🤔 WHERE'S MONGOLIA GOING WRONG? | RIO TINTO'S 66% | COAL EXPORTS

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🤔 DID YOU KNOW?

💰 RIO TINTO: OYU TOLGOI'S MAJORITY STAKE OWNER

During the meeting on December 9, the majority of TRQ shareholders finally voted in favor of Rio Tinto’s $3.3 billion takeover bid.

As a result…

Rio Tinto will now own 66% stake in Oyu Tolgoi, having more direct control over the giant copper mine.

The Anglo-Australian miner is set to buy out the remaining 49.2% shares in TRQ for C$43 per share.

• Not yet: The agreement remains subject to the final approval of the Supreme Court of Yukon in Canada.

• The advantage: The deal gives Rio Tinto the opportunity to develop the Oyu Tolgoi project more efficiently in direct cooperation with the Mongolian government in terms of governance and ownership.

• Looking forward: Oyu Tolgoi's copper production is expected to double and reach 900,000 tons by 2028, which will boost Rio Tinto’s influence in the copper market.

Oyu Tolgoi’s future accelerated

The successful implementation of the agreement will lead to a faster decision-making process - especially, investment matters will be resolved in a much accelerated manner.

• Rio Tinto plans to invest $3 billion in projects such as Oyu Tolgoi, Rincon and Simandou, as the company believes that the demand for its main products will increase by 25% by 2035.

Key takeaway

The deal is likely to bring positive change to the mine’s general operations and bring more benefits for the Mongolian economy.

📉 DATA STORY

With Mongolians protesting the alleged ₮44 billion coal theft for the past few days, it’s important to note that the incident is not the first of its kind. Four years ago, a similar “coal mafia” case worth ₮60 billion was revealed to the public, causing ripples of outrage and anger among Mongolian citizens. One of the main problems here seems to be the government’s excessive involvement in the coal industry, which creates room for secret agreements and under-the-table deals that result in unregistered coal exports. In any case, a task force has been appointed to investigate the latest theft case. Whether the issue will be resolved in a just manner is, unfortunately, not a question with a pre-determined answer.

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🤔 WHERE'S MONGOLIA GOING WRONG?

The latest “coal mafia” case was the last straw for Mongolians who took to the streets, protesting the general ineffectiveness of governance and the poor state of conditions in the country. The question that arises at this point is “Where exactly are we going wrong?”.

Instability

Since 1991, Germany’s had only 4 chancellors, while Mongolia’s seen as many as 16 prime ministers. Our average term of government is only about 700 days, while in Germany it’s 9 years. If we look at how many ministers have changed since 2008:

• Ministry of Finance: 7 times

• Ministry of Environment and Tourism: 10 times

• Ministry of Education and Science: 8 times

• Ministry of Foreign Affairs: 7 times

• Ministry of Labor and Social Protection: 9 times

• Ministry of Defense: 7 times

If the full four-year term was abided, each ministry would have seen only 4 ministers within the given period. In the last 30 years, only two governments have served a full tenure, with the shortest term of government being only 8 months.

“Short-term” long-term policies

Realistically speaking, it’s almost impossible to successfully implement long-term government policies when the governments themselves are quite short-lived. Since 1990, 480 mid- and long-term policies, strategies, concepts, and road plans have been approved and set for implementation, but most of them did not align with the realities of the Mongolian economy and eventually failed. The ones that were actually up-to-par inevitably suffered the frequent changes in the government's structure and now sit forgotten in a random office, accumulating dust.

In this sense, the protests are more about demanding stability - the last thing we need right now is yet another change of government.

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📌 Khan Bank receives Financial Regulatory Commission's approval for IPO. The decision was made during the 23rd regular meeting of the Financial Regulatory Commission on December 9. Khan Bank hereby becomes the third systemically important bank to be listed on the Mongolian Stock Exchange.

📌 Public hearing to be organized in regard to coal theft allegations on December 21. The public hearing will be chaired by Member of the State Great Khural S. Chinzorig and address multiple topics related to the issue, including offtake agreements established by Erdenes Tavan tolgoi JSC.

📌 Mongolia posts $3.3 billion trade surplus for November. Compared to the same period last year, this is a 26.6% increase. Exports rose by 26.2% YoY, reaching $11.1 billion, with imports also growing by 27.2% YoY to $7.9 billion.

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1. Mongolians brave bitter cold to protest ‘coal theft’ corruption (NBC News)

2. China, Mongolia aim to stop spread of shared desert that threatens mining and agriculture on both sides (South China Morning Post)

3. ‘Sharing a bed with a bear and a dragon’, Mongolia aims for closer ties with Australia (The Sydney Morning Herald)

4. Mongolia arrests ex-head of state mining company after corruption protests (Anadolu Agency)

5. Mongolia grabs 20 medals at Asian Classic Powerlifting Championship 2022 (MONTSAME)