The Mogul Report 30-Apr-2024
Top 3 Company Headlines
Steppe Gold to buy Boroo Gold (PR 12-Apr)
Mongolyn Alt MAK buys Sandvik drill rigs (Global Mining Review 19-Apr)
Bulgan Tushig & Huangcheng Energy to open rebar factory (Montsame 09-Apr)
Top 3 Macro and Risk Headlines
SWF law approved (CNBC 19-Apr)
Govt signs climate finance deal to protect grasslands (Reuters 22-Apr)
EBRD €45.3m support to healthcare (PR 29-Apr)
The Mogul's View
As Mongolia is a democracy, the expectations for its SWF could be very different to those in e.g. the Middle East. The Mogul is interested in what this could mean for wealth distribution, infrastructure, pensions, and what all of this could then mean for investors.
Fun Fact: A Mongolian Manchester United fan, Ochirvaani Batbold, has cycled 6,900km from Mongolia to watch them play at the FA Cup final in May (Montsame 23-Apr)

The Mogul Report 31-Mar-2024
Top 3 Company Headlines
Hanjin Logistics & Tuushin MOU (Korea JoongAng Daily 20-Mar)
Ondo Space launch Mongolia’s 1st 2 LEO satellites (PR 07-Mar)
MIAT & Lufthansa Technik partner 787 fleet support (BNN 06-Mar)
Top 3 Macro and Risk Headlines
5.2m of 64.7m livestock dead so far this winter (NYT 29-Mar)
EIB €54.4m green & sustainable development (PR 12-Mar)
US to prosecute ex-PM Batbold for corruption (Reuters 26-Mar)
The Mogul's View
The loss of livestock is higher than previous years, but not terribly unusual, unfortunately. It is still very serious. Livestock farming represents approx. 15% of Mongolia’s economy. Cost effective measures to save livestock over the winter could be very lucrative as well as better for animal welfare.
Fun Fact: The govt has opened a competition to find the concept for the New Kharkhorum City development - Kharkhorum was the capital of Mongolia under Genghis Khan but it has since diminished (Montsame 21-Mar)

The Mogul Report 29-Feb-2024
Top 3 Company Headlines
Trafigura faces Mongolia oil loss (Bloomberg 15-Feb)
Orano uranium mining deal faces delays (Bloomberg 22-Feb)
Jade Gas & MMC sign MOU (PR 29-Feb)
Top 3 Macro and Risk Headlines
Germany/Mongolia strategic partnership (Reuters 07-Feb)
UK/Mongolia air services agreement (PR 07-Feb)
Copper & molybdenum on Mineral Commodities Exchange (Montsame 29-Feb)
The Mogul's View
Mongolia’s oil market is very small, approx. 35,000 bpd in 2021, or about $1bn. Yet Trafigura is said to have losses running into the hundreds of millions. The Mogul expects it will be able to absorb this but is still curious how this happened. Details are few. The Mogul will watch out.
The partnership with Germany is promising for Mongolia. There is plenty on mining, but Germany will also help Mongolia with its judiciary reform. Mongolia will also support Germany’s bid for a permanent seat on the UN Security Council. This is consistent with Mongolia’s 3rd Neighbour policy.
Fun Fact: Ulaanbaatar is going to get a mass transit cable car system built by 2 French companies, Poma and Egis (GCR 16-Feb)

The Mogul Report 31-Jan-2024
Top 3 Company Headlines
Mongolian Mortgage Corp renewed debt $225m, 11.5%, due 2027 (PR 24-Jan)
Steppe Gold (STGO:TSX) to buy Boroo Gold (PR 22-Jan)
Baikal-Transit LLC ₽1.8bn customs terminal (News.mn 25-Jan)
Top 3 Macro and Risk Headlines
China-Mongolia border port record-high goods volume in 2023 (China Daily 02-Jan)
Russia-China gas pipe delayed (FT 28-Jan)
Law now bans poisoning & shooting of strays (World Animal News 25-Jan)
The Mogul's View
The Mogul believes that the new animal rights law is a sign of Mongolia’s development. It’s a promise of resources and management capability. How closely it’s obeyed, let’s see, or if the government can deliver.
It’s not clear why the Power of Siberia 2 pipeline is delayed. China currently receives gas from east Russia from the Power of Siberia pipe. The Mogul suspects either Chinese demand is lower, or they think they can get a better deal.
Fun Fact: Mongolia also has a “Great Wall” 2,700m from China and 405km long, constructed during the 11th to 13th centuries (Jerusalem Post 04-Jan)

The Mogul Report 31-Dec-2023
Top 3 Company Headlines
Thiess 5-year extension Ukhaa Khudag metcoal (International Mining 20-Dec)
Xanadu upgrade Kharmagtai resource estimate (Mining.com 08-Dec)
Rio Tinto & UNESCO sustainability partnership (PR 04-Dec)
Top 3 Macro and Risk Headlines
Foreign banks permitted entry (Bloomberg 22-Dec)
Govt want $11bn to decarbonise (Bloomberg 06-Dec)
Govt to issue bond $350m 7.875% due 2029 (PR 01-Dec)
The Mogul's View
Opening for foreign banks is a sign of Mongolia’s growing economic maturity. This is also reflected in its easy refinancing of the $350m debt due 2024, and its ambitions to raise $11bn for decarbonising its economy. Entry permission for foreign banks is also a sign that it wants to balance off Chinese banking interests. The Mogul is optimistic about Mongolia’s outlook for 2024.
Fun Fact: Mongolia sometimes experiences a rare form of red aurora borealis – this happens because the atmosphere is thinner at Mongolia’s heightened altitude, with fewer oxygen molecules for light to bounce off (India Today 02-Dec)

The Mogul Report 30-Nov-2023
Top 3 Company Headlines
STX & SG Group deal to develop rare earths (Aju Korea Daily 28-Nov)
Gobi (GOV:MSE) $30m ADB loan (PR 20-Nov)
KinRoss & Clean BotanEco carbon credits deal (Straits Times 08-Nov)
Top 3 Macro and Risk Headlines
New tax-free system for foreigners (Xinhua 03-Nov)
New metro line in Ulaanbaatar (Xinhua 22-Nov)
Drones to transport blood to hospital (AKIpress 10-Nov)
The Mogul's View
Mongolia is uneventful going into the winter. It’s good that things are ticking along. New initiatives to welcome in foreign tourists, new metro line, experimental infrastructure for medical care. The govt is refinancing some debt painlessly. The Mogul will see you next month.
Fun Fact: A research team has discovered a new species of dinosaur, Jaculinykus yaruui, which appeared to sleep like a present-day bird, offering further insights into how dinosaurs evolved into birds (Japan News 23-Nov)

The Mogul Report 31-Oct-2023
Top 3 Company Headlines
Orano signs uranium extraction deal (PR 12-Oct)
Thales satellite deal (PR 13-Oct)
SibAgro to open industrial pig farm (Pig Progress 09-Oct)
Top 3 Macro and Risk Headlines
ADB $100m resilience loan (Montsame 06-Oct)
MSE record trading volume (AKIpress 02-Oct)
InterRAO starts restricting electricity supplies to China (Reuters 02-Oct)
The Mogul's View
Mongolia’s French deals will set it up well. Quietly Russia has long been interested in Mongolian uranium. France is a big nuclear energy country. This is a good match. It plays nicely into the 3rd Neighbour policy.
The Mogul notes the apparent irony that at a time there is record volume on the stock exchange that Mongolia is taking loans for financial and economic stability. Watch out.

​​Fun Fact: Mongolia has topped Lonely Planet’s 2024 travel list (Lonely Planet 31-Oct)

The Mogul Report 30-Sep-2023
Top 3 Company Headlines
Megha Engineering $648m oil refinery contract (Reuters 29-Sep)
Hunnu Air to do Japan, China, France flights (News.mn 19-Sep)
Homeplus expands to Mongolia (Korea Times 25-Sep)
Top 3 Macro and Risk Headlines
Mongolia 1st country in Asia to complete FATF regs (News.mn 27-Sep)
ADB $150m loan for roads in western Mongolia (PR 12-Sep)
Pope visits (Vatican News 01-Sep)
The Mogul's View
The Mogul wonders if the Pope’s visit will be useful as a precedent or template for any potential future visits by His Holiness the Dalai Lama. The Dalai Lama has already suggested that his reincarnation will be found in Mongolia. Catholicism is not as prominent or historic as the specific sect of Buddhism the Dalai Lama heads, so it could be reasonable for Mongolia to host him. 
Fun Fact: On his visit to Mongolia, His Holiness the Pope praised Genghis Khan for his unifying legacy (Catholic Herald 02-Sep)

The Mogul Report 31-Aug-2023
Top 3 Company Headlines
Google signs digital partnerships deal with govt (SCMP 06-Aug)
MIAT gets Boeing 787-9 Dreamliner (PR 07-Aug)
Elixir Energy $10.5m to fund Daydream-2 and Nomgon (PR 29-Aug)
Top 3 Macro and Risk Headlines
Govt & Rio Tinto resolve nearly all tax issues (Reuters 03-Aug)
US & Mongolia sign open-skies deal (PR 04-Aug)
Mongolia gets international halal & organic accreditation (AKIpress 11-Aug)
The Mogul's View
Deals with the US are good for Mongolia’s third neighbour policy. Digital and planes. Perhaps the US still produces better tech at a good enough price than their main competitor, China.
Mongolia is well set for a good autumn and winter.
Fun Fact: JTBC is releasing a new reality TV travel show where Korean celebrities travel around Mongolia (Korea Times 06-Aug)

The Mogul Report 31-Jul-2023
Top 3 Company Headlines
Elixir Energy (EXR:ASX) hits gassy coal in both Nomgon IX CBM wells (PR 16-Jul)
Petro Matad (MATD:LSE) gets permit for oil discovery (PR 06-Jul)
ION Energy (ION:TSVX) closes $1m funding round (PR 20-Jul)
Top 3 Macro and Risk Headlines
ADB issues 1st local currency health bond ₮35bn (PR 21-Jul)
China land links will run 24/7 (SCMP 05-Jul)
Hundreds flee homes after flooding in UB (Phys.org 05-Jul)
The Mogul's View
Mongolia’s third neighbour policy may open it to the kinds of criticisms Switzerland sometimes faces. Some are grumbling at ship registrations or Mongolia’s support for the Russian gas pipeline to China. It would be foolish of the West to pointlessly alienate a potential friend.
Fun Fact: The Naadam festival takes place this month. In Mongolian it is called “Eriin Gurvan Naadam”, the “three manly games”. Those games are wrestling, archery, and horse riding (CNN 17-Jul)

The Mogul Report 30-Jun-2023
Top 3 Company Headlines
XacBank begins trading on secondary securities market (AKIpress 14-Jun)
ThaiVietJet flights UB to Bangkok (Montsame 05-Jun)
Musk & PM talk Starlink & Tesla Mongolia expansion (CNBC 07-Jun)
Top 3 Macro and Risk Headlines
France Foreign Minister wants €1bn uranium deal (Reuters 28-Jun)
Shipping registration may help Russia dodge sanctions (Foreign Policy 01-Jun)
Singapore carbon credit deal (Carbon Herald 13-Jun)
The Mogul's View
The first green bond is now registered in Mongolia. The Mogul has long understood Mongolia’s potential for helping to reduce carbon, though it will have a lot of work to do to compensate for its large coal output.
The Mogul previously identified Russia’s interest in Mongolian uranium. France produces a lot of nuclear energy. It ought to be a reliable partner.
Fun Fact: Ibex goats are being introduced to the Bulgan Mountain (Montsame 21-Jun)

The Mogul Report 31-May-2023
Top 3 Company Headlines
Khas Bank & TD Bank shares registered for public offering (Montsame 15-May)
Mirada & EZDRM partner to expand Skytel service (Advanced Television 19-May)
Steppe Gold (STGO:TSX) raises $12.1m for expansion (PR 11-May)
Top 3 Macro and Risk Headlines
MSE reaches record high (AKIpress 05-May)
Mongolia to supply France with critical green energy metals (Bloomberg 21-May)
42% of dust in NE China comes from Mongolia (Global Times 18-May)
The Mogul's View
Mongolia is doing very well. It’s foreign trade is up 50.4% in 4 months. Otherwise, the Mogul is wary that China may use dust as a pretext for some sort of action or attempt to control. The Mogul will monitor.
Fun Fact: According to Freddie Mercury’s notes, the Queen song ‘Bohemian Rhapsody’ was almost called ‘Mongolian Rhapsody’ (NYT 31-May)

The Mogul Report 30-Apr-2023
Top 3 Company Headlines
Hopu raises $141m for Mongolia buyout fund (Nikkei Asia 27-Apr)
SouthGobi move listing to TSX Venture Exchange (PR 01-Apr)
Mom's Touch chicken burger chain to enter Mongolia (Korea Times 04-Apr)
Top 3 Macro and Risk Headlines
530km oil pipeline construction starts (Montsame 29-Apr)
Govt invest in 1st of its kind construction waste recycling plant (Montsame 13-Apr)
Govt launch E-Business platform (PR 11-Apr)
The Mogul's View
The Mogul thinks that several macro level stories are the beginning signs that Mongolia is moving onto more developed concerns. When the Mogul started this newsletter it was a remote thought that Mongolia would be planning online services, recycling, and activating hydroelectric power.
Fun Fact: Long before the Mongols there was a nomadic empire of a people called the Xiongnu, and scientists have been able to analyse their DNA (Phys.org 14-Apr)

