stock and property prices may be driven higher once China allows the yuan to resume gains as the city become more affordable to mainland investors. The HKMA said today it sees no need to change the Hong Kong dollar’s peg to the U.S. dollar.
"Mogi" Munkhdul Badral
CPS Mongolia is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based ASX Licensed Financial Services Company. To trade ASX stocks, feel free to contact me at email@example.com or +976-9999-6779.