CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, Western Australia based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.
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Team Mongolia confirmed 5 medals at London 2012, highest per capita in the world
Congratulations to Battsetseg Soronzonbold on Bronze yesterday in Wrestling
2 boxers qualified for the semifinals yesterday, color of medal to be determined
Erdene Finalizes Agreement to Separate Donkin Coal and Mongolian Minerals Exploration Projects into Separate Public Companies
HALIFAX, NOVA SCOTIA--(Marketwire - Aug. 8, 2012) - Erdene Resource Development Corp. ("Erdene" or the "Company") (TSX:ERD) is pleased to announce that it has entered into a definitive agreement (the "Arrangement Agreement") with Advanced Primary Minerals Corporation ("APM") to exchange all of Erdene's North American property interests, comprised primarily of Erdene's interest in the Donkin Coal Project in Cape Breton, Nova Scotia, for shares of APM. The transaction is being completed by way of a court-approved plan of arrangement (the "Arrangement").
Highlights:
· Following the Arrangement, all of Erdene's North American property interests will be held by an amalgamated company ("Amalco")
· Amalco will be focussed on the development of bulk commodity projects in North America, predominantly coal projects, led by the Donkin Project
· Erdene will be focussed on precious and base metals exploration in Asia, primarily Mongolia
· Upon completion of the Arrangement, the outstanding shares of Erdene (totalling 95,802,901) will effectively be split on a 50/50 basis resulting in 47,901,450 shares outstanding in Erdene and 47,901,450 shares of Amalco which will be distributed to Erdene shareholders
· Upon completion of the Arrangement, Amalco will have 49,255,990 shares outstanding, 47,901,450 (97.25%) of which will be held by Erdene shareholders and the balance by the former APM shareholders
· A total of $1.95M cash will be included with the North American assets being acquired by Amalco
· It is anticipated that the remaining resources and real estate held by APM, with a fair market value of $1.1M to $1.4M, will be sold following the completion of the Arrangement
· A new name and the management team of Amalco will be announced in an upcoming news release
· A special meeting of the Erdene shareholders is expected to be held in Halifax, Nova Scotia in October 2012 to obtain the necessary shareholder approvals
"We strongly believe that the separation of Erdene's major projects, Donkin Coal and Mongolian minerals exploration, into separate public companies will provide excellent value to the Company's shareholders," said Peter Akerley, President and CEO. "The split will provide investors with a clearer framework to assess the investment opportunity and provide management with greater flexibility in the advancement of specific projects."
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South Korea Demands 10% of Tavantolgoi
August 8 (UB Post) The tender for Western Tsankh of Tavantolgoi for strategic investors was cancelled more than a year ago. This issue has risen because they were unable to negotiate on the percentage of ownership. Even now, investors eagerly wait for the Tavantolgoi tender. Investors continuously express how much they want their shares to be. South Korea wanted at least 10 percent of Tavantolgoi's Western Tsankh.
The President and Executive Chief Officer of the South Korean government owned Korea Resources Corporation, Kim Shin-Jon stated, "South Korea wishes to participate in the management of the Tavantolgoi project and want ten percent in return."
According to Reuters, the company has situated 600 billion Won or 532 million USD in their investment budget and it includes investment for West Tsankh.
In his interview, Kim Shin-Jon stated, "the 36 percent for the consortium of Russia, Japan and South Korea by the Mongolian government is too little." But Korea Resources Corporation isn't the only South Korean company that wishes to invest. The South Korean Korea Electric Power Corporation, Posco, Daewoo International Corporation, and LG International Corporation also hopes to participate in the project.
The investment and share issue of Tavantolgoi's West Tsankh has been quiet for a year. Peabody Energy of USA stated that they hope that they will receive a better offer than the previous 24 percent offer. The Chinese Shinhua group stated they want as much of the share as possible and that the Tavantolgoi strategic investment tender will be announced soon. Japan also expressed that they wished to partake in this project numerous times. The President of Mitsui & Co of Japan Fuminobu Kavashima stated in March that their company wished to partake in the project as strategic investor. Before the formation of the new government, the issue of the Tavantolgoi investors had again been talked over. Foreign investors have stated clearly that they are still interested.
