EARNINGS | MINING | LABOR MARKET

Good morning! Wishing you a great day from a country free of Covid-19 restrictions. Borders are now open for international travelers and businesses can work late into the night - everything’s back to normal, but masks are still highly recommended.

  📌 DID YOU KNOW?

Ulaanbaatar is breathtaking during winters, quite literally…

1. Mongolia ranked as the 4th most air-polluted country in the world in 2020. (IQair report 2020)

2. Air pollution is a strong factor leading to the 10 top causes of death among Mongolians. (IHME Mongolia)

3. The main source of air pollution are coal-burning stoves in the “ger” districts (informal settlements) during the cold seasons. (Unicef)

4. In winter, the daily average of air pollution reaches a level 27 times higher than WHO recommends as safe.

Today’s facts were prepared in collaboration with Breathe Mongolia, an international team of professionals and everyday citizens, working to end Mongolia’s air pollution crisis.

🌄 MINING IN A NUTSHELL

Mongolia has a lot of names. The land of the eternal blue sky, the home of Genghis, Asia’s heartland, you name it! Among all these monikers the most economically relevant one is, perhaps, “Minegolia”. The reasons are obvious but read on.

Must-know facts:

• Resources: Mongolia is one of the 29 resource-rich developing countries identified by the IMF. Coal, copper, and gold are the principal reserves mined in the country. Holding 2,778 million tons of proven coal reserves, Mongolia ranks 23rd in the world. As of copper, the country placed 15th by its production in 2017. 

• Players: 75% of all mining licenses are owned by domestic companies, whereas the rest - by foreign businesses and joint ventures. The companies with fully international funding are mostly Chinese, Canadian, and Singaporean. The most well-known of the Mongolian public companies is Tavantolgoi (TTL), Rio Tinto (RIO) and Turquoise Hill Resources Ltd. (TRQ) stand out among the foreign ones. 

• Big picture: Mining accounts for 24% of the GDP, 72% of industrial production, and 85% of all export earnings. The graph above shows the tight-knot correlation between mining and Mongolia’s economy.

Into the future: 

• Rare-earth metals: Mongolia possesses 34,1m tons of rare-earth metals, which makes it the second-biggest source in the world after China. Though development hasn’t started yet, the global increase in demand for such elements makes us expect only the best. The country’s first brine lithium explorer ION Energy Ltd. (ION.V) is leading the way with its two projects covering around 100,000 hectares, highly prospective for rare-earths. 

• More copper: In January, Turquoise Hill Resources Ltd. announced the commencement of blasting that will start the Oyu Tolgoi (OT) underground mine production, which would turn it into the world’s 5th largest copper mine. OT is expected to produce around 500,000 tons of copper per year on average from 2028 to 2038. In comparison to 163,000 tons in 2021, that’s at least a three-fold increase.

Considering the prospects of rare-earth metals and the successful expansion of OT, Mongolia’s mining industry is still in the booming stage. The factual proof would be the 200% increase in share prices of Turquoise Hill Resources within the last few months. What can we say? “Minegolia” lives on.

📢 MNG SUMMIT 2022

Mongolian Next Generation Summit is an annual event for career development, attended by not only the Mongolian youth, but also representatives from major companies like Facebook, Amazon, and Microsoft. In short, the event is all about connecting, sharing, and inspiring each other to reach greater heights in the pursued goals.

What’s this year?

• Theme: Future of work.

• Location: Boston.

• Duration: 2 days.

• Agenda: Historic downtown Boston, Harvard, and MIT campus tours (optional), workshops, panel discussions, speeches and presentations.

• Highlight: “Nadad Heleh Ug Baina” (NHUB) idea competition where you generate potential solutions to address pressing issues in Mongolia and around the world.

• More details.

Visit the registration page HERE.

By the way, Inside Mongolia is working as the media sponsor this year, so see you there!

👩‍🎓 POPULATION & LABOR MARKET

At its peak Mongolia’s TFR (Total Fertility Rate) was 7.6 in 1966, creating a demographic window of opportunity that usually lasts 30-40 years. However, this window was cut short due the Democratic Revolution of 1990 which resulted in a period of instability in the livelihood of citizens. People were struggling to find jobs in face of privatization, closed enterprises, and high inflation. Consequently, TFR was at its lowest, averaging 2.25 from 1995 to 2005 making up what is now Mongolia’s Generation Z.

Population dynamics 🧍‍♀️🧍‍♂️

• Population of 3,357,542. Second least densely populated (2 per km^2) country after Greenland 

• Consistently increasing TFR that has been staying near 3 births per woman since 2013.

• Total life expectancy of 70.71. Life expectancy of a male is 66.71, for a female - 76.22.  

