EK JOINED THE DEMONSTRATION ON MAY 1 CALLING FOR MEASURES TO PROTECT JOBS AND BUSINESSES
The Mongolian National Chamber of Commerce and Industry is planning a big demonstration on International Workers’ Day (1 May) involving all sectors of the economy. The event aims to force the Mongolian Government to take efficient measures to preserve jobs and to support businesses against economic pressure caused by the coronavirus outbreaks.
The Chamber has conducted three surveys among 2100 enterprises, 10,000 individuals and the public since 27 January, when government measures against Covid-19 were announced. According to the results of the survey, 94 percent of 10,000 people admitted that the government’s coronavirus restrictions had affected their daily lives and family finances; 90 percent of enterprises responded that they had suffered from disruption. According to Social Tax Department statistics, some 46000 enterprises have stopped paying taxes.
Source: News.mn
IN-HOUSE TRAINING FOR EK STAFF
Our CFO Mr. Nyambayar Miyegombo gave a lecture on Accounting Fundamentals to the team on April 23. Employees learned some of the basic accounting terms that include revenues, expenses, assets, liabilities, income statement, balance sheet, and statement of cash flows. We became familiar with accounting debits and credits as Nyambayar showed us how to record transactions with good examples. Thank you for our management team for constantly encouraging and nurturing our talent and skills.
ARRIVAL OF DUROFIX
EK well-received Durofix cordless power tools today. We will finish our showroom set up soon and be ready to welcome clients in the upcoming week. DUROFIX is one of the premier portable power tool manufacturers and distributors in the world. The product range covers construction, woodworking, automotive and industrial tools for professionals.
TESTING SOREX WELDING CONSUMABLES
EK successfully delivered Taiwanese professional welding consumables manufacturer SOREX brand welding electrode sample to Transwest LLC for testing. SOREX has non-stop approved and acquired multi-certificates of International Standard Certificate, for instance, ISO 9001, 14001, 45001, CE, DNV-GL, RINA, and so on, to meet customers’ requirements. We are open to receive special requests for test samples on SOREX brand welding electrodes, stick electrodes, flux-cored wire, solid wire, and saw wire.
EK’S PARTNER IN SOUTH GOBI RENEWABLES PROJECT’, MR DAVID PAULL, PUBLISHED AN ARTICLE FOR IN REGARD TO GREEN HYDROGEN USAGE FOR THE MINING INDUSTRY
While we wait for the covid-19 virus to run its course the climate change debate has largely been pushed off the mainstream media radar. Other than before and after photos of clearer skies and waterways, the virus-initiated environmental reprieve has illustrated one thing: it shows what might be if we can achieve decarbonisation goals over the next 30 years.
But the economic Armageddon brought about by covid-19 is not sustainable and the world needs to grasp economically, socially and environmentally sustainable ways to decarbonise our economies if we are to achieve internationally collective climate change response goals.Green hydrogen has been put forward along with EV battery-powered vehicles as a way to decarbonise transport in all its forms, where the sector contributes 22% of emissions.
There are strengths and weaknesses for both. In the passenger car market both energy forms are in the starting blocks but it is unclear who will come out the winner. In many ways hydrogen-powered fuel cells re-energizing batteries could be the elegant answer for range to add to battery EV’s performance credentials.
However, one feels that this is another Sony Beta vs VHS video moment. The first to be seen to be the leader will draw the massive investment into the retail distribution networks required, be it hydrogen refueling stations or EV charging facilities and the designing of vehicles that need these power sources. Batteries and hydrogen are both too expensive at the moment, as are the cars that use these power trains. The winner will be the first who can drive savings from material economies of scale.
Ripe for conversion
While I would not be so brave as to pick a winner in relation to passenger vehicle applications there is a clear winner in relation to one very large subsection of industrial transport. Mine site vehicles.
One large scale dump truck, depending on the haul road it is using, will use between 100 and 140 litres of diesel per 100km. These vehicles operate all day every day except for maintenance down time. That’s between 260kg and 360kg of CO2 per 100km per truck.
Large open pit mines have tens of these vehicles operating continuously, so the numbers build up very quickly.
Replacing diesel with green hydrogen in these applications makes perfect sense:
• The high energy density of H2 lends itself to transport applications requiring a heavy transport task over distance.
• Quick refuel times similar to diesel.
• Distribution infrastructure on site sized and designed to a captive off-taker/end user.
• Wind and solar farms can be located adjacent to remote mine sites, removing many of the difficult hydrogen transport issues. (Diesel is trucked in from the nearest oil refinery!)
