⛏️ LITHIUM IN MONGOLIA | BANK IPO POSTPONEMENT | MSE IN APRIL

Partner with Inside Mongolia

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📌 DID YOU KNOW?

Mongolia in world-famous rankings:

• Mongolia dropped 22 places to 90th on the World Press Freedom Index.

• As of the Corruption Perceptions Index, Mongolia is ranked 110th in 2021, down 23 places from 5 years ago.

• Mongolia is ranked 118th on the Human Rights and Rule of Law index, where it used to place 115th back in 2016.

• On the World Competitiveness Index, Mongolia is ranked 60th in 2021, stepping forward one place from 2020.

⛏️ LITHIUM IN MONGOLIA

Global demand for lithium, a critical component in batteries, is soaring as sales of electric vehicles are at an all-time high. Lithium prices have surged a staggering 438% above last year and its consumption has almost quadrupled over the last decade. With lithium set to power the future, Mongolia is making progress in lithium exploration.

A new player in the lithium sector: ION Energy

Leading the race to supply the world’s growing lithium demand is ION Energy (ION), the first-ever lithium and brine explorer and developer in Mongolia. They have been undergoing the exploration of lithium through two flagship projects: Baavhai Uul and Urgakh Naran.

2017: Co-founders, Ali Haji and Matthew Wood identify an opportunity for lithium exploration and development in Mongolia

2019: Acquisition of 80,000+ hectare “Baavhai Uul” Lithium Brine license, the largest exploration license awarded in Mongolia

2020: IPO on the TSX Venture Exchange under the symbol “ION”

2021: Acquisition of ~20,000 hectare “Urgakh Naran” Lithium Brine license

Promising results

Last week, ION Energy provided an operational and exploration update on Baavhai Uul and Urgakh Naran Projects.

• Baavhai Uul Project: ~25% lithium anomalies shown thusfar. Further drilling results are pending.

• Urgakh Naran Project: Results from core brine sampling are expected. Sampling was collected from the surface, with five of eight Transient Electromagnetic (TEM) lines completed with 53 auger holes to a depth of 12m, 2m after the water table or basement; whichever was arrived at first. Auger holes are being sampled every 2m and are bailed a minimum of twice, 24 hours after being drilled before collecting brine samples.

Mongolia’s competitive advantage

With its geographical and natural resource rich advantages, Mongolia could become a major player in Asia’s booming Lithium market. Exploration of lithium in Mongolia started only 5 years ago which means that there is an untapped and unlimited potential. Moreover, an investor friendly environment coupled with an established mining industry makes Mongolia well-positioned to supply the major markets of the world.

One such market is China, the world leader in manufacturing lithium batteries. According to Benchmark Mineral Intelligence, in 2021, 148 of the world’s 200 lithium-ion battery mega factories were located in China. Given such a colossal neighbor, Mongolia holds a huge competitive advantage compared to producers located elsewhere.

📢 THE SIGN ​

New, but old

The exhibition titled "The Sign" features more than 1,600 logos created by 19 different Mongolian designers within the span of 20 years. No matter how modern the word "logo" itself may seem, the exhibition will give you a ride to Mongolia's past where you'll see that logos were as ubiquitous as they are now.

Behind the scenes

Since the exhibition also provides information about creators of the most famous logos in Mongolia, it would be a great chance to get backstage and find out who is behind the images we see every day in our lives.

The details:

• Duration: May 7 - May 11, 2022

• Location: The National Art Gallery of Mongolia, Ulaanbaatar, Mongolia

👀 MAYBE LATER: BANK IPOs

Last year, the Parliament of Mongolia adopted the Amendments to the Banking Law, according to which systemically important banks in the country had to go public before the first half of 2022 ended. However, it seems like we have to wait a little longer.

IMF knows it all

An IMF Working Group has recently paid a visit to Mongolia, advising us to postpone the IPOs of commercial banks due to the adverse effects of the pandemic and the international crisis. Previously in December, they also insisted that it was essential for commercial banks to meet all the financial requirements including asset quality review (AQR) before they go public. And in case the banks couldn’t gather the necessary capital, the IMF regarded the IPO postponement as inevitable.

Mongolia follows

81% of the Standing Committee on Economic Affairs members support the deferral of banks’ IPOs. The Central Bank’s President, who believed that the IPOs could be completed within the initially given time, is also among them. It appears that he finally heeded the IMF’s guidance. Here’s how he explains the change of mind.

• There are benefits: Making banks meet certain conditions and requirements before they go public a bit later could contribute to the overall stability of the banking sector and protect investor interests.

• Risk exclusion: If multiple banks simultaneously launch IPOs in the short time left, competition would increase, and some banks might perform badly, which would hurt the sectors’ general health.

• AQR: An asset quality review will be done as early as August, 2022 and then we will be ready to launch bank IPOs.