VIDEO: The Earth Project: Mongolia's Wind Revolution
(GlobalPost) The country's first windfarm is set to open this summer.
Mongolia has massive coal reserves, but that hasn't stopped the country from taking advantage of vast renewable resources.
BoM auctions $46.5 million at ₮1,358.5, ¥100 million at ₮213.3
August 9 (Bank of Mongolia) During the forex auction, the BoM sells USD 46.5 million at closing rate of MNT 1358.50 and CNY 100 million at closing rate of MNT 213.30.
BoM issues ₮65.2 billion 1-week 13.25% p.a. bills
August 8 (Bank of Mongolia) BoM issues 1 week bills worth MNT 65.2 billion at a weighted interest rate of 13.25 percent per annum /For previous auctions click here/
BoM signs MoU with Sri Lanka's Central Bank
August 8 (news.mn) The financial intelligence units of the Sri Lanka Central Bank signs Memorandums of Understanding with 4 countries.
Accordingly, MoUs have been signed with Russia, Saudi Arabia, USA and Mongolia. It will help the Central Bank to work with the financial intelligence units of above countries on preventing fraudulent monetary transactions and terrorist financing. It will also help to exchange necessary intelligence information among countries.
Sri Lanka has singed such MoUs with 20 countries so far.
MPRP'S CH. ULAAN ELECTED DEPUTY SPEAKER
August 8 (InfoMongolia) The Parliamentary plenary session has started at 01:50 pm today on August 08, 2012 with an attendance of 57.7% or 41 members out of 71.
Two issues were planned to be discussed at the meeting, where the first one was to appoint the Deputy Speaker of the State Great Khural (Parliament) of Mongolia.
Within the scope of the new appointment issue "Justice" Coalition merged from MPRP and MNDP nominated Ch.Ulaan for the Deputy Speaker position and he was approved by 97.6% votes of the members, who were present at the meeting.
The second issue discussed at the meeting was appointing the Chairmen of the Petitionary's Standing Committee; Social Policy, Education, Culture and Science's Standing Committee, and Legal Standing Committee. At yesterday's afternoon session meeting following people were selected as the Chairmen of the complied committees:
1. State Structure's Standing Committee - A.Bakei
2. Security and Foreign Policy Standing Committee - Ts.Tsolmon
3. Environment, Food and Agricultural Standing Committee - G.Bayarsaikhan
4. State Budget Standing Committee - Ts.Davaasuren
5. Economic Standing Committee - B.Garamgaibaatar
The members who have attended the meeting 100% solidly promoted and appointed Z.Bayanselenge for the Chairwoman of Social Policy, Education, Culture and Science's Standing Committee and Sh.Tuvdendorj as the Chairman of Legal Standing Committee. With the enactment of the appointment resolution the Parliament has formed 7 standing committees. As of today, the Chairmen of 7 committees have been appointed respectively, where Petitionary's Standing Committee hasn't been approved yet.
"Right now MPP grouping is holding its meeting, where they are discussing about whether to attend the session meeting or not.
The negotiations are not so distant. So I believe that the MPP members would attend the next session meeting", said the Speaker Z.Enkhbold upon closing today's session.
NEW MAYOR OF ULAANBAATAR CITY E.BAT-UUL RECEIVES HIS CREDENTIALS
August 8 (InfoMongolia) On August 07, 2012 the Prime Minister of Mongolia S.Batbold has appointed E.Bat-Uul for the Governor of Capital city and Mayor of Ulaanbaatar and handed him the credentials.
At the Capital City Citizens' Representative's Khural (City Council) meeting which took place on August 06, E.Bat-Uul has been nominated for the City Mayor's position following has been submitted to the Prime Minister for approval accordingly.