• These large dump trucks are diesel/electric. Diesel is burnt to create electrical power to drive the transmission. Truck modifications would require engine replacement with fuel cells to provide equivalent power. Fuel cells would require significantly less maintenance than diesel engines.
• Hydrogen is significantly more efficient at converting its contained heat energy into mechanical energy at between 60% and 64% verses diesel at 40%.
First movers
It is little wonder that the world’s largest mining companies are embracing green hydrogen as the chosen fuel to help reduce carbon footprints. Anglo American in conjunction with Engie will be trialling a hydrogen-powered dump truck at their Mogalakwena open pit platinum mine in South Africa this year.
The vehicle, which is called a fuel cell electric vehicle (FCEV) haul truck, will be powered by a hydrogen fuel cell module paired with Williams Advanced Engineering’s scalable high-power modular lithium-ion battery system. Williams provides batteries for FIA’s E-Formula motorsport.
This arrangement will replace the existing vehicle’s diesel engine, delivering in excess of 1MWh of energy storage. The battery system will be capable of recovering energy through regenerative braking as the haul truck travels downhill.
Anglo American expects operational performance of the converted trucks to be the same or better than the original diesel trucks, with the additional benefits of cleaner air, less noise and lower maintenance costs.
Furthermore, on March 18 global mining companies BHP, Fortescue Metals and Anglo American and engineering consultancy firm Hatch announced a collaboration on a new green hydrogen consortium aiming to accelerate the production of renewable hydrogen with an initial focus on Western Australia with its rich solar and mineral resources.
With the major mining companies focusing on making significant strides in decarbonisation by 2030 expect there to be more announcements such as this focusing this “low hanging fruit” for the mining industry’s to materially reduce its carbon foot print.
David Paull is a director of the South Gobi Renewables Project, which is looking to develop a green hydrogen production capability based on southern Mongolia’s wind and solar resources.
ECONOMY
EXPORTS DECLINE BY 39.3 PERCENT
The Customs General Administration released the statistics on preliminary export performance.
As of April 20, 2020, Mongolia exported goods worth USD 1.3 billion. The figure represents the fall of 39.3 percent as compared with the same period of the previous year.
The export includes 3.6 million tons of coal, 2.5 million tons of iron ore, 382.9 thousand tons of copper concentrate, 176.1 thousand tons of spar, 46.7 thousand tons of zinc ore and concentrate and 395.4 thousand tons of crude oil.
Source: Montsame
MONGOLIA CANCELS TAVAN TOLGOI’S USD 1 BILLION IPO PLAN
Mongolia has cancelled an executive order to fund its giant Tavan Tolgoi coal project through an international initial public offering (IPO), citing “political distortions” and the current dire state of global financial markets.
Erdenes Tavan Tolgoi (ETT), the state-owned company that holds the license to the deposit, had been working with an adviser for preparations of the planned IPO, which included a listing in the Hong Kong Exchange (HKEX).
The stock market launch, which could have raised more than $1 billion, was meant to help fund the massive project and related transportation infrastructure to deliver 30 million tonnes of coking coal a year to markets in China and beyond.
The cancelled plan was at least the third effort to raise money to develop the Tavan Tolgoi mine after international partnerships failed in 2011 and 2015. Mongolian lawmakers in 2018 approved a plan to sell up to 30% of Tavan, which is the country’s second-largest mining investment after Rio Tinto’s Oyu Tolgoi copper-gold-silver operation.
Source: Mining.com, Montsame, Yahoo Finance, The UB Post, ZGM Daily
COKING COAL EXPORT CONTRACTS IN MARCH
According to the local officials, mineral export is increasing at the Gashuunsukhait border and 178 trucks of coal, as well as 96 trucks of copper concentrate, have been exported through the border on April 24. Coal export is relatively lower compared with normal times 800-1000 trucks per day; however, it is the highest since the resumption of exports. The copper concentrate export has been processing under regular circumstances, said the officials of Umnugovi province.
Moreover, the Minister of Foreign Affair worked with the Ambassador of China to Mongolia at the Gashuunsukhait border and held an online meeting with the authorities of the Bayannuur and the Gantsmod border of China last week. Customs General Administration (CGA) informed that 3.8 million tons of coal were exported at USD 310.7 million from the beginning of the year to April 23.
Source: ZGM Daily
CHINA-MONGOLIA BORDER PORT SEES OVER 500 CHINA-EUROPE FREIGHT TRAINS
A total of 537 China-Europe freight trains passed through the port of Erenhot in North China's Inner Mongolia autonomous region as of Thursday this year, according to local customs.