The Mogul Report 31-Mar-2023
Top 3 Company Headlines
TMK Energy (TMK:ASX) & Mongol Alt gas offtake deal (Natural Gas World 20-Mar)
Mongol iD mobile payments empowered by MineSec (PR 15-Mar)
CU opens 300th store in Mongolia (PetrolPlaza 13-Mar)
Top 3 Macro and Risk Headlines
Rio Tinto stands ground on Oyu Tolgoi tax take (AFR 13-Mar)
Dalai Lama: US-born Mongol reincarnated Jetsun Dhampa (PR 08-Mar)
GDP +2.1% (Montsame 14-Mar)
The Mogul's View
Underground production finally started at Rio Tinto’s Oyu Tolgoi mine. It is not the only copper project to move forward. It is also not the only copper project with tax disputes against the govt. On balance, the situation is good now that production has finally started. The Mogul is still wary that the govt may try to get greedy, rather than more relaxed and settling, when it starts to see money coming in.
The Dalai Lama’s announcement is not entirely unexpected. He has speculated that his reincarnation may come from Mongolia and he does visit the country. The Jetsun Dampa is the third most important figure in Tibetan Buddhism. The Mogul doesn’t expect anything serious from China.
Fun Fact: Mongolian BBQ is really from Taiwan (Tasting Table 30-Mar)

The Mogul Report 28-Feb-2023
Top 3 Company Headlines
Carrefour & Altan Joloo open 2 stores (PR 17-Feb)
Steppe Gold (STGO:TSX) plans HK dual listing (PR 21-Feb)
Elixir Energy & SB Energy progress green hydrogen plan (PR 21-Feb)
Top 3 Macro and Risk Headlines
GDP +4.8% in 2022 (Xinhua 17-Feb)
1st coal auction at MSE (Montsame 16-Feb)
Mongolian banks to accept Russian MIR debit cards (Russia Briefing 19-Feb)
The Mogul's View
The SK/Mongolia MOU on rare earth metals is good news. Approx. 90% currently come from China, they’re mostly used in electronics, and in such small quantities that you can fly them out on a plane. This will be very appealing to consumers and Mongolia won’t need to rely on lots of railways. Refinement could prove a problem. The process is very particular and difficult to get right, even with the best raw material sources. The Mogul will be more interested when there is news on a plan for this.
Fun Fact: This month Mongolia celebrated the Lunar New Year, called Tsagaan Sar (PR 20-Feb)

The Mogul Report 31-Jan-2023
Top 3 Company Headlines
2ndry market trading of stock exchange’s shares begins (Montsame 10-Jan)
Aspire (AKM:AU) gets approvals at Ovoot Project (PR 09-Jan)
SUU starts 12 cooperatives for milk production (Montsame 10-Jan)
Top 3 Macro and Risk Headlines
PM says Russia sanctions affecting Mongolia (FT 30-Jan)
Mongolia to screen whole population for hidden diseases (Daily Telegraph 12-Jan)
MSE Renews the TOP-20 Index (Montsame 27-Jan)
The Mogul's View
The PM says that Mongolia is taking in less in navigation fees through its airspace, and certain supplies are now more difficult to procure. Mongolia is largely dependent on Russia for fuel. The Mogul is dubious. Mongolia is probably affected by many of the same shortages and price rises that many countries are. There are also a lot of things that the govt may want to distract from. The Mogul suspects that the real difficulty is greater reliance on China, its only other land neighbour.
Fun Fact: The lowest temperature reached -47°C in Mongolia (AKIpress 13-Jan)

The Mogul Report 31-Dec-2022
Top 3 Company Headlines
Rio Tinto completes $3.3bn Turquoise Hill buy out (Reuters 16-Dec)
Govt hope listing ETT internationally will drive out corruption (Reuters 13-Dec)
Ulaanbaatar Railway first export freight train (Montsame 10-Dec)
Top 3 Macro and Risk Headlines
Banks lift USD transaction limits (Montsame 06-Dec)
China opens new veg, fruit export channel to Mongolia (Xinhua 20-Dec)
EBRD $68.1m for new transmission line (PR 15-Dec)
The Mogul's View
The govt needs to sort itself out. Protests about coal thefts got heated. Even the US Embassy took notice of students getting rowdy at the State Palace. International listings will not fix corruption and theft. The Mogul expects investors will be repulsed. The govt does appear to be taking some actions – public hearings, investigations, putting Tavan Tolgoi Railways into an emergency regime. The Mogul expects the situation will be brought under control – at least to regular, predictable levels of dodginess for third world mining operations.
Fun Fact: The clue to more durable racehorses may be in the DNA of Mongolian horses (Times 18-Dec)

The Mogul Report 30-Nov-2022
Top 3 Company Headlines
Golomt Bank registers shares to be issued as public offer (Montsame 10-Nov)
Mongolia Energy $95m loss for 6-month period (PR 28-Nov)
Jade Gas first production test well (PR 25-Nov)
Top 3 Macro and Risk Headlines
Mongolia opens 3rd railway to Chinese border (Rail Journal 28-Nov)
Turquoise Hill's $3.1bn takeover in doubt, Rio requests vote delay (Bloomberg 10-Nov)
ADB grid-connected solar & battery system in Uliastai (PR 28-Nov)
The Mogul's View
Mongolia is going to keep selling coal to China. It’ll keep doing well. The country is even making interesting plans for the future regarding renewable energy. It has plenty of choices with such a large amount of land – solar, wind, and even geothermal energy, perhaps, in some spots.
Fun Fact: The Order of Genghis Khan, the country's highest state award, was awarded for the first time to a non-Mongolian, to American author Jack Weatherford for his contribution to the studies of Genghis Khan (Xinhua 24-Nov)

The Mogul Report 31-Oct-2022
Top 3 Company Headlines
Beijing Energy International to build wind power plant (PR 17-Oct)
GS25 launches 100th outlet, aims for 500 stores by 2025 (Mint 03-Oct)
Engineers India refinery consultancy deal (Inside Retail 28-Oct)
Top 3 Macro and Risk Headlines
FTSE Russell to upgrade Mongolia to frontier market status (Montsame 05-Oct)
Residence permits for all Russians who ask (Odessa Journal 01-Oct)
Germany wants key resources from Mongolia (AP 14-Oct)
The Mogul's View
FTSE Russell will upgrade Mongolia in Sep-2023. The Mogul expects this will initially give a big boost to Mongolian share prices. It’s all passive, though, so the bump won’t last.
It’s a risk for Mongolia to shelter Russian draft dodgers. Perhaps Russia needs every friend it can get and won’t (can’t?) do anything to retaliate.
Fun Fact: 82-year-old Baraduuz Deemchig has built a 30 hectare oasis in the desert, which he started in the 90s, with over 400,000 trees, and crops such as sea buckthorn and raspberries (AKIpress 24-Oct)

The Mogul Report 30-Sep-2022
Top 3 Company Headlines
Govt pay MMC $153m to settle dispute (Mining Technology 01-Sep)
KM to build heat and power plant (AKIpress 28-Sep)
Khan Bank & ICT Group SME digital ecosystem (News.mn 21-Sep)
Top 3 Macro and Risk Headlines
Russians flee to Mongolia to avoid draft (Straits Times 25-Sep)
President invites Kim Jong Un to visit (NK News 12-Sep)
Tavantolgoi-Gashuunsukhait operational (Montsame 09-Sep)
The Mogul's View
The Mogul expects the govt to deal with the influx of Russians carefully. Russia is an important counterbalance to China. Conversely, energy infrastructure through Mongolia to China is important for Russia. Perhaps it will turn a blind eye to a country which can’t reasonably be expected to police its vast borders and catch every fleeing Russian.
Fun Fact: Mongolia will soon get its own version of the US TV series Project Runway (VideoAge 29-Sep)

The Mogul Report 30-Jun-2022
Top 3 Company Headlines
TEPCO grid stabilisation to help renewables (PR 24-Jun)
TMK Energy (TMK:ASX) Snow Leopard-3 well drilling begins (Market Herald 17-Jun)
SB Energy and Elixir MOU green hydrogen R&D (PR 17-Jun)
Top 3 Macro and Risk Headlines
25 SOEs to go public (Montsame 30-Jun)
World Bank $40.7m loan to improve online public services (PR 06-Jun)
NASA to improve cashmere goat grazing sustainability (PR 15-Jun)
The Mogul's View
Coal exports are up again and going along nicely. Let’s see if China goes into lockdown again though.
It’s a complete contrast to the bigger company stories this month related to green energy.
Mongolia looks like it’ll have a pleasant summer.
Fun Fact: Giorgio Marengo, who served as a missionary in Mongolia for nearly 20 years will become the world’s youngest cardinal (National Catholic Register 02-Jun)

The Mogul Report 31-May-2022
Top 3 Company Headlines
Turquoise Hill debt funding from Rio Tinto as it evaluates $2.7bn offer (Reuters 19-May)
TransBank & Joseph Sassoon Group partnership deal (PR 20-May)
Petro Matad drilling halted by China lockdown (PR 05-May)
Top 3 Macro and Risk Headlines
$110m to boost transport connectivity and logistics (World Bank 25-May)
China 1,520mm gauge railway, cutting time by 30% (Global Times 26-May)
Govt to pay off Samurai bond early (PR 19-May)
The Mogul's View
The biggest risk facing Mongolia is China’s Covid-19 response measures. Port closures and supply chain issues ultimately come back to hit Mongolia’s raw materials exports. Otherwise Mongolia is doing well. The Mogul expects this to continue.
Fun Fact: Mongolia is trying to woo British filmmakers there, promising a 35% rebate on whatever they spend in Mongolia and a 10% extra if they make films reflecting Mongolian culture (Telegraph 24-May)

The Mogul Report 30-Apr-2022
Top 3 Company Headlines
BMR buys $6.3m 45% coal stake from Silver Elephant (ELEF:TSX) (PR 04-Apr)
Zijin 9.9% $5.56m Xanadu (XAM:ASX) deal (PR 19-Apr)
MIAT & Hunnu cooperation deal (CAPA 21-Apr)
Top 3 Macro and Risk Headlines
China to cut coal tariffs (Global Times 28-Apr)
D-Parliament e-platform launched (Montsame 16-Apr)
First metal powder plant opens (Xinhua 11-Apr)
The Mogul's View
The ADB agrees with the Mogul that there will be growth this year but it will be muted. Tax revenue increased 40.1% compared to the same period last year. It’s a sign that the economy is recovering but then industrial output dropped 24.4% in Q1. Russia’s loss is Mongolia’s gain in the commodities and agriculture markets. The positives and negatives are balancing out but Mongolia’s outlook remains positive. The economy will grow but it will be dull.
Fun Fact: Entrepreneurs in Mongolia are finding uses for sheep wool as fertiliser, packaging, fabric softener, and insulation (Nikkei Asia 25-Apr)

The Mogul Report 31-Mar-2022
Top 3 Company Headlines
Rio Tinto offers $2.7bn for Turquoise Hill (TRQ:TSX) (PR 14-Mar)
Gazprom pipeline enters design phase (Montsame 01-Mar)
Steppe Gold (STGO:TSX) back in production (PR 01-Mar)
Top 3 Macro and Risk Headlines
Govt to build new Erdeneburen hydropower plant (Montsame 03-Mar)
Coal still key to China energy strategy after parliament meeting (Reuters 11-Mar)
End to PCR test requirement for entrance (Montsame 14-Mar)
The Mogul's View
Rio Tinto’s offer is for the 49% it does not own yet. Some investors think it is too low. Pentwater Capital Management, the largest minority shareholder at 10%, said it would be happy to pay for Rio Tinto’s shareholding at the price they’ve suggested. Pentwater says that Rio Tinto bought its 51% for $63.70 per share. The Mogul expects some haggling.
Fun Fact: Paleolithic Mongolians may have eaten the last giant camels 27,000 years ago (Archeology.org 28-Mar)

The Mogul Report 28-Feb-2022
Top 3 Company Headlines
Erdenes Tavantolgoi & Frontera bond deal in the Metaverse (PR 15-Feb)
TMK (TMK:ASX) buys Telmen Energy (PR 15-Feb)
Resilience (RM1:ASX) wants ASX relisting (Market Herald 15-Feb)
Top 3 Macro and Risk Headlines
Borders reopened for vaccinated people (France 24 15-Feb)
Prominent anti-China activist arrested in Mongolia (France 24 15-Feb)
Total govt budget revenue up 42.4% yoy (Montsame 17-Feb)
The Mogul's View
After Ukraine the Mogul is much less certain about the viability of Mongolia’s so-called “third neighbour” strategy. Mongolia has good relationships with both Russia and China and the Gazprom pipeline (see last month’s report below) suddenly looks much more important. That doesn’t mean Mongolia is safe. It must still pursue the third neighbour strategy and think even more about what it can do to balance external interest. This will be very difficult. Western investors are much more likely to be risk averse. The Mogul expects Mongolia’s economy to keep growing, because it is starting from a low base, but not as much as it otherwise could.
Fun Fact: Bars Motors presented Mongolia’s first electric car to the Mongolian National Olympic Committee (Montsame 28-Feb)

The Mogul Report 31-Jan-2022
Top 3 Company Headlines
Aeroflot resumes flights to Ulaanbaatar (PR 13-Jan)
Jade Gas (JGH:ASX) 58m gas-bearing coal (PR 14-Jan)
Elixir (EXR:ASX) MOU to finance hydrogen project (PR 18-Jan
Top 3 Macro and Risk Headlines
Rio Tinto & govt Oyu Tolgoi dispute (PR 25-Jan)
China lets in Australian coal at ports (Bloomberg 22-Jan)
Indonesia blocks coal exports (Reuters 01-Jan)
The Mogul's View
Finally everyone can move on and build Oyu Tolgoi properly. Production is expected H1 2023. This should remove the huge uncertainty and disincentive for other potential mining projects. Now the main points of concern are Chinese demand and border/Covid policy.
Gazprom finished its study on the proposed pipeline. Now it will move to the actualisation phase. This is good for Mongolia. More trade, more infrastructure, more countries invested in its stability.
Fun Fact: Tumenzaya Khadkhuu started a Manchester City FC supporters club which is now officially recognised (PR 18-Jan)