"Numerous works and projects are being done in the city, but yet many problems are too be solved too", noted the Premier S.Batbold upon handing the certification and laid duties upon the new Mayor to intensify now successfully ongoing works and activities and immediately start mending those that needs to be directed.
Further, the Prime Minister mentioned to the 31st Mayor E.Bat-Uul to keep the continuity of civil service and asked him to successfully implement actions reflected in his programme.
In response, the new Mayor expressed his solidity with the Premier's suggestions and said to continue the successful going project and promised to create conditions for civil servants that enable them to carry their duties within the legal frames. In relevance with the finishing of his term of full rights the previous Mayor G.Munkhbayar has been released from his duties under the Prime Minister's ordinance.
After that E.Bat-Uul received Mayor's stamp from G.Munkhbayar, who has served for 4 years, at the Capital City Governor's Office in presence of officials and employees of the Governor's Office.
The former Mayor G.Munkhbayar wished E.Bat-Uul success in his work and presented the stamp and latest formal reports on capital city budget of the year of 2012 and on progress of works being carried out in the city. Hereby, the 31st Mayor E.Bat-Uul noted that he would put all his efforts in developing UB, turning it into a city that would draw out ones pride adding that first of all he would immediately start the work to built relevant infrastructures in Ger district areas as it was cited in DP's action plan.
Rio Tinto profit soars above estimates
August 8 (BusinessDay) Resources giant Rio Tinto has beaten market expectations by reporting first-half underlying earnings of $US5.2 billion.
While the results amount to a 34 per cent drop on a year earlier, the profit beat consensus forecasts from analysts of $US4.9 billion. Credit Suisse, for instance, had forecast a $US4.7 billion result.
The company's net earnings were $US5.885 billion - also topping market forecasts of about $US5 billion.
The company has also announced a deferred tax credit of $US1 billion relating to Australia's mining tax.
"We have been signalling for some time that markets would remain volatile and we have seen challenging conditions in the first half," Rio Tinto Chief Executive Tom Albanese said.
"Although sentiment remains negative in Europe and the US recovery is still fragile, our order books are full and we expect Chinese GDP growth to be around 8 per cent in 2012. We expect to see signs of improvements in Chinese economic activity by the end of the year."
Rio said it is sticking to its $US16 billion spending plans for the year, much of which is being spent on expanding the company's mining operations in the Pilbara region of WA.
Even so, Rio plans to cut 140 jobs with the closure of the Blair Athol Mine in central Queensland. The mine is located close to the Clermont Mine, which Rio has had under review for several weeks, and from which the company has already announced some redundancies.
Rio's Australian-listed shares ended trading before the earnings release. For the day, they edged up 4 cents, or 0.1 per cent, to $54.89.
Rio's London-based shares were trading 0.9 per cent in early trading to 3,154 pence, compared with a 0.5 per cent drop in the broader mining sector.
Price slump
This time last year Rio reported a net profit of $US7.6 billion and an underlying profit of $US7.8 billion. The company blamed today's lower figure on the recent slump in iron ore prices.
The lower iron ore prices will hurt Rio more than its bigger rival BHP Billiton, given the commodity accounts for almost 80 per cent of Rio's revenues.
Iron ore prices have fallen about 13 per cent over the past month and the benchmark price in China was today $US116 per tonne - well below the $US135 per tonne the bulk commodity has been fetching for most of 2012.
Rio reports on a calendar year schedule. It will pay an interim dividend of 72.5 US cents per share, up 34 per cent on a year ago.
The miner said cashflow from operations was $US7.8 billion in the first half, down 39 per cent on a year earlier.
Headwinds for miners
Rio Tinto joins major rivals Anglo-American and Xstrata in reporting earnings dented by falling prices and stubbornly high costs. Vale, the world's largest producer of iron ore, reported its worse second quarter since 2007 last month, blaming slowing demand for the steelmaking ingredient.