The customs have adopted various measures to raise efficiency and ensure the safety and stability of the freight trains amid the fight against coronavirus epidemic, said Nie Weidong, an officer with the customs.
The customs also improved the customs clearance and other services relying on the internet and other platforms.
The Erenhot Port is the largest land port on the border between China and Mongolia. It has handled 379 China-Europe freight trains in the first quarter of this year, up 19.6 percent year on year.
Source: China Daily
ADB APPROVES USD 100 MN LOAN FOR DEVELOPMENT OF ADVANCED BESS IN MONGOLIA
The Asian Development Bank (ADB) has approved a USD 100 million loan to help supply renewable energy to Mongolia by installing its first large-scale advanced battery energy storage system (BESS).
“Mongolia is among the most heavily coal-dependent developing member countries of ADB, and its energy sector is the largest contributor to its greenhouse gas emissions, accounting for about two-thirds of the total,” said Director General of ADB’s East Asia Department James Lynch. “The project will lead to the decarbonisation of the energy system in the country with increased penetration of renewable energy.”
In 2018, coal-fired combined heat and power plants contributed to 93 percent of total power generation in the electricity grid. Mongolia’s rich renewable energy potential—such as wind and solar—is estimated to be equivalent to 2,600 gigawatts, which could fully meet the country’s future power demand. However, this rich potential has not been realised.
Source: SaurEnergy.com
SEVEN PROJECTS TO BE IMPLEMENTED WITH GREEN CLIMATE FUND
At its plenary session, the State Great Khural passed a draft law on the ratification of the cooperation agreement between the Government of Mongolia and the Green Climate Fund (GCF).
The Fund annually spends USD 100 billion for climate change mitigation. For the successful implementation of seven projects by Mongolia with investment from the GCF to reduce greenhouse gas emissions, the Cabinet resolved in May 2019, to enter into a cooperation agreement with the Fund. Accordingly, Minister of Environment and Tourism E.Tserenbat signed an agreement with GCF on November 22, 2019.
Source: Montsame
CHILDREN IN ZAVKHAN RECEIVE CASH TO DEAL WITH CLIMATE SHOCKS
Mongolia is one of many countries increasingly affected by climate change. It is already having a profound impact on Mongolia’s weather conditions, increasing frequency and magnitude of extreme weather events or shocks such as severe winter with excessive snow fall, intensification of drought and aridity, rapid melting of permafrost and glaciers. This fundamentally undermines the well-being of children in the countryside.
UNICEF Mongolia in close collaboration with the Ministry of Labour and Social Protection has designed a pilot programme worth USD$ 490 000 to provide cash assistance for all children living in the remote rural areas prone to extreme weather shocks. The testing of the pilot has started this winter in 4 soums of Zavkhan province in western part of the country. These soums had the most snowfall this winter to date. As part of the pilot, all children aged 0-5 living in these villages received cash worth of MNT40,000 (approximately US$15) through the existing national system for delivery of the Government’s Child Money Programme.
Source: Montsame
MY POOR ULAANBAATAR - EDITORIAL
According to ‘The Vision 2050’, thirty years from now, the capital of Mongolia, Ulaanbaatar, will be “a livable, environmentally friendly, and people-centered” city. At that time, it will have become a modern metropolis with satellite cities such as Aero City and Maidar; thus, a new system with several urban centers will have been constructed. Residents of Ulaanbaatar and its suburbs will be fully provided with housing and social infrastructures such as health and education will be radically upgraded to make them more comfortable to live in.
Furthermore, Ulaanbaatar will be people-centered rather than car-, building-, and capital-centered. All these ambitious plans sound nice to us residents, but they are not convincing. As I was reading “The Vision 2050” I wondered if it is possible to change fundamentally in the next 30 years, after 30 years of destroying this city. There are at least three reasons to think so:
Source: Jargal DeFacto
BUSINESS
LOSSES OF SELF-EMPLOYED BUSINESSES SOAR AMID ECONOMIC DOWNTURN
According to a Survey on income change by workplace fac¬tors conducted by the Mongolian National Chamber of Commerce and Industry (MNCCI), over 73 percent of the citizens are affected by the COVID-¬19 restrictions as the private sector, the main income source to more than one million people, gets one step close to collapse. More than 90 percent of the self-employed businesses faced a loss amid the coronavirus economic downturn. The research included approximately 10,000 people with 76 percent of the respondents admitting that the disease has hugely impacted their life. Specifically, people who have a maximum income of MNT 400,000 monthly are having a hard time managing their household spending.