• Female to male ratio of university students is 1.57. (2020) 

Labor market (2021, USD)

• Labor force of 1,226,792. 

• Average wage of $464 vs. median wage of $346. 

• 67.1% of the population earn below the average wage.

• Highest paying sectors: mining - $1067, financial services - $566, energy - $562, IT - $550..

• Women earned an average of 86 cents for every dollar earned by men in 2020.

Brain drain 🧠

• 190k Mongolians live abroad - 5.8% of the population.

• 47,650 of which are students pursuing higher education.

• Mongolian youths are showing higher interest in migrating in search of higher education and higher quality of living for themselves and their families. 

• Russia, China and Japan showed great interest to hire Mongolian talent. After seeing the great potential for STEM related fields, Japan has increased scholarship opportunities for Mongolians in hopes to fill the gap in IT engineers.

🔔 EARNING SEASON HIGHLIGHTS

In light of the earnings season in Mongolia, we present 3 companies that are significant to the Mongolian economy.

Suu (SUU):  Suu is the leading dairy company in Mongolia, operating since 1958. The company holds 48% of the total market share of the dairy industry. As of today, Suu supports more than 2500 local herders and supplies more than 70 types of milk products to Mongolian customers. Suu reported $29.4 million(+22.2%) in total assets, $35 million(+26.8%) in sales revenue, and 34% YoY growth in net profit amounting to $3.27 million. Suu company’s share price exhibited a 288% increase in 2021. Today their total market cap is $71.4 million.

GOBI (GOV):  Gobi is the world leading cashmere manufacturer that has a worldwide online presence. In the age of sustainability, it is the second biggest global cashmere producer with an impressive 100% traceability. On a mission to reach a bigger audience, Gobi Cashmere has been ambitiously expanding their foreign operations, invested $60 million in 2019, their biggest investment to date. Unfortunately, due to the pandemic and closure of international tourism, they lost their main audience which plunged their sales. Gobi reported $104.4 million(-20%) in total assets,  23.3% YoY sales revenue growth, and $13.2 million (-19.1%) in loss. In 2021, their share prices increased by 168%, and today Gobi Cashmere’s market cap is $81 million. Now that the borders are fully open once again, things are looking up for GOBI.

Ard Financial Group (AARD): AARD is a diversified financial services holding company. Their investment portfolio consists of insurance, credit, securities, assets, management, properties, and realty companies. They also have proprietary digital products based on artificial intelligence and blockchain technology, such as ArdCoin and Ard Fintech to name a few. AARD reported that their total assets have surged 313% YoY to $115 million, 370% YoY growth in long-term investment at $84 million. In 2021, their share price soared a whopping 576% and the total market cap reached $80 million yesterday.

🏃 QUICK STORIES

📌State-owned enterprises will go public. Mongolia has about 100 state-owned companies and all of them are set to be listed on the Mongolian Stock Exchange. Mongolian Post (MNP) was the first one to go through the process, which increased its net profits 10 times. Experts are expecting the same for the other state-owned enterprises.

📌Aerotropolis to be built in Khushig valley. It’s been not so long since the new Chingis Khaan international airport opened its doors for the first time, but the plans to build a city around it are already on the table. The city will be a free economic zone with export-oriented production based on science, advanced technology, and artificial intelligence.

📌 Inflation hits its highest level in 11 years. According to the National Statistics Office, inflation in the country reached 14.6%, a figure higher by 2% than at the end of 2021. Since 200 out of 373 items of the market basket are imported goods, the dramatic increase of 47.3% in import prices within the last year became the main reason for the inflation surge.

📌 AmCham Mongolia hosts its February Monthly Meeting. The theme of the discussions focused on Mongolia’s New Economic Recovery Policy setting pandemic-related goals and other macro-economic policies. Attendance of more than 80 participants were from the AmCham community, foreign and domestic investors, and embassy representatives.  

📷 A GLIMPSE OF MONGOLIA

About: The Erdene Zuu Monastery, the earliest surviving Buddhist monastery in Mongolia, is located in the Ovorkhangai province. Having survived the communist religious purge in the 1940s, Erdene Zuu is one resilient structure that still remains a place of worship for many people. Today it is an active Buddhist monastery as well as a museum that is open to tourists.

Fun facts:

• Erdene Zuu is adjacent to the Mongol Empire’s capital city Karakorum.

• It is a part of the Orkhon Valley Cultural Landscape included in the World Heritage List.

ESSENTIAL LINKS

• Not sure where to eat in Ulaanbaatar? Food and drink reviews in English. (Dodddo0)

• 5 tips to survive Mongolia’s brutal winter. (Breathe Mongolia)

• Must know geography facts! (Geography Now)

• Are the Mongolian stereotypes true? (Real Mongolia)