Rio chief Mr Albanese said the company is stepping up efforts to contain costs and raise productivity.
The miner's Oyu Tolgoi project in Mongolia is on course for its first commercial output in the first half of 2013.
Rio's net debt increased to $US13.2 billion from $US8.5 billion a year ago.
The company said it is ''well advanced'' in its plans to sell off its diamond unit but said it is not in talks with BHP on combining diamond operations. Rio is not a ''forced seller'' of either its diamond or aluminium assets, the miner said.
Earnings from all of the company's business divisions - excluding the small diamonds and minerals area - were down, including iron ore, aluminium, copper and energy (coal and uranium)
Seaborne Coal To Drop As China Shifts Supply Contracts to Mongolia
August 8 (Bloomberg) Coal used to make steel is set to drop to the lowest price in two years, eroding earnings at BHP Billiton Ltd. (BHP) and Rio Tinto Group (RIO), as European demand wanes and China shifts supply contracts to Mongolia from Australia.
The contract price may drop 11 percent to $200 a metric ton in the three months to Dec. 31 from $225 a ton this quarter, according to seven analysts and industry officials in a Bloomberg survey. The spot price in China fell 25 percent from the end of June to $177 yesterday, the lowest this year, according to data compiled by Bloomberg.
A deepening debt crisis in the eurozone has dragged down demand and prices of commodities, forcing the world's largest steelmaker ArcelorMittal (MT) to shutter or idle plants in the region. Slowing economic growth in China, the second-biggest importer of metallurgical coal, has increased chances of output cuts at mills and further shrinkage in demand for the fuel.
"Steel demand in Europe is very weak and consumption has slowed dramatically in recent months," said Tim Cahill, an analyst at J&E Davy Holdings Ltd. in Dublin. "It'll get worse in the second half as government spending slows and banks stop lending to home buyers. Unless the U.S., Europe, China pump in serious stimulus, global steel demand will remain subdued."
Rating Cut
The EU produced 14.73 million tons of steel in June, the lowest for that month since 2009. Moody's Investors Service cut the corporate family rating of Tata Steel Ltd. (TATA)'s European unit, which contributes two-thirds of the steelmaker's output, saying further signs of weakness in the region's steel industry will lead to slower recovery in Tata's operating and financial profile. The outlook remains negative, Alan Greene, senior credit officer at Moody's, said today in a report.
Possible higher supplies will also put pressure on prices after the BHP Billiton Mitsubishi Alliance, the world's biggest exporter of steelmaking coal, resumed operations last month at its Queensland mines, pruning the risk of shortages. The venture supplies about 18 percent of global coking coal, according to a March 22 Goldman Sachs Australia Pty report.
"If BHP Mitsubishi mines are successful in bringing on significant output quickly, prices will possibly decline below $200 a ton," said Jim Truman, a coal market analyst at Hill & Associates in Morgantown, West Virginia. "All steel companies will benefit and almost all coal miners will lose revenue."
Lower Earnings
Full-year profit at BHP, slated to report earnings this month, may drop 24 percent to $17.9 billion, according to the average of 20 analyst estimates compiled by Bloomberg. Credit Suisse AG analysts, revising down commodity price forecasts, cut their full-year profit estimate for BHP by 7 percent, according to a July 12 note.
Analysts trimmed 2012 profit estimates for Rio on lower commodity prices and slowing growth. Rio today posted first-half net income of $5.9 billion, beating the $5.04 billion average of 11 estimates compiled by Bloomberg.
Kelly Quirke, a Melbourne-based spokeswoman for BHP Billiton, declined to comment on falling coking coal prices, its impact on the company or plans to cut output, as did Karen Halbert, a spokeswoman for Rio Tinto.