The unemployment rate dramatically rose as well as the domestic market cap declined by as much as MNT 260 billion since the pandemic.
Source: ZGM Daily
ERDENES TT TO DISTRIBUTE MNT 199 BILLION IN DIVIDENDS
‘Erdenes Tavan Tolgoi’ (ETT) held a press conference earlier today (27 April) regarding dividends from the revenue of 2019.
The mining giant will distribute dividends totaling MNT 199 billion 736 million to over 2.5 million Mongolian nationals who own 18.5 percent of the total shares. The distribution is due to start on 1 May.
Despite the fact that the country is in advanced emergency readiness in prevention of COVID-19 pandemic, the mining company is operating normally. The company extracted 45.2 thousand tonnes of coal, transported 38.2 thousand and exported 49.5 thousand last week; the represents an increase of 15 thousand tonnes of coal extraction and 10 thousand tonnes of exports on the previous week.
Source: News.mn
See also: Only 300,000 ETT shareholders link securities account with bank account
CASHMERE EXPORTS ROSE BY 30 PCT FROM 2017 TO 2019
Mongolian cashmere sector exports have increased by 30 percent since a new national programme was approved by parliament in 2018. According to Ch.Ulaan, Minister of Food, Agriculture and Light Inductries, more than 1600 jobs have been created in the cashmere sector since 2017 as production capacity has increased. Mongolia exported cashmere products worth USD 434, 7 million in 2019, which was an increase of 30 percent on 2017. As part of the initiative, Mongolia has also hosted an international cashmere forum which was attended by over 350 representatives from 17 countries.
Known simply as ‘Cashmere’, the national programme, helped 38 enterprises receive soft loans totaling MNT 296, 4 billion issued by Development Bank of Mongolia over a period form 2018-2019. In order to support sustainable revenue sources for herders, the ministry has been issuing MNT 300 billion loans with interest of 3 percent.
Source: News.mn
MNCCI: PANDEMIC IMPACT ON CONSTRUCTION INDUSTRY REMAINS HIGH
According to a survey by the Mongolian National Chamber of Commerce and Industry (MNCCI), the COVID-¬19 epidemic is affecting construction businesses, with an average of 96 percent of respondents saying it has had a “moderate to severe impact on operations”. About 48.7 percent of the respondents said that the pandemic had a severe impact on the construction business, while 28.2 percent admitted that it had a moderate impact. In terms of its impact on employment, 51 percent of respondents said it had a notable impact on the construction sector. The Mongolian Builders Associ¬ation had previously reported that the construction sector is facing a shortage of professional staff. Industry experts also assume that COVID-¬19 could lead to further job losses as some facilities in the construction sector come to a standstill.
Source: ZGM Daily
IMPORTS OF AUTOMOBILES DECREASE BY 28.8 PCT
As of April 21, Mongolia’s import has declined by 11.2 percent as compared with the same period of the previous year according to the customs statistics.
In particular, imports of automobiles decreased by 28.8 percent. In other words, about 16,850 cars have been imported to the country since January this year. Imports of heavy-duty vehicles and equipment decreased by 13.5 percent, as reported earlier by the Mongolian Customs General Administration that international shipping has disrupted due to the COVID-19 pandemic.
Moreover, imports of fuel and diesel declined amid falling oil prices. During the reference period, a total of 147.9 thousand tons of fuel was imported, showing a decrease of 16.6 percent compared to the same period of the previous year. The import of diesel dropped by 20.8 percent during the same period.
Source: Montsame
MIAT MONGOLIAN AIRLINES CONDUCTS INTERNATIONAL CARGO FLIGHT
The national flag carrier of Mongolia, MIAT Mongolian Airlines, has conducted an international cargo flight using a Boeing 767-300 airplane, taking their first step to enter the international cargo transport market.
Due to the global coronavirus pandemic, air travel has become significantly restricted, resulting in the air transport market becoming limited and operations of airlines facing troubles. During this difficult time, flights to transport various medicine as well as personal protective gear, face masks and medical equipment to be used at hospitals have successfully begun to be conducted, reports MIAT Mongolian Airlines.
Source: Montsame
COAL OUTPUT OF SOUTHGOBI REACHES 90,000 TONS SINCE EXPORT RESUMPTION
The border closure has adversely impacted sales and cash flows of Southgobi Resources Ltd. in the first and second quarters of 2020. Since the Shiveekhuren¬-Sekhe border resumption, the company has been exported approximately 90,000 tons of coal within one month.