The Mogul Report 31-Dec-2021
Top 3 Company Headlines
Rio Tinto to cancel govt’s $2.3bn debt (Reuters 13-Dec)
SLA Digital partner with Unitel, launch DCB (PR 14-Dec)
Leather processing factory JV launched (Montsame 16-Dec)
Top 3 Macro and Risk Headlines
China’s zero Covid policy blocks coal exports (bne IntelliNews 15-Dec)
Melting permafrost destroying roads (Worldcrunch 15-Dec)
Discussion on starting SWF (Montsame 01-Dec)
The Mogul's View
The good news about Oyu Tolgoi continues. The Mogul is optimistic that the worst is behind the govt and Rio Tinto. The idea of starting a SWF has floated around for a long time. It would be a good idea and perhaps now it’s more realistic.
The pandemic seems under control in Mongolia. The population is relatively younger compared to western countries but the weather forces people indoors. Mongolia cannot control China’s pandemic policies. China is 90% of Mongolia’s export market. The risks are already becoming reality.
Fun Fact: The clothing brand Loro Piana is starting a programme which will let you track your cashmere from goat to coat (New York Times 12-Dec)

The Mogul Report 30-Nov-2021
Top 3 Company Headlines
Turquoise Hill approves Oyu Tolgoi budget increase (PR 29-Nov)
Central Express master franchisee MSE listing (Korea JoongAng Daily 14-Nov)
KT to equip hydrogen plant at Mongolia’s 1st oil refinery (Montsame 25-Nov)
Top 3 Macro and Risk Headlines
COP26 pledge to phase out coal (FT 13-Nov)
Third of all job losses are in tourism sector (News.mn 19-Nov)
Turkey to build weapons factory (Janes 23-Nov)
The Mogul's View
It looks like there’s progress on Oyu Tolgoi debt and financing. The Rio Tinto CEO, Jakob Stausholm, visited Mongolia to discuss a “reset”. The Turquoise Hill approval is a very good sign.
The COP26 pledge to phase out coal was weakened almost as soon as the conference was over. Coal isn’t going anywhere soon but it shows what a lot of the world wants to do. It’s even more reason for Mongolia to sort itself out regarding copper, other resources, and other industries.
Fun Fact: The capital of the Mongolian Empire, Karakorum, built by Genghis Khan’s son, Ögödei, was mapped for the first time (Daily Mail 04-Nov)

The Mogul Report 31-Oct-2021
Top 3 Company Headlines
Steppe Gold (STGO:TSX) study predicts ATO project $1.7bn revenue (PR 27-Oct)
Erdene (ERDN:MSE) closes $5m MSE offer (PR 12-Oct)
Us Erdene jims opens sea buckthorn jam factory (Montsame 25-Oct)
Top 3 Macro and Risk Headlines
Chinese coal prices hit record high (Reuters 15-Oct)
Mongolia added to FTSE “frontier market” status watch list (Montsame 28-Oct)
Gross industrial output increased 22% from last year (Montsame 15-Oct)
The Mogul's View
Mongolia is doing well. The Mogul is wary. The general news and atmosphere seem like those 10 years ago when The Mogul Report first started. Mongolia underperformed for a long time after that. Record high coal prices in China, going into winter, are good for Mongolia. Everything should get better as the pandemic lifts too. The Mogul is optimistic in the short term at least.
Fun Fact: A Korean-Mongolian greenbelt plantation project turned 3,000 hectares of desert into forest (Korea Herald 28-Oct)

The Mogul Report 30-Sep-2021
Top 3 Company Headlines
FCA investigating Rio Tinto over misleading Oyu Tolgoi claims (This Is Money 26-Sep)
ONDO licensed (Developing Telecoms 27-Sep)
EBRD and Khas Bank $4.8m loan to Suu Milk (Montsame 07-Sep)
Top 3 Macro and Risk Headlines
China coking coal futures up, supply crunch (Reuters 28-Sep)
45% film production tax incentive (Hollywood Reporter 01-Sep)
Russia & China to help with fuel shortage (Global Times 27-Sep)
The Mogul's View
Rio Tinto’s problems are increasing as another major financial regulator starts investigating. Rio Tinto deny everything and put the discrepancies down to different-than-expected geological conditions. That sounds plausible but that isn’t the only thing regulators are interested in.
Otherwise Mongolia is doing very well. The Asian Development bank forecasts 4.8% growth and the MSE was the world’s best performing stock exchange this year.
Fun Fact: Hakuho, the sumo grand champion (originally Mönkhbatyn Davaajargal from Mongolia) is retiring at the age of 36 (Jiji Press 27-Sep)

The Mogul Report 31-Aug-2021
Top 3 Company Headlines
APU (APU:MSE) first to reach ₮1tn market cap (Montsame 03-Aug)
Mongolian Stock Exchange highest profit in its history (Montsame 17-Aug)
RM1 starts IPO process on ASX for Kincora assets (PR 18-Aug)
Top 3 Macro and Risk Headlines
Rio Tinto offers to cut Oyu Tolgoi loan rates (FT 30-Aug)
Chinese SOEs lose claim against iron ore deposit (GAR 26-Aug)
MCC & govt UB $93m water purification plant (PR 20-Aug)
The Mogul's View
Turquoise Hill and the govt commissioned a report which concluded that the $1.4bn cost overrun at Oyu Tolgoi was Rio Tinto’s fault. Rio Tinto protested and now they’re making concessions. It might be very tempting to accept Rio Tinto’s offer, take a political win, and get on with building Oyu Tolgoi. Rio Tinto are proposing an extra $350m over the next 3 years. Mongolia’s GDP is approx. $15bn. The FCA and SEC are still investigating. The govt should wait.
Fun Fact: Edinburgh Zoo welcomed 3 Przewalski’s horses, which are endangered and native to Mongolia (Edinburgh Evening News 28-Aug)

The Mogul Report 31-Jul-2021
Top 3 Company Headlines
Khan Bank submits plan to become public traded (Montsame 01-Jul)
Golomt Bank submits plan to be publicly traded (Montsame 04-Jul)
SBI invests in AND Global (Nikkei Asia 06-Jul)
Top 3 Macro and Risk Headlines
Vaccines fail to suppress Covid-19 spread (Nikkei Asia 26-Jul)
New international airport opens (Xinhua 04-Jul)
Rio Tinto probed by UK FCA over disclosures (FT 28-Jul)
The Mogul's View
Finance sophistication is growing a bit in Mongolia. All the major native banks are private or SOEs. There are not many international banks. If there is a growing business opportunity for banking in Mongolia they might take another look.
Covid-19 concerns aren’t particular to Mongolia but perhaps the govt will examine which vaccines it is using. Elsewhere other Rio Tinto mines have been impacted by the spread of the pandemic, adding to their growing problems. The Mogul expects a general negative impact on Oyu Tolgoi development.
Fun Fact: Mongolia is home to the world’s first national park (Guardian 06-Jul)

The Mogul Report 30-Jun-2021
Top 3 Company Headlines
Steppe Gold (STGO:TSE) approved for MSE dual listing (Montsame 30-Jun)
LendMN 2-year 14% MNT5bn bond (PR 25-Jun)
Ion Energy (ION:CVE) starts lithium salar exploration (PR 11-Jun)
Top 3 Macro and Risk Headlines
Ex-PM Khurelsukh wins presidential election in landslide (Reuters 09-Jun)
EAEU free trade talks begin (PR 01-Jun)
$1bn sovereign bonds refinanced at record low rate (Montsame 30-Jun)
The Mogul's View
Mongolia’s economic future looks very good but the Mogul is suspicious of the Mongolian People’s Party. The MPP now controls both the presidency and parliament. They started the long-running and counterproductive fuss with Rio Tinto over  about a decade ago which has held the economy back. They’re also the party from Mongolia’s soviet era.
Fun Fact: GOBI Cashmere (GOV:MSE) will let you track which goat your sweater came from (Forbes 15-Jun)

The Mogul Report 31-May-2021
Top 3 Company Headlines
Govt threatens to cancel OT investment deal unless tax claim dismissed (Mining Weekly 04-May)
Erdenet Mining Corp to build metallurgy-chemical plant complex (Montsame 06-May)
Khan Bank appoints service providers for its IPO (Montsame 18-May)
Top 3 Macro and Risk Headlines
Presidential candidates approved, election campaign period begins (Montsame 24-May)
Thermal coal futures at record high (Bloomberg 11-May)
Vaccine rate high (NYT 20-May)
The Mogul's View
President Battulga will not run again. Presidential politics has calmed down. It looks like it was all bluster. See last month’s report below.
Mongolia is most vaccinated country after Israel. High coal prices are obviously good given how much it exports. Its outlook is bright.
Fun Fact: Palaeontologists have discovered that the dinosaur Shuvuuia deserti had owl-like night senses (Science 07-May)

The Mogul Report 30-Apr-2021
Top 3 Company Headlines
Turquoise Hill (TRQ:TSX) & Rio Tinto agree Oyu Tolgoi funding plan (PR 09-Apr)
BlackGold (41H:SGX) S$1bn RTO Tengri Coal from MGL (PR 09-Apr)
ER Telecom builds cross border link to Mongolia (ComNews 23-Apr)
Top 3 Macro and Risk Headlines
President tries to ban the ruling party (PR 19-Apr)
Parliament accepts Court’s ruling on presidential candidates (Montsame 23-Apr)
Mongolia Third Neighbor Trade Act reintroduced to US Congress (Montsame 22-Apr)
The Mogul's View
Presidential elections are due next month and politics is getting very, very ugly. Parliament, overwhelmingly controlled by the Mongolian People’s Party (MPP), voted to limit presidents to one term. This would prevent the current president, Battulga, of the Democratic Party, from running again. Battulga responded by issuing a decree to ban MPP on the grounds that they were attacking Mongolia’s democracy. He has also allegedly been seen meeting senior military officers. Parties are supposed to announce their candidates for the presidential elections in May.
Fun Fact: Fukuoka City Museum in Japan is displaying objects from ships from the Mongol fleet which tried to invade in the 13th Century – they were destroyed by “divine wind” or “kamikaze”, the original use of that term (News.mn 08-Apr)

The Mogul Report 31-Mar-2021
Top 3 Company Headlines
Govt & Rio Tinto agree to replace Oyu Tolgoi $7bn funding plan (Nikkei Asia 01-Mar)
MMC (975:HK) $228m tax charge (Bloomberg Tax 18-Mar)
JGC (1963:TYO) consortium win solar plant bid (Nikkei Asia 20-Mar)
Top 3 Macro and Risk Headlines
Highest daily increase in Covid-19 cases (Xinhua 13-Mar)
Govt to start SWF (Montsame 10-Mar)
Govt to start fintech regulatory sandbox (Montsame 03-Mar)
The Mogul's View
Agreeing to replace the Oyu Tolgoi funding plan is just the first step. The Mogul expects negotiations to agree the actual replacement will take some time. Rio Tinto has a lot of problems. The govt stands a very reasonable chance of getting improved terms.
Mongolia managed to hold off Covid-19 for a long time but it has finally arrived. Mongolia will be fine. It is receiving a lot of help from the ADB - $100m to help with the covid response, and $175m to tackle climate vulnerability. Summer and vaccines are coming soon. This could be over very quickly.
Fun Fact: If you liked The Hu perhaps you should check out Mongolia’s burgeoning Hip Hop scene (CNN 16-Mar)

The Mogul Report 28-Feb-2021
Top 3 Company Headlines
Turquoise Hill (TRQ:TSX) relief victory against Rio Tinto (Reuters 04-Feb)
Bogd Bank IPO, Ard Securities underwriter (Montsame 04-Feb)
Talon Petroleum (TPD:ASX) 35% interest in Telman CBM project (Market Herald 03-Feb)
Top 3 Macro and Risk Headlines
Vaccine programme launched (PR 23-Feb)
PM to increase digitalisation with new Ministry of E-Development (Xinhua 03-Feb)
Working group created for Ulaanbaatar municipal bonds (Montsame 09-Feb)
The Mogul's View
There are rumours that the govt asked Rio Tinto whether it would consider a mutually agreed end to the Oyu Tolgoi deal. The Mogul thinks that the govt and Rio Tinto should proceed but that Rio Tinto should expect very reasonable compensation. A bad end is bad for Mongolia too. Disputes and dithering over Oyu Tolgoi has delayed development of the mine itself and put off FDI since The Mogul Report began. Make sure everyone is happy, call it quits, cut the losses, and try again properly!
Fun Fact: The bonds between Mongolian herders and the bankhar working dog are so strong that they are the only animals which the herders give names (Atlas Obscura 23-Feb)

The Mogul Report 31-Jan-2021
Top 3 Company Headlines
Govt considers ending Oyu Tolgoi expansion (Reuters 11-Jan)
Gazprom SPV for pipeline feasibility study (TASS 22-Jan)
Khan Bank $24.8m long term funding deal for micro & SME finance (Montsame 06-Jan)
Top 3 Macro and Risk Headlines
Healthcare failure, protests, PM, Dep PM, Health Minister resign (Montsame 21-Jan)
More Covid-19 restrictions lifted in Ulaanbaatar (News.mn 26-Jan)
NATO complete cybersecurity project (Army Technology 19-Jan)
The Mogul's View
Rio Tinto is in a difficult position over Oyu Tolgoi. Turquoise Hill is the source saying that the govt is considering ending expansion. Turquoise Hill is citing the inability of Erdenes Oyu Tolgoi (SOE) to offer bonds in 2021 in its latest legal filings in its lawsuit against Rio Tinto. Turquoise Hill is Rio Tinto’s majority owned subsidiary but it looks like Turquoise Hill is aligned with the govt.
The Mogul doesn’t expect healthcare related govt resignations to help Rio Tinto. The relevant ministers are still in post.
Fun Fact: Ski resorts reopened in Ulaanbaatar after easing of lockdown measures (News.mn 18-Jan)

The Mogul Report 31-Dec-2020
Top 3 Company Headlines
Rio Tinto confirm Oyu Tolgoi underground expansion capital & timeline (PR 16-Dec
Steppe Gold (STGO:TSX) to list on Mongolia Stock Exchange (PR 14-Dec)
Freights at Erlian will load on Ulaanbaatar Railway JSC trains (Montsame 08-Dec)
Top 3 Macro and Risk Headlines
China formalises Australia coal import ban (Guardian 14-Dec)
Power consumption up after govt write off (Xinhua 15-Dec)
2nd refined coal factory opens (Montsame 09-Dec)
The Mogul's View
Mongolia expected to export approx. 40m tons of coal to China at the beginning of this year. It only exported approx. 35% of this. There are reports of shortages and power outages in China. The Mogul expects it will take a long time to establish better supply lines.
The Mongolian Tax Authority audited Oyu Tolgoi. It found approx. $228m of extra taxes owed from 2016-18 and reduced Oyu Tolgoi’s operating loss carry forward balance by approx. $1.2bn. Rio Tinto is still facing legal action from minority Turquoise Hill shareholders. The Mogul thinks Rio Tinto will have to do more than confirm the Oyu Tolgoi underground expansion timeline.
Fun Fact: A cold air mass (-45.5°C) in Mongolia broke the world record for the highest barometric pressure readings at 1,094.3 millibars (Washington Post 29-Dec)