About 44 percent of Alpha Natural Resources Inc.'s revenue last year and more than 10 percent of BHP's sales in the year ended June 30, 2011, came from coking coal. The fuel made up about 10 percent of Anglo American Plc's revenue last year.
Below $200
Should benchmark prices fall below $200 a ton because of receding demand in China, the world's biggest steel producer and consumer, coking coal suppliers including BHP, Rio Tinto, Teck Resources Ltd. (TCK) and Alpha Natural will start cutting output to support prices, said Kuni Chen, an analyst with CRT Capital Group LLC in Stamford, Connecticut.
While spot prices have fallen below $200 a ton for the first time since August 2010, the drop may not lead to settlements at these levels in the next quarter, according to Doyle Trading Consultants LLC, an energy research firm specializing in coal.
"When there are major volume commitments at stake, negotiations are much different than spot market transactions during periods of very weak demand," Doyle Trading said in a July 26 report.
Global steel demand growth is forecast to slow to 3.6 percent this year from 5.6 percent in 2011, according to the World Steel Association. China may consume 648 million tons of steel this year, compared with 657 million tons forecast in March, because of the slowing economy, Australia's Bureau of Resources and Energy Economics said in a June 27 report.
Wait-and-Watch
"To buy or not buy coking coal now is a million dollar question, which doesn't have an easy answer," said Jayant Acharya, director at JSW Steel Ltd. (JSTL), India's third-largest producer. "The industry is in a wait-and-watch mode. Prices look weak and may fall further."
Chinese steelmakers may lower production this month and next to remain profitable as the slowest economic growth in three years drags down sales. Immediate-delivery prices of benchmark hot-rolled steel sheets in China fell to 3,652 yuan a ton on Aug. 7, the lowest level since November 2009.
"Steel prices in China are falling faster than raw material prices, which can lead to closures of some of the high- cost capacities," said Mark Pervan, the head of commodity research at ANZ Banking Group in Melbourne.
Japan Demand
The slow pick-up in demand in Japan, the biggest coking coal importer, has further dashed the hopes of miners. Japan's crude steel production in the first six months of this year was little changed from a year earlier at 54 million tons, belying expectations demand will spurt as Asia's second-biggest economy rebuilds itself after the Fukushima nuclear disaster last year.
Contract coking coal prices surged to a record $330 a ton in the June quarter last year, after heavy rains in Queensland disrupted output at mines and choked shipments. Prices declined for four straight quarters after that before climbing back in the three months started July 1.
As much as 87 percent of the 275 million tons of global seaborne coking coal trade is distributed among Australia, the U.S. and Canada, according to David Radclyffe, managing director for equity research at Nomura Holdings Inc. in London, giving suppliers a hold on prices. Australia supplies 57 percent of the market, he said.
Mongolia is likely to provide the strongest new competition being next to China and because of the size and quality of its reserves, Australia's Bureau of Resources and Energy Economics said in a July 2 report.
"China benefits from its proximity and availability of cheaper coal from Mongolia," said Helen Lau, a Hong Kong-based analyst with UOB-Kay Hian Ltd. "Mongolia will continue to replace Australian coking coal in China."
China launches trading platform for rare earth metals
BEIJING, August 8 (AFP) — China on Wednesday launched a trading platform for rare earth metals, state media reported, as it moves to boost its pricing power over the strategic resources for which it dominates global production.
China's leading producer of rare earths, Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co., started the platform in cooperation with nine other companies and institutions, Xinhua news agency said.
Xinhua said that the facility is located in the city of Baotou in China's resource-rich northern region of Inner Mongolia, described as containing over half of global light rare earths output.
Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co. could not be reached for comment.
China dominates production of the metals -- key elements in consumer electronics and other high-tech goods -- producing in excess of 90 percent of rare earths, though it only has 23 percent of global reserves, Xinhua said.
Their strategic importance gained prominence in late 2010 when Japanese industry sources said China temporarily cut off exports amid a territorial dispute between the countries. China denied halting exports.