In accordance with the company’s statement, coal will not be mined in May since existing coal has been purchased from the warehouse. SouthGobi also ceased major mining operations since February 11. The volume of coal export through Shiveekhuren-Sekhe is lower than usual and limited. China expects that fall in coal export will continue to affect the company’s revenue, cash flow, and profit.
Southgobi Resource Ltd predicted a loss of USD 18 million in the first quarter of 2020 and the company’s net income stood at USD 2.1 million during the same period of the previous year. SouthGobi Ltd. shares traded at HKD 0.6 on the Hong Kong Stock Exchange, showing no fluctuation.
Source: ZGM Daily
MINING COMPANIES ENCOUNTER STOCK DECLINE
According to the trade performance index, MSE listed mining companies have faced a sharp decrease and inactive in share price during the period of border ban due to COVID-19. In particular, MSE tier-I listed Tavan Tolgoi JSC’s share price has been lowered by 35.3 percent within nearly three months, and market value lessened by MNT 121.2 billion.
During the same period, the shares of MSE tier-II listed Aduun Chuluun JSC decreased by 26.4 percent, and the market capitalization dwindled by MNT 1.2 billion. However, Bayanteeg JSC’s shares declined by 12.2 percent and were traded only six times on MSE since February, while Berkh Uul JSC’s shares were traded only once during active trading froze.
In addition, the construction industry is suffering badly from the looming recession either. In terms of MSE tier-II listed Arig gal JSC, the share price dropped by 9.3 percent since the border restriction.
Source: ZGM Daily
RESALE PRICE CONTROL UNDER THE LAW
Recently, one of our client had been seeking our advice on Mongolian competition law, particularly on the resale price maintenance issue. As the client’s expectation is that Mongolia may have a similar restriction against resale price control/management as same as other jurisdictions like in US, South Korea and Hong Kong. Meanwhile providing legal analysis to our client’s inquiry, we have decided to provide the post in concern with background of the law on competition of Mongolia.
In Mongolia, Law on Prohibiting Unfair Competition was initially enacted in 1993, then it was amended in 2000, after ten years this law was renewed as the Law on Competition which is recent effective legislation in Mongolia. The current effective competition law is consisted of five chapters and 27 Articles.
The purpose of the Competition law shall be to regulate relations regarding creation of conditions for fair competition in the market for entities conducting business activities, …
Source: LehmanLaw Mongolia
PROFESSOR ENKHTUYA: CASHMERE IS PROVEN TO BE THE BEST OF ALL NATURAL FIBERS - INTERVIEW
As a Professor of the School of Industrial Technology, D. Enkhtuya, gave an exclusive interview with The UB Post. Since 1981, she has conducted extensive studies on cashmere production, de-hairing technology, the usage of cashmere and its health properties.
Cashmere is one of the most sought-out fibers in the world. What makes it such an expensive and luxurious commodity?
Let me first talk about fibers. Fiber is divided into two categories – natural and chemical. Of all the fibers in the world, wool and cashmere account for only one percent. Furthermore, cashmere makes up merely 0.001 percent of that amount making it an incredibly scarce fiber.
Secondly, goats produce premium cashmere fibers only in Mongolia and Inner Mongolia. Historic accounts show that many Asian and European countries relocated these goats several times in attempts to produce top-grade cashmere. However, the goats stopped producing cashmere fibers after being moved to a warmer climate. Only in select cold climate countries like Mongolia is it possible for fine cashmere to be produced.
Source: The UB Post
MONGOLIAN-BRITISH CHAMBER OF COMMERCE: MONGOLIA AND CORONAVIRUS - EDITORIAL
On the evening of Saturday January 25th I organised the annual Burns supper in Ulaanbaatar where the nighttime temperature can drop to -40c. A bagpiper from Glasgow dressed in a kilt and fortified by the finest Scottish whisky played outside the venue. With his rendition of ‘Scotland the Brave’ he welcomed a variety of ambassadors, business representatives and a Scottish judo team far from home. The event had been planned from my kitchen table in Yorkshire with the help of my business partner who is an adventure travel entrepreneur from Glasgow and the Honorary Consul for Mongolia in Scotland no less.
Yorkshire firms have imported cashmere from Mongolia for many decades. Stanley Burton, son of the founder of Leeds clothing retailer Burtons, visited the country twice in the 1970’s. He fell in love with the place and supported Leeds University with funding for Mongolian studies.
Source: Mongolian-British Chamber of Commerce