The Mogul Report 30-Nov-2020
Top 3 Company Headlines
Govt seek review into Rio Tinto & Oyu Tolgoi (FT 25-Nov)
AND Global strategic equity deal from Marubeni (8002:TYO) (PR 17-Nov)
XacBank choose Infosys (INFY:NYSE) for digital upgrade (PR 24-Nov)
Top 3 Macro and Risk Headlines
Parliament reject Presidents pandemic household financial support plan (China.org.cn 18-Nov)
Plans for 2022km of paved roads (World Highways 17-Nov)
Mongolia records 1st local Covid-19 transmission (Reuters 11-Nov)
The Mogul's View
Things keep getting worse for Oyu Tolgoi. It’s over budget, delayed, law suits are flying around, and there’s a lot of fighting over how to fix it and who should pay. Rio Tinto is under pressure from influential shareholders i.e. Odey to get a better deal for its spend. They think that Rio Tinto is taking a greater risk with its capital and subsidising minority shareholders of Turquoise Hill (TRQ:TO). Turquoise Hill blame Rio Tinto for bungled construction at Oyu Tolgoi. Meanwhile a whistleblower reported ethical concerns to numerous regulators.
This is the first time that the Mogul finds himself sympathetic with the govt and its plan for a review.
Fun Fact: The Mongolian Aerospace Research and Science Association (MARSA) hosted the “Mars on Earth” conference featuring astronauts and scientists working on sending humans to Mars ( Montsame 09-Nov)

The Mogul Report 31-Oct-2020
Top 3 Company Headlines
Rio Tinto class action re Oyu Tolgoi cost & schedule claims (Australian Financial Review 16-Oct)
National Privatization Fund launched & oversubscribed (Montsame 19-Oct)
Airbus/govt encrypted communications deal (Critical Communications Review 29-Oct)
Top 3 Macro and Risk Headlines
ADB $420m loans for China-Mongolia border ports (Xinhua 26-Oct)
Japan $236m loans to aid post-Covid economic recovery (Mainichi Shimbun 10-Oct)
EU removes Mongolia from tax blacklist (Xinhua 10-Oct)
The Mogul's View
Chinese companies were told to stop importing Australian coal. This is a response to Australian criticisms of the Chinese govt. Mongolia is now the top source for China. The Mogul isn’t sure how long the embargo will last. Mongolia sends most coal by truck. This works for northern Chinese consumers but in the south it is much cheaper, faster, and generally reliable to take deliveries in ports and send coal by rail.
The result of the law suit against Rio Tinto could be interesting. If they are found to have misled investors it will give the govt ammunition for its own grievances.
Fun Fact: Scientists believe that a newly discovered fossil of a two-fingered bird-like Oviraptorid dinosaur (Oksoko avarsan) will help them discover why animals lose and gain fingers and toes through evolution (New Scientist 07-Oct)

The Mogul Report 30-Sep-2020
Top 3 Company Headlines
Turquoise Hill (TRQ:TO) equity sale & Rio Tinto $500m debt for Oyu Tolgoi development (PR 10-Sep)
MCC chose Stantec to advise $350m Ulaanbaatar water supply project (PR 24-Sep)
Golomt Bank secure $5m 3-year loan from Enabling Qapital for microfinance (Montsame 11-Sep)
Top 3 Macro and Risk Headlines
Govt $600m 5.5-year 5.125% bond to repay sovereign debt (Montsame 29-Sep)
Mongolia joins APTA (SCMP 29-Sep)
Protests of Chinese diplomat over Inner Mongolia cultural suppression (Reuters 15-Sep)
The Mogul's View
Turquoise Hill’s share price dropped about 25% and has stayed around $0.84 since the equity sale and debt refinancing plan was announced. The proposed underground extension may be delayed for another 3 years because of geological difficulties and reserve estimates were reduced. The Mogul has low expectations.
Rio Tinto is looking for a new CEO after the last one blew up 46,000 year old aboriginal sacred sites in Australia. Bold Baatar, a Mongolian, is on the shortlist. The Mogul doubts his appointment would change Rio Tinto’s business interests but it may help politically.
Fun Fact: A new fossil of a 410m year old armoured fish, named Minjinia turgenensis, discovered in Mongolia, suggests sharks may have evolved bones and lost them again (BBC Science Focus 12-Sep)

The Mogul Report 31-Aug-2020
Top 3 Company Headlines
Cerberus ($45bn AUM) stakes in 7 MCS Group companies (PR 24-Aug)
Darkhan Nekhii (NEH:MSE) to export to Russia (Montsame 05-Aug)
Xanadu Mines (XAM:ASX) $12m raise for exploration (Market Herald 11-Aug)
Top 3 Macro and Risk Headlines
Gazprom & govt agree China pipe study (Natural Gas World 25-Aug)
Payment licences for fintech cos (Montsame 24-Aug)
Dornogobi oil refinery construction to be accelerated (Montsame 14-Aug)
The Mogul's View
Nobody has died from Covid-19 in Mongolia. The govt had a highly centralised, quick response with good quarantining, testing, and tracing. Its handling of the pandemic puts it in a good position. The Mogul is more concerned about its customers and demand for resources in economic downturn. Gross industrial output over the first 7 months of 2020 is down 19.3% compared to 2019. Coal exports to China are down 46% for the same period.
Fun Fact: M.Myagmarsaikhan, a circus performer, completed a 130m tight-rope walk 50m above the Chuluut River Canyon (Montsame 13-Aug)

The Mogul Report 31-Jul-2020
Top 3 Company Headlines
Denison win $10m plus 5% interest (Mining Weekly 30-Jul)
Steppe Gold (STGO:TSX) starts drilling (PR 21-Jul)
Socratus Studio startup accelerator program (Montsame 02-Jul)
Top 3 Macro and Risk Headlines
Oyu Tolgoi reserve est cut, costs up, & delays (Reuters 03-Jul)
Revenue of Mongolian banks down (News.mn 27-Jul)
Bubonic plague outbreak, Khovd region quarantined (Daily Mail 03-Jul
The Mogul's View
The Mogul is very concerned for Mongolia’s economic outlook. Tax revenue for H1 is down 15.8%, and exports are down 28.2%, compared to the same period last year. The Oyu Tolgoi news is particularly bad and cannot be blamed on Covid-19. If Mongolia had just stuck to what it agreed regarding Oyu Tolgoi almost 10 years ago, it could have been in a much better position today.
Fun Fact: Dragon City or Longcheng City, the capital of the Xiongnu Empire, has been rediscovered in central Mongolia (Xinhua 18-Jul)

The Mogul Report 30-Jun-2020
Top 3 Company Headlines
Govt & Gazprom to create JV (Montsame 19-Jun)
TD Bank & Ulaanbaatar City Bank merge (Montsame 29-Jun)
Intl consortium to create metal alloy production plant (Montsame 10-Jun)
Top 3 Macro and Risk Headlines
MPP win landslide parliamentary re-election (Channel News Asia 25-Jun)
ADB raise first ever tugrik denominated debt, ₮21bn (Montsame 04-Jun)
China-backed AIIB approve $100m loan for Covid-19 fight (Reuters 19-Jun)
The Mogul's View
Mongolia’s Covid-19 infection numbers are very low but it still has problems. The IMF approved a $99m loan on top of the AIIB’s $100m to help mitigate budget shortfalls and support businesses.
It looks like some see opportunity in all the trouble. FDI and general foreign interest is increasing. Perhaps it’s a good time to buy low. The Mogul thinks this is unrelated to the election result, but it does not hurt to have some stability.
Fun Fact: A team of Israeli archaeologists are arguing that the Great Wall of China was built to keep out Mongolian climate refugees (Haaretz 15-Jun)

The Mogul Report 31-May-2020
Top 3 Company Headlines
Bodi Insurance IPO (Montsame 25-May)
TerraCom (TER:ASX) divests Baruun Noyol Uul coal mine for $2 (Mining Weekly 04-May)
Steppe Gold (STGO:TSX) begins gold & silver sales (PR 11-May)
Top 3 Macro and Risk Headlines
Mongolia added to EU money laundering black list (Reuters 05-May)
Exports down 40.4% Q1 2020 (News.mn 11-May)
Anti-Covid-19 measures greatly improve health all-round (GPJ 10-May)
The Mogul's View
The Mogul is surprised by govt plans to build a power station to service Oyu Tolgoi. This could reduce the cost of developing the mine by approx. $1bn for Rio Tinto. It would also help give the govt more control over the project. The Mogul suspects the move is predicated on a 2021 post-pandemic export recovery. It’s a big risk but the Mogul approves. Progress on Oyu Tolgoi is long overdue. Whatever happens in the short term it will pay off in the long term. Mongolia is a cheap and geopolitically attractive source of minerals for China.
Fun Fact: Some theorise that Mulan was actually Mongolian, not Chinese, because the Ballad of Mulan says that she fought for the Khan; two skeletons of “warrior women” in Mongolia lend weight to the idea (LiveScience 08-May)


The Mogul Report 30-Apr-2020
Top 3 Company Headlines
Tavan Tolgoi IPO cancelled (Montsame 28-Apr)
Rio Tinto faces Turquoise Hill minority shareholder revolt (FT 03-Apr)
ACI (ACIW:NASDAQ) & Hi-Pay create payment gateway service (PR 16-Apr)
Top 3 Macro and Risk Headlines
Tavan Tolgoi coal exports almost back to normal (News.mn 13-Apr)
Small banks record huge losses (News.mn 07-Apr)
International flights suspended until end of May (Xinhua 28-Apr)
The Mogul's View
Covid-19 has barely touched Mongolia. At time of publication, 38 confirmed cases and 9 recovered. Population density is low, even in the largest city, the capital, Ulaanbaatar.
The Mogul is more concerned about plummeting commodities prices, global economic slowdown, and potential international reactions against China. The threats to Mongolia’s main exports and customer are enormous.
Fun Fact: The Pope appointed a new Apostolic Prefect to Ulaanbaatar (Vatican News 15-Apr)

The Mogul Report 31-Mar-2020
Top 3 Company Headlines
MMC (975:HK) reports $252m 2019 profit (Montsame 25-Mar)
Khan Bank first in Mongolia to use SWIFT gpi (Montsame 06-Mar)
Development slows at Oyu Tolgoi (PR 16-Mar)
Top 3 Macro and Risk Headlines
Coal exports resume to China (Montsame 23-Mar)
Putin approves gas pipeline to China via Mongolia (News.mn 30-Mar)
Mongolia closed for foreigners (News.mn 16-Mar)
The Mogul's View
The Mogul expects Mongolia to handle the Covid-19 outbreak well. It has a small, spread out population. Companies are repurposing production for medical materials e.g. GEM International donating alcohol for hand sanitiser, Munkhiin now making 45k masks per day. The govt took quick action to restricted movement around and in and out of Mongolia.
Hopefully the resumption of mineral exports does not expose Mongolia. But it does need the money. The Mogul wonders if the govt will learn a lesson and be more fiscally responsible in the future...
Fun Fact: Mongolia will restore its traditional alphabet, replacing the Cyrillic alphabet adopted from the Soviets (Times 20-Mar)

The Mogul Report 29-Feb-2020
Top 3 Company Headlines
Rio Tinto moves for international arbitration in tax dispute (Reuters 20-Feb)
Bars Motors launch MOZO, 1st car produced by Mongolians (Montsame 03-Feb)
Bolorjonsh LLC's fluorspar enrichment plant ready (Montsame 17-Feb)
Top 3 Macro and Risk Headlines
Coal exports resume (Argus Media 21-Feb)
President in Coronavirus quarantine (Montsame 27-Feb)
Green Pasture project to incentivise herding sustainability (Montsame 05-Feb)
The Mogul's View
The Mogul expects the govt to lose vs Rio Tinto in the international courts.
The response to Coronvirus seems mixed. Travel outside of Ulaanbaatar to the countryside was restricted. Quarantining the President is a good show of seriousness and fairness. Coal exports are mostly driven by trucks out of Mongolia. China takes 90% of Mongolian coal – is the trade too financially important to restrict?
Fun Fact: The Central Bank of Mongolia released updated designs of the ₮50k and ₮20k notes this month (News.mn 07-Feb)

The Mogul Report 31-Jan-2020
Top 3 Company Headlines
Tavan Tolgoi sales revenue reaches $1bn (Montsame 03-Jan)
InvesCore & Alibaba sign cooperation deal (Montsame 09-Jan)
MIAT cuts airfares 7% on, 37% off season (Montsame 06-Jan)
Top 3 Macro and Risk Headlines
IMF: President’s debt forgiveness plan violates 2017 bailout terms (Reuters 10-Jan)
Tax intake increases 18.8% (News.mn 21-Jan)
Chinese border closed until 02-Mar (Reuters 31-Jan)
The Mogul's View
The IMF’s warning is discouraging but not a knockout blow. Mongolia’s tax take is healthy and Tavan Tolgoi is performing very well. This is good news ahead of the IPO. The Mogul is slightly more worried by the closed border. China is still overwhelmingly Mongolia’s largest trade partner, especially for coal. The Mogul expects the coronavirus outbreak will be under control before too long and everything will be back to normal.
Fun Fact: A herder woman saved her husband from a wolf attack with an axe in the south western Bayan-Ulgii province on 22-Jan (Xinhua 24-Jan