A source close to the World Trade Organization (WTO) said last month that the body would investigate Chinese export restrictions on rare earths, after a request by the European Union, the United States and Japan.
The US claims that China sets export quotas, duties and other restrictions that make the products increasingly expensive.
China's WTO delegation said last month that the country's policies are meant to protect natural resources and achieve sustainable economic development, not to protect domestic industry.
Zhang Rihui, vice general manager of Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-tech Co., said that pricing on the platform will be "transparent and consistent," according to China National Radio.
The report said the trading centre will focus on physical trading in the initial stage with futures trading likely to be launched if operation of the exchange proves successful.
Luo Renyuan, an analyst at Industrial Securities in Shanghai, said that China is aiming to increase its global influence in rare metal pricing.
"The establishment of this trading platform is mainly to earn more say for China over the pricing of rare earth resources in the international market," Luo told AFP.
Bat KHURTS awarded Sukhbaatar Medal after ex-president jailed
ULAN BATOR, Aug. 8 (Xinhua) -- A senior Mongolian anti-corruption official received one of the nation's highest awards after former President Nambar Enkhbayar was sentenced to four years in prison for corruption and graft, local media reported Wednesday.
The Sukhbaatar medal was conferred on Bat Khurts, vice chairman of the Independent Agency Against Corruption (IAAC), in a very low-profile ceremony on Saturday, a day after the sentencing of Enkhbayar, according to the report.
The report did not specify the reason for the award, but speculations were rife that it might be related to Enkhbayar's arrest and conviction.
The report also did not disclose who conferred the award. According to Mongolian law, it is the president who chooses people for the prestigious medal.
Khurts, also Mongolia's former spy chief, was arrested by British authorities two years ago under an EU arrest warrant issued by Germany for alleged kidnapping and torture of a Mongolian asylum seeker.
He was released shortly after by German authorities before a visit by German Chancellor Angela Merkel to Mongolia, and was later appointed the IAAC's vice chairman by President Tsakhia Elbegdorj.
KHAAN QUEST 2012 TO START ON AUGUST 12
August 8 (InfoMongolia) Last Monday a fifteen-day joint military training named "Nomadic Elephant 2012" has commenced in India, whereas Mongolia is about to host a multinational military training the "Khaan Quest 2012" at the Complex of Training Center of Mongolian Armed Forces in Tavan Tolgoi, Tuv aimag on August 12-24, 2012.
The Armed Forces of 15 countries will participate for its annual gathering devoted to strengthening international cooperation and interoperability on peacekeeping initiatives abroad. The multinational military training, codenamed "Khaan Quest", have been held every year since 2003, and were initially started to bolster a regional approach to counterterrorism, which become a part of 5 main activities to support Asia Pacific countries' peacekeeping operations.
In 2011, the Mongolian Armed Forces and the U.S. Pacific Command conducted significant joint training exercises during the gathering. However, the number of counterparts has grown significantly over the years, though this year over 1,000 military servants from 15 countries claimed for its participation, whereas 3 states including the Russian Federation, People's Republic of China and Republic of Kazakhstan will attend as observers.
Moreover, 600 military servants representing Mongolia, 200 from USA and about a troop (30) will practice from rest countries each. The purpose of Khaan Quest is to increase interoperability and planning expertise among participating nations and to further develop the Mongolian Armed Forces' training center.
Although, the Khaan Quest is becoming more infused with Asian powers, it remains a stage for Mongolia to display its strategic relationship with the United States and NATO. In March 2012, NATO approved an Individual Partnership and Cooperation Program with Mongolia marking the formalization of a relationship that has blossomed within the past decade. Cooperation between the two is expected to focus on building up the capacity of the Mongolian Armed Forces as well as improving interoperability with NATO troops. Mongolia has been steadily improving its ties with NATO through its commitment of troops during the Kosovo conflict and its current efforts in Afghanistan.
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"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
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CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSLicense Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
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