Just a matter of waiting?

As the IPOs loom, people are preparing to invest. And for those who have already made their preparations, extending the waiting time might be stressful. But there’s really nothing to be afraid of. At least that’s what Mandal Future Growth (MFG) mutual fund, which has raised $16.7 million from 8,000 investors wanting to participate in the upcoming IPOs, is so sure about:

• No problemo: Banks will have no issues raising the required capital of $167-$233 million because there is as much as $6.7 billion in bank deposits only.

• Banks are ready: There have already been many investment events organized by the commercial banks planning to go public, which indicates their readiness rather than unpreparedness.

In the end, whether banks’ IPOs would be deferred or not is essentially just a matter of time. So, it might be better to be worrying about which of them to invest in instead.

🏛️ DATA STORY

Overall, $2.5 million worth of shares (including portfolio trading) were traded on the Mongolian Stock Exchange (MSE) in April, down 45% from March. As you see from the graph above, the trading activity of Bodi Insurance (BODI) and Erdene Resources (ERDN) rebounded sharply since the previous month. While Bodi Insurance’s case can be explained with their share buyback announcement, Erdene Resources’ jump happened due to a single day of heightened trading activity. On April 5, the company’s shares worth $207 thousand were traded on the MSE, which made up the majority of its monthly trading value.

🏫 MAKING EDUCATION ACCESSIBLE

The data shown above makes it clear that access to education in ger areas is extremely limited. And if we consider the fact that 90% of a child's brain development happens before the age of 5, it’s essential to pay special attention to the education of preschoolers and even younger kids. Unfortunately, given the shortage of kindergartens in ger areas, not every child is receiving the growth opportunities they are entitled to.

But there’s a solution

One of the most effective proven ways for caregivers to aid the development of social, emotional, and motor skills of children is shared reading. This is why GerHub is implementing the Let’s Read project aimed at building awareness among parents and caregivers of the importance of reading with their children aged below 5. The project is supported by The Asia Foundation and The Lorinet Foundation, and carries out activities in the following three directions:

• Increasing accessibility to quality books through an open library

• Equipping parents and caregivers with key skills and knowledge they need to effectively read with their children in a fun and creative way

• Organizing community storytime events

Since GerHub’s target communities in 31 and 43th khoroo of Songinokhairkhan District have only one kindergarten for 200 children, which is not nearly enough for over 1,200 preschoolers in the area, the project seems to be of vital importance for the future of these children.

*This article was prepared in partnership with GerHub.

🏃 QUICK STORIES

📌 Thiess celebrates 15 years in Mongolia. Thiess, the largest mining service provider in the world, began operating in the country in 2007, and has since successfully completed various projects. The company now provides mining services in Ukhaa Khudag and is responsible for the Oyu Tolgoi expansion project.

📌 Mongolia embraces digital signatures. Since the newly amended Law on Electronic Signature came into effect on May 1, many citizens have already been issued their e-signatures. Now they can remotely carry out their work, access certain public services online, and even take loans digitally.

📌 Mongolian Trade Representative Office opens in Vladivostok. According to Mongolian Ambassador to Russia U.Enkhtuvshin, it will work as a bridge for the expansion of trade and economic relations between the two countries, including the expansion of Mongolian exports and imports, as well as the increase of transit traffic from Mongolia to the Asia-Pacific region.

📌 Foreign exchange reserves dropped to $3,3 billion in March. It’s a $366.6 million decrease from February and a 30% YoY decline. Throughout 2021, the USD/MNT exchange rate was stable, with foreign exchange reserves peaking at $4.9 billion in April. It’s clear that the US dollar strengthening against most currencies in the international market has had a negative impact on Mongolian Tugrik.

📷 A GLIMPSE OF MONGOLIA

About: A snapshot from the latest event by UB Comedy Club founded in 2014. Within 8 years of its existence, the club has become the leading incubator for stand-up comedians, setting the stage for the country’s new comedy scene.

A little history: Before the emergence of stand-uppers, sketch comedy was the most popular form of public entertainment in Mongolia. Though, as the times changed and the younger generation born in the 1990s or later became the majority consumers of entertainment, things couldn’t stay unchanged. More and more people started preferring the real-life jokes of stand-up comedians over the exaggerated sketch caricatures.

FYI:

• UB Comedy occasionally holds events in English. The last one was organized on April 23, 2022. So, if you’re currently in Mongolia and looking for some laughter, follow their Facebook page where they post details about their upcoming comedy nights.

ESSENTIAL LINKS

• Isaac Schwartz at Asian Investing Summit 2022 on Mongolia. (MOI Global)

• Curious about Mongolia's food and culture? Check this YouTube channel with 444K subscribers! (ARTGER)

• What Genghis Khan's Mongolian sounded like? (NativLang)

• Risks UK businesses may face in Mongolia. (GOV.UK)