The Mogul Report 31-Dec-2019
Top 3 Company Headlines
BAML, Credit Suisse, Nomura to run Tavan Tolgoi IPO (Montsame 17-Dec)
ADB & XacBank loan to support SMEs (Montstame 17-Dec)
Aono Freshmeat seeks market share in Mongolia (Nikkei Asian Review 23-Dec)
Top 3 Macro and Risk Headlines
1-year ban on new mining licences (News.mn 19-Dec)
PM says 7.9% growth in 2019 (Xinhua 31-Dec)
Oyu Tolgoi attracted 80% of all FDI Jan-Oct (News.mn 18-Dec)
The Mogul's View
The Mogul is concerned about Mongolia’s levels of debt and dependence on govt rather than private sector financing. ADB loans for SMEs and health service promotion, and house-building loans from the Export-Import Bank of Korea are the big financing stories. It is telling that Oyu Tolgoi is such a large proportion of FDI. The Mogul thinks investors are unsure about Mongolia. It’s crazy that the govt would do anything to endanger Mongolia’s one major success story. Selling a stake in Tavan Tolgoi looks like a matter of necessity. Mongolia needs the money. The Mogul thinks Mongolia could be desperate and expects a low price.
Fun Fact: Donald Trump Jr visited Mongolia and got retroactive permission for hunting an endangered argali sheep (Pro Publica 11-Dec)

The Mogul Report 30-Nov-2019
Top 3 Company Headlines
Govt threatens Rio Tinto (RIO:LSE) Oyu Tolgoi renegotiation (Montsame 21-Nov)
Mongolia Energy Corp (276:HK) fall 84% in 5 years (Simply Wall Street 06-Nov)
MDS & KhanLex launch country's first legaltech platform (Legal Week 14-Nov)
Top 3 Macro and Risk Headlines
Constitution amended to move power from Pres to PM (Reuters 15-Nov)
Mongolia to miss coal export targets (News.mn 12-Nov)
Returnees boost IT sector (Asian Nikkei Review 11-Nov)
The Mogul's View
The Mogul normally despairs when the govt says it wants to change the Oyu Tolgoi agreement. The Mogul is cautiously optimistic that this time is a little different. It wants to change more minor terms, not the base agreement. Rio Tinto are reportedly relieved. The Mogul believes it could be a good idea and a sign of good will to give the govt this small win...but only if that is the end of the matter.
Mongolian expats are returning with skills they’ve gained abroad and helping to build the IT sector. The Mogul predicts that many other sectors will benefit from this kind of experience.
Fun Fact: Rock band “The Hu” (yes, really) will receive Mongolia’s highest state award, the Order of Genghis Khan, from President Battulga on the National Pride Day (Xinhua 18-Nov)

The Mogul Report 31-Oct-2019
Top 3 Company Headlines
MIAT getting new Boeing 787-9 (News.mn 02-Oct)
Tetra Tech (TTEK:NASDAQ) $30m water supply deal (Press Release 23-Oct)
Gobi cashmere (GOV:MSE) join EBRD project (News.mn 22-Oct)
Top 3 Macro and Risk Headlines
Mongolia put on FATF “grey list” (Bloomberg 18-Oct)
Govt grants 1,200 mining exploration licences (News.mn 17-Oct)
ADB signs $103m loan (News.mn 03-Oct)
The Mogul's View
The FATF grey list means that Mongolia is under closer scrutiny for financial crime such as money laundering and terrorist financing. This is poor timing. Mongolia has a lot of debt, needs foreign investment, and is supposed to be preparing for the Tavan Tolgoi IPO in Hong Kong. The Mongolian govt is taking dramatic action; 800 Chinese were arrested in Ulaanbaatar in a cybercrime probe.
In any case, the Mogul expects potential investors will wait.
Fun Fact: A new museum will be built to commemorate ex-Prime Minister P.Genden (1895-1937) who defied Stalin to protect religious freedom but was executed in Moscow (News.mn 09-Oct)

The Mogul Report 30-Sep-2019
Top 3 Company Headlines
Putin tells Gazprom to consider gas delivery to China via Mongolia (Reuters 09-Sep)
Erdenes Tavan Tolgoi granted ISO certifications (Montsame 20-Sep)
News Agency creates 1st website for visually impaired (News.mn 27-Sep)
Top 3 Macro and Risk Headlines
India additional $236m to original $1bn credit line for oil refinery (Tribune 22-Sep)
ADB: growth was higher than expected (News.mn 25-Sep)
Govt plans shift to selling higher value coking coal (Hellenic Shipping News 06-Sep)
The Mogul's View
Mongolia’s energy/resource industry is more noticeably maturing. Refining oil, processing coal, and delivering gas from Russia to China are big steps up from simply digging things out of the ground for export. Any improvements in Mongolian coal mining are probably in preparation for the long-anticipated Tavan Tolgoi IPO.
Fun Fact: Mongolia welcomed its first robot receptionist at the Science, Technology and Innovation-2019’ exhibition (News.mn 26-Sep)

The Mogul Report 31-Aug-2019
Top 3 Company Headlines
540 family apartments planned for Dornogobi oil refinery workers (Montsame 15-Aug)
Mongolian Airways Cargo expands freighter fleet (News.mn 09-Aug)
Gobi Cashmere (GOV:MSE) opening US online store (Montsame 05-Aug)
Top 3 Macro and Risk Headlines
Land exchange system launches (Montsame 06-Aug)
Former intelligence chief faces torture charges (Channel News Asia 22-Aug)
Tavan Tolgoi/Gashuusukhait port railway construction resumes (Montsame 26-Aug)
The Mogul's View
Growth of air cargo and a 10% salary increase at Ulaanbaatar Railway JSC look like signs that trade is healthy. Hopefully this will continue into a more active autumn. The Mogul maintains that if politicians can fend off short-term, impatient resource nationalism, and start thinking bigger, that Mongolia could have very prosperous future.
Fun Fact: Congratulations to Bob Long, from Wyoming, who became the oldest winner of the Mongolian Derby at 70 years old. It is the world’s longest horse race, stretching 1000km over 7 days (News.mn 16-Aug)

The Mogul Report 31-Jul-2019
Top 3 Company Headlines
Rio Tinto Oyu Tolgoi will cost more & take longer (MarketWatch 15-Jul)
Japanese NUBIA JV 15-year air port operation deal (Airport Technology 08-Jul)
Mongolian startup accelerators merge (Digital News Asia 09-Jul)
Top 3 Macro and Risk Headlines
World Bank $100m for economic stability (Montsame 30-Jul)
President tries for US trade deal (WSJ 30-Jul)
China helps Mongolia build first expressway (Global Times 11-Jul)
The Mogul's View
Oyu Tolgoi seems to be in trouble again. The Mining Minister (see April’s Report below) previously ended any suggestion of scrapping the deal with Rio Tinto, but it looks like parliament will try to force a request for renegotiation. Rio Tinto says the project will cost more money and take longer as it is. Whether it’s true or just a negotiating ploy, Mongolia isn’t in the position to play around on this. In any case, the EBRD, which helped put the original deal together, is suggesting it might plug the gap. This is all very stupid. The Mogul says just get on with it.
Fun Fact: The Mongolian Ballet Program will stage a production calling for action against air pollution (UNICEF 19-Jul)

The Mogul Report 30-Jun-2019
Top 3 Company Headlines
Sharp (6753:TSE) solar plant ready to supply UB (PV Tech 13-Jun)
PE firm Cerberus seeks Mongolia opportunities (WSJ 18-Jun)
Texas-based Tito vodka launching in Mongolia (Spirits Business 18-Jun)
Top 3 Macro and Risk Headlines
Mining minister may cancel 2015 $5.3bn Rio Tinto deal (AFR 28-Jun)
Politics is deadlocked but there is demand for change (Reuters 27-Jun)
EU initiative to support yak & camel wool (just-style 03-Jun)
The Mogul's View
The Mogul doesn’t expect political deadlock to break. This may be an impediment to decision making and progress but it is good for maintaining some level of political predictability and stability. Mongolia needs this if it wants to build its economy properly and sustainably. It is also good for Mongolia’s resistance to overbearing Chinese or Russian influence. The Mogul cannot believe that mining ministers are still threatening the Rio Tinto Oyu Tolgoi expansion deal – equal to about 45% of Mongolia’s GDP.
Fun Fact: The tradition of using Bankhar herding dogs is making a comeback as part of an effort to help prevent grassland desertification (SCMP 10-Jun)

The Mogul Report 31-May-2019
Top 3 Company Headlines
Elections may delay Tavan Tolgoi IPO (Nikkei Asian Review 31-May)
Invescore NBFI IPO (Montsame 23-May)
Petro Matad (MATD:LSE) commences well site construction (PR 28-May)
Top 3 Macro and Risk Headlines
India & Mongolia $1.25bn oil refinery construction (liveMint 13-May)
Bubonic plague deaths prompt quarantine (Siberian Times 03-May)
ADB approve $38m loan to develop ecotourism (Xinhua 28-May)
The Mogul's View
Erdenes Tavan Tolgoi is rebalancing its spending priorities toward building infrastructure and preparing for the IPO. Mongolia’s prospects look good, in general. The GDP growth estimate for Q1 was an impressive 8.6%. The politicians seem to be on top of debt and spending. However, there are large protests against the parliament. The protesters believe that growth, investment, and prosperity are not being delivered fast enough. The Mogul hopes that the govt sticks to the plan and the public holds its cool. We shall see...
Fun Fact: The Thousand Camel Festival began this year with a camel (and herder) beauty contest (NPR 11-May)

The Mogul Report 30-Apr-2019
Top 3 Company Headlines
Govt rules out Oyu Tolgoi deal change (FT 09-Apr)
Capital Bank liquidated (News.mn 08-Apr)
Blue Hill Mining plans blockchain capital raise (Cointelegraph 03-Apr)
Top 3 Macro and Risk Headlines
Coal exports up 15% after China cuts Australian coal (Reuters 15-Apr)
Nomads win landmark compensation case vs Rio Tinto (Guardian 08-Apr)
World Bank forecasts 7.2% growth in 2019 (Xinhua 24-Apr)
The Mogul's View
The Mining Minister promptly squashed a 200 page proposal from MPs to rewrite the Oyu Tolgoi copper mine deal. This is good. Mongolia does not need this nonsense again. If Mongolia can take advantage of the Australian/Chinese fight over cyber security, it will do even better in 2020.
The Capital Bank news sounds alarming but it is not. The bank is about 1% of Mongolia’s banking system. 99.5% of the 256,000 accounts were insured under the government-mandated protection scheme. The Bank of Mongolia seems to be handling this well. 
Fun Fact: Mongolia, which is landlocked, has become a member of the International Surfing Association (Inside the Games 06-Apr)

The Mogul Report 31-Mar-2019
Top 3 Company Headlines
Prophecy (PCY:TSX) Ulaan Ovoo coal mine open (PR 18-Mar)
Aaron System to open AKHAN cryptocurrency exchange (Global Coin Report 07-Mar)
Odey shorts Rio Tinto’s Turquoise Hill (TRQ:TSX) (Financial Times 07-Mar)
Top 3 Macro and Risk Headlines
Children evacuated from the city to escape air pollution (Phys 14-Mar)
China supports Erdenet thermal power plant expansion (News.mn 25-Mar)
Govt launches animal husbandry & water management plan (IISD 28-Mar)
The Mogul's View
Mongolia faces a number of environmental challenges. Toxic air pollution from burning winter fuel is perennial. This is only likely to get worse as climate change makes herding harder – worse grazing for livestock. People are being pushed into the city while better economic prospects were already pulling them in. The Mogul praises a recent ban on single use plastics but the country has much bigger problems. The ADB is funding its 1st ever solar farm in Mongolia. More would be very welcome.
Fun Fact: Mongolians gathered this month to celebrate the Lake Khövsgöl ice festival, celebrating their connection to nature, at -40°C (BBC 22-Mar)

The Mogul Report 28-Feb-2019
Top 3 Company Headlines
Achit Ikht joins LME (Montsame 15-Feb)
KFCs closed for inspection (Xinhua 18-Feb)
EBRD supports Suu milk expansion (Dairy Reporter 05-Feb)
Top 3 Macro and Risk Headlines
Mongolia posts 6.9% growth (Reuters 14-Feb)
Govt advances new refinery construction (Oil & Gas Journal 11-Feb)
Sainshand 55MW wind farm begins operations (Renewables Now 25-Feb)
The Mogul's View
Achit Ikht’s new membership at the London Metal Exchange is an encouraging sign. The Mogul expects the commodities industry to continue becoming more sophisticated and plugged in to the rest of the world. A return to unambiguously strong economic growth is also very welcome.
Fun Fact: A new species of oviraptor dinosaur from the late Cretaceous period was discovered in Mongolia (Phys.org 06-Feb)

The Mogul Report 31-Jan-2019
Top 3 Company Headlines
Oyu Tolgoi corruption probe (Reuters 29-Jan)
MIK Holding (MIK:MSE) subsidiary $250m 3-year 9.75% bond (Montsame 31-Jan)
Tumen Shuvuut IPO (Montsame 16-Jan)
Top 3 Macro and Risk Headlines
Parliamentary Speaker ousted for corruption (Channel News Asia 29-Jan)
Demand for cashmere wool is destroying grasslands (Science 30-Jan)
China bans pork products after African swine flu outbreak (Reuters 31-Jan)
The Mogul's View
Protests against corruption rage on. Cracking down on corruption will be tough but necessary. Faith in democracy depends on it. Trust in the economy depends on it. Corruption touches a lot of major industries and a probe into Oyu Tolgoi is concerning.
Otherwise, business is looking a little livelier. E.g. Mongolia is attracting attention as a potential cryptocurrency mining centre, and a new 10MW solar plant launched. The Mogul is encouraged but the country really must eliminate corruption if it wants a better future.
Fun Fact: The US Mongols biker gang loses its trademarked logo (AP 12-Jan)

The Mogul Report 31-Dec-2018
Top 3 Company Headlines
Turquoise Hill (TRQ:TSX) & govt resolve power deal (PR 31-Dec)
Bank of China struggling to get full licence (Euromoney 18-Dec)
AIS-X crypto exchange secure partnerships (Press Release 20-Dec)
Top 3 Macro and Risk Headlines
25k protest against corruption in UB (Reuters 27-Dec)
PM survives no confidence vote (Guardian 01-Dec)
VAT intake boost from lottery ticket scheme (Bloomberg 25-Dec)
The Mogul's View
As ever, Mongolia is very wary of Chinese influence in the economy. Bank of China has not been granted a full licence. Other foreign banks are open in Mongolia e.g. ING and MUFJ but mostly inactive. The Mogul wonders if Mongolia will have to let China do business before others will risk committing more to the market. On the other hand, the long-standing, obstructive disagreement about a power source for Oyu Tolgoi is finally resolved. This is good news.
The Prime Minister is keen to stress that he is not and will not become a dictator. It’s not reassuring when politicians say things which should be taken for granted.
Fun Fact: Mongolia does not have “Santa Claus” but instead “Winter Grandpa” visits and he wears a blue suit (Bloomberg 25-Dec)

The Mogul Report 30-Nov-2018
Top 3 Company Headlines
Central & Invescor new members at stock exchange (Montsame 15-Nov)
Petro Matad (MATD:LSE) well fails to strike oil (PR 26-Nov)
Airbnb using what3words for stays with nomads (TechCrunch 19-Nov)
Top 3 Macro and Risk Headlines
Govt SME loan fund embezzlement scandal (Nikkei Asian Review 16-Nov)
Tavan Tolgoi/China 30m ton per year rail 2021 completion (Reuters 08-Nov)
ADB $85.6m loan for renewable energy projects (CNBC 02-Nov)
The Mogul's View
Cabinet ministers appear implicated in the loans scandal, receiving significantly preferential rates to ordinary citizens. The protests may increase. Corruption could endanger IMF help and the success of the much-anticipated IPO for the flagship Tavan Tolgoi project.
Fun Fact: Early Mongolians did not have the genes to eat dairy – to get around this they fermented it (Science Magazine 05-Nov)

The Mogul Report 31-Oct-2018
Top 3 Company Headlines
Dutch development bank loan Khan Bank $120m for SMEs (GTR 03-Oct)
HKEx, NYSE, LSE frontrunners for Tavan Tolgoi IPO Apr-2019 (Montsame 26-Oct)
Centerra (CG:CN) sells Mongolia business $35m (Mining Journal 13-Oct)
Top 3 Macro and Risk Headlines
President threatens hunger strike to protest parliament (Bloomberg 30-Oct)
Russia/China trans-Mongolian pipeline in the works (TOL 16-Oct)
Fuel costs increase as tugrik depreciates (Xinhua 09-Oct)
The Mogul's View
President Battulga is deeply unhappy with parliament. He says they are inactive when it comes to the economy and wants them to voluntarily disband. Parliament is 85% controlled by his opposition party. This is not just a political stunt ahead of 2020 elections – parliament can and must do more.
The Mogul looked forward to the autumn in August. Some activity has picked up. Xanadu Mines (XAM:AU) is announcing major upgrades at Kharmagtai and Aspire’s (AKM:AU) rail plans to Russia are proceeding. This is good but Mongolia can do better.
Fun Fact: Not so fun...Mongolia is banning the celebration of Halloween in schools to help preserve its Buddhist heritage (Channel News Asia 30-Oct)

The Mogul Report 30-Sep-2018
Top 3 Company Headlines
Mobicom issue first govt approved cryptocurrency (Montsame 28-Sep)
Sharp (6753:TSE) to build new solar plant (Power Technology 17-Sep)
Petro Matad (MATD:LSE) fails to find oil (Morningstar 20-Sep)
Top 3 Macro and Risk Headlines
Rio Tinto still needs a power source for Oyu Tolgoi (Reuters 13-Sep)
Winter comes early to Mongolia (Xinhua 20-Sep)
Pollution making herders reconsider city life (Guardian 24-Sep)
The Mogul's View
Mongolia is still, almost literally with its mineral wealth, a country building itself from the ground up. It is in a great position to benefit from the best of new technology – blockchain, renewables energy, etc. The Mogul is encouraged by the govt’s open-mindedness. This makes slow progress and delays in the mining industry even more frustrating.
Fun Fact: The University of Pennsylvania, Trump’s alma mater, is now offering a course to learn the Mongolian language (Daily Pennsylvanian 21-Sep)

The Mogul Report 31-Aug-2018
Top 3 Company Headlines
Aspire (AKM:AU) new low ash coking coal project (S&P Global 29-Aug)
Xanadu (XAM:AU) directors buy more shares (Press Release 29-Aug)
Darkhan Nekhii (NEH:MSE) to export 100k leathers to Europe (Montsame 22-Aug)
Top 3 Macro and Risk Headlines
Russia increase trade turnover 40% in 1 year (Montsame 28-Aug)
S.Korea cross border securities service launched (Montsame 15-Aug)
Govt to establish trade missions abroad to boost exports (Xinhua 08-Aug)
The Mogul's View
The summer has continued to be uneventful. The Mogul still looks forward to the autumn. Trade, exports, and tax intake are increasing. Mongolia continues to make good progress on economic reform.
Fun Fact: The Gobi Desert is the fifth largest desert in the world

The Mogul Report 31-Jul-2018
Top 3 Company Headlines
Plans to open Tavan Tolgoi begin (Montsame 02-Jul)
Megatech Corp launch silicon processing plant (Montsame 02-Jul)
LendMN (LEND:MSE) join Rakuten accelerator (Montsame 27-Jul)
Top 3 Macro and Risk Headlines
World Bank predicts 6% growth 2019-20 (World Bank 06-Jul)
Govt sets out annual wind plan (Wind Power Monthly 04-Jul)
High river water levels cause alarm (Xinhua 16-Jul)
The Mogul's View
Summer is always a quiet time in Mongolia. The Mogul looks forward to autumn. Rumours that Tavan Tolgoi is preparing for a Q1 2019 IPO may become clearer. The Mogul is not holding his breath. Many have talked about this IPO for a long time with no sign of progress.
Fun Fact: The earliest evidence of horse dentistry, approx 1150 BC, was discovered in Mongolia (Archeology.org 03-Jul)

The Mogul Report 30-Jun-2018
Top 3 Company Headlines
Govt considering Tavan Tolgoi IPO (Reuters 21-Jun)
Erdene (ERD:TSE) 1st foreign MSE dual listing (Mining Weekly 14-Jun)
Petro Matad (MATD:LSE) raise $13.7m for new well (PR 14-Jun)
Top 3 Macro and Risk Headlines
India finance Mongolia’s 1st oil refinery (Xinhua 19-Jun)
Russia deal to lower rail freight costs (Xinhua 08-Jun)
IMF 4th review & approves finance (IMF 27-Jun)
The Mogul's View
There has been a lot of talk about a Tavan Tolgoi IPO in the past but little action. The Mogul thinks that Mongolia’s improving economy and stability mean that 1) the conditions are good and 2) it still needs the money.
Lower rail freight costs with Russia reduce reliance on China. A native oil refinery will help reduce reliance on Russia. Mongolia’s “3rd neighbour” policy is still a good idea.
Fun Fact: After the Soviet era, the Millennial generation is reviving Mongolia’s tradition of Buddhism and monasteries (Reuters 06-Jun)
The Mogul Report: A free monthly selection of company, macro, and risk news about Mongolia and companies based there or with significant business activities there.

The Mogul Report 31-May-2018
Top 3 Company Headlines
Rio Tinto warns govt on breaking contracts (FT 22-May)
Sharp (6753:TYO) to build 2nd solar farm (Xinhua 25-May)
Goyo $22.5m to increase cashmere processing 5 times (Montsame 04-May)
Top 3 Macro and Risk Headlines
Govt plans $16bn investment programme (Reuters 21-May)
Mongolia & Russia seek free trade deal (Xinhua 29-May)
MNT bank deposit minimum reduced 12% to 10% (Montsame 02-May)
The Mogul's View
Mongolia is now open for dual stock exchange listings. The 1st approved was Erdene (ERD:TSX). The Mogul believes this is good for Mongolia’s own small capital markets. Mining is Mongolia’s biggest industry. In April approx. 40% of trades on the Mongolia Stock Exchange were in APU (beverages) and LendMN (fintech).
Fun Fact: Mongolia’s traditional musical instrument is the morin khuur, a type of two stringed fiddle with one male and one female horse hair.

The Mogul Report 30-Apr-2018
Top 3 Company Headlines
Govt to buy 40% shares of Mongolia Telecom (News.mn 16-Apr)
Erdenes Mongol founds Erdenes Alt Resource gold co (Montsame 24-Apr)
Ulaanbaatar Railway reports record annual cargo (Mongolia GoGo 12-Apr)
Top 3 Macro and Risk Headlines
2 ex-PMs arrested in corruption probe (Financial Times 11-Apr)
ADB $130m loan to improve air quality (Press Release 04-Apr)
BoM guidance on emoney and cryptocurrencies (Press Release 26-Apr)
The Mogul's View
The corruption probe continues. The arrest of two ex-PMs should make politicians and govt officials think twice about dishonesty.
The Mogul is encouraged by ADB economic growth forecasts (3.8% 2018, 4.3% 2019), record freight, growing oil exports, growing trade. Mongolia continues to improve trade relations with China, Japan, and India. The Mogul is optimistic that Mongolia will tackle corruption, remain politically stable, and enjoy at least a few great years of economic success.
Fun Fact: China and Mongolia will begin a 3 year cooperative effort to save the endangered Gobi bear – it is believed there are only 28 Gobi bears remaining (Xinhua 18-Apr)

The Mogul Report 31-Mar-2018
Top 3 Company Headlines
Swiss govt say Rio Tinto not part of corruption probe (Financial Times 28-Mar)
Mongolian & Bohai Commodity Exchanges to open cashmere market (Reuters 30-Mar)
BCEG to build 142 kindergartens & 97 schools (News.mn 29-Mar)
Top 3 Macro and Risk Headlines
Caofeidian port new rail link to Mongolia (Hellenic Shipping News 27-Mar)
Interest rate cut to 10% (Bank of Mongolia)
Harsh winter kills 700,000 livestock (News.mn 09-Mar)
The Mogul's View
The Mogul is pleased by continued efforts to investigate and eliminate corruption. The Mogul is also pleased by the IMF’s assessment that Mongolia’s spending reforms appear to be effective. Mongolia must continue to behave responsibly and successfully diversify its economy if it hopes to prosper.
Fun Fact: GerHub is reinventing the traditional Mongolian tent dwelling (the ger) to help make Ulaanbaatar more environmentally friendly (NPR 04-Mar)

The Mogul Report 28-Feb-2018
Top 3 Company Headlines
Oyu Tolgoi to lift force majeure (Reuters 28-Feb)
Dentsu (4324:TSE) to build AI centre in UB (UB Post 22-Feb)
FarmaTrust & govt blockchain deal to stop fake medicine (Merkle 28-Feb)
Top 3 Macro and Risk Headlines
Govt will build power plant to support Oyu Tolgoi (Reuters 20-Feb)
Govt rejects cap on foreign workers (Channel News Asia 13-Feb)
Air pollution causing health crisis, UNICEF (Reuters 23-Feb)
The Mogul's View
The Mogul expects 2018 will be a good year for mining. The signs from Oyu Tolgoi are good for copper. Aspire (AKM:AU) will up its coal production. Petro Matad (MATD:LSE) will drill for oil. The Mogul is still wary about the Erdenet mine and MCC. The Constitutional Court ruled in favour of the govt repurchase decision.
The Mogul is encouraged by spurt of technology news – Dentsu, FarmaTrust, and the Lend.mn IPO. Mongolia is a developing country. It will be able to adopt the best of today’s technology.
Fun Fact: Mongolia has lodged a formal diplomatic protest with Japan over a children’s comic which insulted Genghis Khan (Japan Times 23-Feb)

The Mogul Report 31-Jan-2018
Top 3 Company Headlines
Rio Tinto (RIO:LSE) Oyu Togoi $155m tax (Mining.com 16-Jan)
MCC to fight govt $400m Erdenet copper repurchase (Reuters 09-Jan)
House of Od fashion line debut (Vogue 14-Jan)
Top 3 Macro and Risk Headlines
New UB $500m airport delayed to 2019 (Reuters 09-Jan)
Govt closing SOEs (Montsame 11-Jan)
Mongolia removed from EU tax haven black list (Bloomberg 15-Jan)
The Mogul's View
The govt probably thinks that price of copper will increase. If this is the reason behind its Erdenet and Oyu Tolgoi actions then this is dangerous. Changing deals on a whim is not good for business. Rio Tinto responded to the OT tax bill by halting shipments. It also opened a new office in UB. Perhaps this is how it hopes to persuade the govt to cancel its questionable tax bill. Perhaps it is trying to pre-empt accusations that it has dodged $470m of Canadian taxes.
Fun Fact: Mongolia’s most popular snacks are pine nuts (BBC 15-Jan)

The Mogul Report 31-Dec-2017
Top 3 Company Headlines
Govt lose in court vs MMC to nationalise Erdenet copper mine (Reuters 08-Dec
Mongolia Securities Exchange (1st private market) opens (Montsame 05-Dec)
Investor Nation crowdfunded & listed (MSE 11-Dec)
Top 3 Macro and Risk Headlines
Tavan Tolgoi coal exports resume (Montsame 22-Dec)
IMF approves first payments (IMF 15-Dec)
Govt promises action to get off EU tax black list (Reuters 13-Dec)
The Mogul's View
The President vetoed the proposed 2018 budget because it violated the terms of the IMF deal. The Mogul was pleased. Later the IMF, World Bank, and Japan confirmed financing deals for Mongolia.
The Mogul is concerned about Chinese customs. Officials said they were cracking down on smuggling. The border queue of coal trucks reportedly reached 130km. Traffic flow is normal again but this kind of disruption while coal prices are up is very unwelcome.
Fun Fact: A rare fossil of the dinosaur Halszkaraptor escuilliei was resuced from poachers – it is a dinosaur which lived in Mongolia on water like a duck (National Geographic 06-Dec)

The Mogul Report 30-Nov-2017
Top 3 Company Headlines
SouthGobi (1878:HK) CEO arrested for fraud in China (UB Post 22-Nov)
ITools IPO sets MSE record, x3 oversubscribed (UB Post 13-Nov)
Mogoin Gol begins exporting coal to China (Montsame 21-Nov)
Top 3 Macro and Risk Headlines
Alcoholism deaths 15% (Guardian 07-Nov)
Customs queue at border hinder coal exports (Reuters 13-Nov)
Yokozuna Harumafuji says sorry, retires after assault (Asahi Shimbun 29-Nov)
The Mogul's View
The MSE top 20 YTD has delivered a 110% return. The stock exchange has been the world’s best performing. The next few months are likely to be dull as Mongolia slows down for winter.
The Yokozuna is the title of the champion sumo wrestler. Mongolia wrestlers have dominated the title since 2003. Successful sumo are symbols of national pride in Mongolia and their most prominent representatives abroad. The Mogul hopes that Harumafuji has not deterred Japanese tourism to Mongolia.
Fun Fact: A new 70m year old fossil was found of what might be the world’s largest pterosaur, a flying dinosaur with an 11m wingspan (Science Alert  01-Nov)

The Mogul Report 31-Oct-2017
Top 3 Company Headlines
Golomt Bank 8-year SME finance credit deal with WBC & OPIC (Montsame 09-Oct
Clean Energy, SoftBank, Newcom launch Tsetsii wind farm (PR 06-Oct)
Hogan Lovells law firm leaving Mongolia (The Lawyer 10-Oct)
Top 3 Macro and Risk Headlines
IMF bailout talks resume (IMF 30-Oct)
Govt raise $800m bond (Montsame 26-Oct)
3 Chinese companies suing Mongolia (UB Post 03-Oct)
The Mogul's View
Debt management (public & private) is under control but there is much more work to do. Institutional investors seem to think they will get their money back. FTSE Russell removed Mongolia from its frontier markets index inclusion watch list. The 3 Chinese companies seem to have a good case – their licences were revoked after increases in commodities prices. The Mogul does not yet see a plan for real economic development or maturation.
Fun Fact: A team of S.Korean archaeologists found a 2,000 year old mummy of a man wearing Chinese clothes in western Mongolia (Yonhap News 16-Oct)

The Mogul Report 30-Sep-2017
Top 3 Company Headlines
ICBC opens rep office (UB Post 12-Sep)
E-mart to open 2nd store (Korea Herald 25-Sep)
EBRD 6.16% CND1.4m stake Kincora Copper (KCC:CVE) (Reuters 22-Sep)
Top 3 Macro and Risk Headlines
Parliament vote to oust PM over corruption (Reuters 07-Sep)
Coal price causes 5-year stock market high (Reuters 21-Sep)
Free trade zone construction begins (China Daily 21-Sep)
The Mogul's View
The Mogul thinks Mongolia’s outlook is poor. The IMF will delay its bailout until the new PM is appointed in October. The Mogul wonders how long it will take (if ever) for the coal price success to filter to the rest of the economy. Interesting business developments have been too few for too long.
Fun Fact: Adam Rolston completes the longest ever recorded golf hole across Mongolia – 1,250 miles and 20,093 shots (Golf 17-Sep)

The Mogul Report 31-Aug-2017
Top 3 Company Headlines
Engie (ENGI:EPA) to build $120m Sainshand wind farm (News.mn 25-Aug)
MMC (975:HK) H1 gross profit $110.6m (Press Release 28-Aug)
Gobi (GOV:MSE) cashmere begins international shipping (Montsame 01-Aug)
Top 3 Macro and Risk Headlines
PM accused of corruption by own party (AP 23-Aug)
Study begins on free trade zone with China (China Daily 01-Aug)
Banks prepare for reform after IMF bailout (Reuters 03-Aug)
The Mogul's View
The PM is accused of signing seven contracts worth $328m with politically connected business. He is accused by 30 of the 65 MPs from his own party. Mongolia’s prospects would be even better if it could fix its political problems.
The Mogul expects Mongolian coal to do very well. China Shenhua is closing two of its coal mines and China is stopping importing coal from North Korea. Mongolia stands to benefit. China/Mongolia trade is already up 44.2% y-o-y.
Fun Fact: Ulaanbaatar’s famous Beatles statue is under threat – the Mogul says let it be (Reuters 12-Aug)

The Mogul Report 31-Jul-2017
Top 3 Company Headlines
Sinopec to drill for Petro Matad (MATD:LSE) (Press Release 05-Jul)
APU (APU:MSE) to merge with Heineken-owned MBC (UB Post 17-Jul)
Govt buy $2.55m, 40% stake of Mongolia Telecom (News.mn 19-Jul)
Top 3 Macro and Risk Headlines
Battulga (Democratic Party) wins presidency (Bloomberg 07-Jul)
H1 coal exports increase over 300% (Reuters 31-Jul)
Grain exports banned; draught & hot summer (Reuters 28-Jul)
The Mogul's View
The Mogul isn’t worried about Battulga’s “populist” or “anti-China” views. Diversification away from China is consistent with the long-held “3rd neighbour policy”. The Mogul is more concerned about FDI but parliament is still strongly held by the opposition Mongolian People’s Party.
The coal export boom might be due to N.Korea sanctions. China normally gets a lot of cheap minerals from N.Korea. Some mines are revising their prices up. It seems Mongolia is in a stronger negotiating position.
Fun Fact: Mongolian sumo and yokozuna (top tier sumo), Hakuho Sho (Mongolian name Davaajargal Munkhbat) breaks the sumo record for most career wins – he has won 1,050 bouts in 97 tournaments (Montsame 24-Jul)

The Mogul Report 30-Jun-2017
Top 3 Company Headlines
Suu LLC issue Mongolia’s largest ever corp bond, $2.55m (Reuters 29-Jun)
Mongolyn Alt opens new cement factory (Montsame 12-Jun)
EBRD extends cashmere funding for Gobi JSC (News.mn 02-Jun)
Top 3 Macro and Risk Headlines
Presidential race goes to run-offs (Nikkei Asian Review 27-Jun)
Central bank missing ₮3 trillion/$1.27bn (Montsame 08-Jun)
Govt moot asset management co. to tackle bad loans (FT 11-Jun)
The Mogul's View
Rio Tinto (RIO:LSE) and Petro Matad (MATD:LSE) are taking advantage of govt mineral exploration extensions. This is encouraging but the Mogul is wary of political risk.
The Presidential race has gone to a second round. Battulga, the Democratic Party candidate, wants to reinstate a banking measure which would derail the IMF bailout. He believes Mongolia does not need the bailout. The Mogul believes that the IMF’s bailout conditions force Mongolia to tackle corruption. On the other hand, if Enkhbold, the Mongolian People’s Party’s (MPP) candidate, won, this would add to the MPP’s already overwhelming political power in parliament.
Fun Fact: The Mogul is looking forward to great national Naadam holidays in July – wrestling, horse racing, and archery

The Mogul Report 31-May-2017
Top 3 Company Headlines
Rosetti to deploy renewable energy network (News.mn 18-May)
Petro Matad (MATD:LSE) raises $43m (UB Post 11-May)
Mongol Content releases 1st animated TV series (News.mn 19-May)
Top 3 Macro and Risk Headlines
Mongolia receives $5.5bn IMF bailout (BBC 25-May)
ADB $1.2bn for social programs & bank reform 2017-20 (Montsame 31-May)
Economy grew 4.2% in Q1 due to increased coal prices (Reuters 16-May)
The Mogul's View
The Mogul is optimistic. The IMF finally granted its bailout. This marks a potentially new start for Mongolia. Growth in Q1 and greater interest from foreign investors is encouraging.
There is some discussion about Mongolian interest in joining ASEAN. China welcomes active participation in the Belt and Road Initiative, the economic corridor which it hopes will bridge Asia and Europe. The Mogul looks forward to greater Mongolian involvement in global projects.
Fun Fact: Mongolian is a “Ural-Altaic” language, a group which includes Finnish, Turkish, and Korean

The Mogul Report 30-Apr-2017
Top 3 Company Headlines
Exchange fights to keep frontier market watch list status (MSE 19-Apr)
Public transport company revenues double (News.mn 11-Apr)
Erdene (ERD:TSX) Bayan Khundii gold mine proceeds (Mining.com 06-Apr)
Top 3 Macro and Risk Headlines
Press freedom threatened (Bloomberg 27-Apr)
Criteria met for $5.5bn IMF bailout (Bloomberg 19-Apr)
Online platform for interbank foreign exchange (Montsame 26-Apr)
The Mogul's View
The Mogul is deeply concerned about press freedom in Mongolia. Parliament is considering a “Law on Infringement”. It would allow the police to impose ₮100m ($41,000) fines for libel or defamatory statements without going through the courts.
FTSE Russell added Mongolia to its frontier market watch list in 2012. The economy was booming but since then it has underperformed. Many important developmental steps haven’t happened. Mongolia is still a promising country but if it’s removed from the list The Mogul will understand.
Fun Fact: Mongolia launches its first satellite into space (Reuters 19-Apr)

The Mogul Report 31-Mar-2017
Top 3 Company Headlines
Mongolia Mining Corp (975:HK) files Ch 11 US Bankruptcy (PR 31-Mar)
Stock exchange discusses cooperation with Toronto (Montsame 14-Mar)
Erdene (TRD:TSX) $500,000 private placement (Press Release 16-Mar)
Top 3 Macro and Risk Headlines
Japan extend $850m bailout programme (Reuters 29-Mar)
Govt to double land open for mining exploration (Reuters 06-Mar)
Govt to discuss trading uranium with India (Calculatta Telegraph 08-Mar)
The Mogul's View
Mongolia has its debts under control thanks to great help from the IMF and Japan. Holders of 82% of the govt’s $580m bonds due this month took the offer of new 7-year bonds at par with 8.75% yield. The remaining amount placed with new investors at a yield of 7.625%. The Mogul is impressed.
The Mogul is wary of uranium trade discussion with India. This boosts with the “3rd neighbour” policy but Russia has a strong interest in Mongolian uranium. Is this a sign that Russia is now less influential or will it provoke a negative reaction?
Fun Fact: The Mongolian “Bankhar” livestock guardian dog breed helps to preserve the ecology of the steppe (Nikkei Asian Review 02-Mar)

The Mogul Report 28-Feb-2017
Top 3 Company Headlines
Govt revoke Erdenet copper privatisation (Montsame 10-Feb)
Mongolyn Alt & SOE Erdenes Mongol sign Erdenes Ashid JV (Montsame 13-Feb)
Terracom (TER:ASX) start coal export to Kingho (Mining Weekly 09-Feb)
Top 3 Macro and Risk Headlines
IMF agree 3-year bailout programme (IMF 19-Feb)
China extend currency swap deal (Nikkei Asian Review 21-Feb)
EU-Mongolia partnership agreement (EU 17-Feb)
The Mogul's View
The Mogul is pleased. Copper price is up approx. 30% since Oct-2016. Coal prices are up, demand is rising, and the Chinese ban on N.Korean coal will help Mongolia. The IMF will lead a 3-year, $3.5bn programme. Separately China agreed a 3-year ¥15bn ($2.2bn) central bank currency swap deal. This is better than selling Mongolia entirely to China. It also shows relations have normalised. Mongolia dollar bond yields, due Apr-2021, fell 156bps to 9.29% from a 3-month high on 29-Nov-2016.
The cancellation of the Erdenet privatisation looks worse than it is. Erdenet privatisation was a bad political decision made by the previous Democratic Party govt on the day before it was destroyed in the 2016 election. Rostec, the buyer, is a Russian SOE, not a private company. President Elbegdorj is worried about deterring foreign investors but he is from the Democratic Party. It has not affected foreign bailouts. The Mogul is unconcerned.
Fun Fact: Mongolia’s capital city is Ulaanbaatar – it means “Red Hero”

The Mogul Report 31-Jan-2017
Top 3 Company Headlines
Chalco (601600:SHA)  debt will be paid by Apr (Montsame 20-Jan)
Darkhan-Uul solar plant opens (Montsame 18-Jan)
Elit Ur open potato chips factory (Montsame 06-Jan)
Top 3 Macro and Risk Headlines
Air pollution protests in Ulaanbaatar (BBC 28-Jan)
Govt tightens penalty for corruption (News.mn 10-Jan)
Draft legislation for casino resorts (News.mn 10-Jan)
The Mogul's View
Mongolia seems to be managing its debts. The PM also announced that the Development Bank’s $580m debt will be paid on time and without additional burdens (UB Post 09-Jan). The Mogul is curious and would like more detail. The outstanding $76.5m Chalco debt will be repaid with cut-price coal ($59.30 per ton) from the East Tsankhi block of Tavan Tolgoi. Prices at the reopened West Tsankhi block are $71.50. The World Bank projects an 11% increase in metals prices due to restricted supply and increased demand (CMO Jan-2017). Mongolian coal prices have already increased – a metals price increase would be excellent for copper and iron ore miners.
Air pollution is a large and persistent problem in Ulaanbaatar. The Govt introduced free electricity at night in the Ger areas to reduce emissions from fires for heating. There is also a growing market for electric heaters, insulation technology, and air filtering equipment, face masks, and cleaner fuels. The Mogul is most concerned about potential public health issues.
Fun Fact: Japan has its first yokozuna (top tier sumo wrestler) since 1998 – the rest have been Mongolian and one Hawaiian (WSJ 23-Jan)

The Mogul Report 31-Dec-2016
Top 3 Company Headlines
Turquoise Hill (TRQ:TSX) resumes China copper export (Reuters 14-Dec)
MMC (975:HK) to resume Tavan Tolgoi negotiations (PR 15-Dec)
Green Climate Fund approve XacBank $20m loans (PR 19-Dec)
Top 3 Macro and Risk Headlines
Dalai Lama forbidden future visits (Global Times 20-Dec)
Draft amendments to banking law presented (Montsame 22-Dec)
Harsh winter threatens livestock wipe-out (Deutsche Welle 23-Dec)
The Mogul's View
The Mogul was correct about the Dalai Lama & China (see last month’s report below). For a short time China cancelled trade and loan talks, blocked the border, and put fees on exports. Now we’re back to relative normality. The price was small. The Dalai Lama cannot return during this govt’s time in power. MMC will resume negotiations with the China/Japan consortium bidding to develop Tavan Tolgoi. Coal exports rose approx. 80% y-o-y (and reached a record high volume) and the SOE Erdenes TT, negotiated an average 85% sale price increase per ton going into 2017.
The draft amendments to the banks law will regulate funding for socio-economically important projects, restrict services for individuals, and try to prevent a monopoly.  The Mogul suspects these amendments are aimed at the Bank of China. The amendments are limiting but allow a cautious path forward. In general the govt seems to expect foreign banks to open in Mongolia. The Mogul expects this is very necessary.
Fun Fact: 13-year-old Kazakh girl, Aisholpan Nurgaiv, from N.W.Mongolia is the first Eagle Huntress – a tradition usually reserved for boys. See the documentary “The Eagle Huntress” (NY Times 02-Dec)

The Mogul Report 30-Nov-2016
Top 3 Company Headlines
State Bank full privatisation price set ₮300bn (UB Post 25-Nov)
Petro Matad (MATD:LSE) tap 9-23bn barrel oil field (News.mn 18-Nov)
TerraCom (TER:ASX) 7.5m tons coal offtake deal (News.com.au 11-Nov)
Top 3 Macro and Risk Headlines
China indefinitely cancel talks after Dalai Lama visit (Bloomberg 25-Nov)
SoftBank (9984:TSE) plans 500% solar&wind increase (Bloomberg 21-Nov)
UK & Mongolia sign mining MOU (Reuters 29-Nov)
The Mogul's View
The green/fossil fuel contrast is great in Mongolia. Engie (ENGI:FR) and Ferrostaal (FRSL:GR) will cooperate on the $100m Sainshand wind project. SoftBank will add 250MwH capacity. The pan-Asian “Golden Circle” electricity network is just beginning. Mongolia is forward-looking, environmentally friendly, or desperate for all possible business. The Mogul is intrigued by Petro Matad’s announcement but sceptical. The market cap remains small at approx. £17.4m. Renewables may be a more reliable source of income – also not reliant on China.
After the Dalai Lama’s visit, China has cancelled talks about loans, copper, coal, and infrastructure investment. The Mogul believes the govt expected this reaction, this is pretend outrage from China, business interests will win, and talks will resume soon. Chinese withdrawal is a risk but Mongolia has other options. Russia is friendly and open to include Mongolia in the Eurasian Economic Union, the UK is wants to increase mining, and business interest is increasing from Japan, Europe, and Australia.
Fun Fact: Since 2003 only Mongolians have become the Yokozuna, the top champion sumo wrestler in Japan (WSJ 25-Nov)

The Mogul Report 31-Oct-2016
Top 3 Company Headlines
Rio CEO – no Oyu Tolgoi dividend for 10 years (Bloomberg 06-Oct)
Stock exchange to be privatised – 20bn MNT (UB Post 10-Oct)
Vestas (VWS:DC) 25 wind turbines S.Gobi project (Lawyers Weekly 13-Oct)
Top 3 Macro and Risk Headlines
Minister of Finance submits recovery plan (Montsame 28-Oct)
Foreign investor restrictions eased (Reuters 04-Oct)
Development Bank probe finds $8.5m of violations (UB Post 13-Oct)
The Mogul's View
The Mogul sees the start of recovery. In most cases foreign investors will not need govt approval in “strategic” industries like mining. The govt also promises tax stability for as long as 22 years. The probe into the Development Bank and arrest of its ex-head shows the govt is getting itself in order. The World Bank est. 0.1% growth for 2016 and the Asian Development Bank est. 1.4% growth for 2017.
Oyu Tolgoi and Rio Tinto present some risk. Govt attempts to fiddle the deal with Rio Tinto caused many of the current problems in the first place. It is a serious knock to its pride that Mongolia will not receive any dividends from its flagship mine for 10 years. Will dividends be a political issue? It is potentially even worse that Rio shareholders are questioning any continued involvement with Oyu Tolgoi.
Fun Fact: The Bogd Khan Mountain is the oldest national park in the world, granted protection by the Chinese Qing Dynasty in 1783.

The Mogul Report 30-Sep-2016
Top 3 Company Headlines
New private stock exchange to open (Mongol Messenger 02-Sep)
Bid reviews resume for Tavan Tolgoi (Reuters 09-Sep)
Govt dismiss Oyu Tolgoi directors who fixed Rio dispute (Bloomberg 20-Sep)
Top 3 Macro and Risk Headlines
Mongolia seeks IMF assistance (Reuters 30-Sep)
New rail pitch to China-backed AIIB (Reuters 20-Sep)
Govt cancels hide & leather restrictions (Montsame 15-Sep)
The Mogul's View
The Mogul predicts that the worst is over. The IMF bailout represents the lowest Mongolia can go. Details of the request are not public yet but the Mogul expects a favourable plan. Steps taken to avoid default (see Last Month’s Report) were good for recovery anyway and give the IMF reason to take the govt seriously. Assistance from the IMF also avoids overreliance on China.
The Mogul sees financial difficulty in Mongolia more as a govt problem than private. The Mogul predicts that most Mongolian banks will be OK. On average they have approx. 40% liquidity and most loans are hard collateral based. They aren’t cash flow lenders and don’t collateralise them. The Mogul is wary of banks' dollar denominated loans. There is serious risk if the TGS/USD exchange rate does not stabilise.
Fun Fact: Wrestling coaches who strip protested (see Last Month’s Report) at the Olympics banned for 3 years (in time for Tokyo...) from attending competitions (Guardian 21-Sep)

​The Mogul Report 31-Aug-2016
Top 3 Company Headlines
PM asks Rio Tinto (RIO:LSE) to develop Oyu Tolgoi faster (Reuters 30-Aug)
Erdenes Mongol strategic reform plan (Mongol Messenger 25-Aug)
DHL freight services extended to Mongolia (PR 10-Aug)
Top 3 Macro and Risk Headlines
Mongolia faces a debt crisis (Wall Street Journal 04-Aug)
Coal exports increase (News.mn 18-Aug)
Central bank raises interest rates to 15% (Press Release 18-Aug)
The Mogul's View
The Finance Minister said that even defence and health spending are in question; foreign cash reserves will drop to a $46m deficit; the debt burden will be 78% GDP this year; and the govt’s “critical goal” is to avoid default. The Mogul is unconcerned. It is old news that Mongolia faces severe difficulties. It’s politically clever to set and beat low expectations.
The govt is already taking action to attract foreign investment (see last month’s report). Now it is cutting spending. Inflation is low (0.9%). The new interest rate aims to tackle the sliding Tgs/USD rate. Coal exports will increase y-o-y. Economic growth is predicted for 2016 (1.4%).
The Mogul also thinks that Mongolia is trying to avoid the embarrassment of an IMF bailout. Talks began about joining the Russia-led Eurasian Economic Union (EEU) and rare joint military exercises were held. Will China take the bait and give Mongolia money to prevent a closer relationship with Russia? Even if it doesn’t, EEU membership is a good Plan B.
Fun Fact: Two Mongolian wrestling coaches removed their clothes at the Olympics in protest of a questionable lost points decision against Ganzorigiin Mandakhnaran for the bronze medal in the 65kg men’s freestyle category – the crowd sided with Mongolia (USA Today 22-Aug)

​​The Mogul Report 31-Jul-2016
Top 3 Company Headlines
Sharp (6753:TYO) to build 10MW solar plant (Press Release 19-Jul)
SPAR Group (SPP:SJ) open stores with Max Group (EPR Retail News 20-Jul)
Govt offer 24% Baganuur (BAN:MSE) (Mongol Messenger 08-Jul) 
Top 3 Macro and Risk Headlines
Russia delay $1bn China loan for hydropower (Bloomberg 10-Jul)
UN concerned about N.Korean worker rights in Mongolia (WSJ 07-Jul)
Livestock at record high after harsh winter (Global Meat News 04-Jul)
The Mogul's View
Mongolia promises economic recovery. The new MPP government intends to be mining friendly (CNBC 04-Jul). Commitments from non-miners SPAR and Sharp are encouraging. It was feared that an unusually harsh winter (dzud) would destroy livestock numbers, but they are at a record high.
Russia state-owned Rostec unexpectedly sold its stakes in the Erdenet and Mongolrostsvetmet JVs back to Mongolia for $400m. Then it delayed the Eg River dam project by raising environmental objections with UNESCO. The new dam would give Mongolia energy independence from Russia. The dam project leaders say they can find funding from Japan, S.Korea, and Norway. This month Mongolia and S.Korea announced plans to start a free trade deal (Yon Hap News 17-Jul) and Japan sent its first defence attaché to UB (Nikkei Asian Review 15-Jul).
Failure of the Eg River hydropower project to find support elsewhere might show a failure of Mongolia’s “3rd Neighbour policy” to reduce the influence of China and Russia. The Mogul suspects this is why China is respecting Russia’s environmental concerns.
Fun Fact: There is a new youth cultural movement growing in UB centred on art, music, and skateboarding. It is called “Uukhai”, which is an attacking cry of Mongol warriors (Vogue 01-Jul)

The Mogul Report 30-Jun-2016
Top 3 Company Headlines
Govt seek to buy Erdenes TT (TTL:MSE) shares (Montsame 10-Jun)
Rio Tinto plan Turquoise Hill (TRQ:TSX) takeover (The Times 12-Jun)
China SAM to buy stake in Wolf Petroleum (WOF:ASX) (PR 14-Jun)
Top 3 Macro and Risk Headlines
Election: MPP win 65 of 76 seats (Reuters 30-Jun)
China, Russia, Mongolia sign economic corridor plan (Xinhua 24-Jun)
N&S Korea talks at 3rd Ulaanbaatar Dialogue (News.mn 17-Jun)
The Mogul's View
The Mogul is optimistic that the MPP have learned the lessons of their stupid “resource nationalism” and will continue the DP’s efforts (necessary but unpopular – DP now 9 seats) to rebuild confidence of foreign investors. Recent deals with Rio Tinto, Russia, China, Japan, and others, and a high external debt ($22.599bn - almost double GDP) mean that the new MPP govt has no choice but to behave honourably.
US Secretary of State John Kerry visited with high praise for Mongolia (Channel News Asia 05-Jun). Jacobs Engineering (JEC:NYSE) won a substantial Oyu Tolgoi development contract (PR 07-Jun). Erdenes Mongol and General Electric have signed a mining cooperation MOU (PR 22-Jun). The Mogul is encouraged by the rebirth of US interest. It is a great endorsement of Mongolia’s prospects.
Fun Fact: Mongolia’s national post service will be first in the world to implement the What3Words simplified address system. It identifies 9m² squares with 3 unique words - useful for nomads in a country where many streets and buildings are named for Genghis Khan. (Quartz 13-Jun)

The Mogul Report 31-May-2016
Top 3 Company Headlines
Rio Tinto approve $5.3bn Oyu Tolgoi copper expansion (Bloomberg 06-May)
MIAT start direct flights to Frankfurt (Montsame 28-May)
Tavan Tolgoi draft bill submitted to parliament (News.mn 17-May)
Top 3 Macro and Risk Headlines
China wants to set world commodities prices (Bloomberg 25-May)
Hydroelectric dams may dry Russian Lake Baikal (Pravda.ru 24-May)
New election rules will handicap smaller parties (Channel News Asia 20-May)
The Mogul's View
Rio Tinto will increase copper output at Oyu Tolgoi in 2020, coinciding with a predicted world shortage. The Mogul understands that renewable energy uses over 10 times more copper than conventional sources. Mongolia will be a great producer of renewable energy (see last month’s report below). A study by Ren21 showed that developing countries spent more than developed countries on renewable energy for the first time in 2015. The Mogul will closely watch Mongolian rare earth metals which are used for making wind turbines.
Fang Xinghai, vice chairman of the Chinese financial regulator, announced China’s intention to become a centre for setting world commodities prices. Today China relies on benchmarks set in London and New York. The Mogul is wary about what China’s ambition could mean for Mongolia.
Fun Fact: Makh Impex won gold and silver medals for its jerky and sausages at the IFFA international meat processing competition in Frankfurt (Montsame 26-May)

The Mogul Report 30-Apr-2016
Top 3 Company Headlines
Winsway (1733:HK) files for bankruptcy (PR 11-Apr)
ZTM Engineering $248m hydroelectric station (News.mn 07-Apr)
Shell (RDSB:LSE) to exit Petro Matad (MATD:LSE) partnership (PR 29-Apr)
Top 3 Macro and Risk Headlines
Softbank (9984:TO) plan NE Asia power grid by 2020 (Asia Nikkei 11-Apr)
$1bn India loan to be spent on infrastructure (UB Post 19-Apr)
VTB Bank $300m credit for petroleum imports (Mongol Messenger 22-Apr)
The Mogul's View
This month’s events appear negative but The Mogul is unconcerned. Shell’s exit from its JV with Petro Matad is due to streamlining at Shell. Petro Matad will be sufficiently compensated. Last month MMC defaulted (see below) and now Winsway has filed for bankruptcy. Both specialise in coking coal, which is used to make steel. China has too much steel and does not need coking coal. Lower grade coal is used for power plants. Many of these producers remain...for now.
Mongolia will be a great exporter of renewable energy. Softbank will begin construction of a ¥50bn ($460m) wind power farm in the Gobi Desert later this year. The grid will serve China, Russia, S.Korea, and Japan and will initially bring power to 6.25 million households, the equivalent of 2 nuclear power plants. This project will diversify the economy from mining, reduce reliance on China, and increase regional interest in Mongolia’s success and security.
Fun Fact: Archaeologists discovered the oldest complete Turkic style burial. Conspiracy theorists say that the mummy “wearing Adidas boots” is proof of time travel (Daily Mail 11-Apr)

The Mogul Report 31-Mar-2016
Top 3 Company Headlines
Mongolian Mining Corp (975:HK) defaults (Bloomberg 23-Mar)
Marubeni (8002:TYO) TT power plant deal (Montsame 01-Mar)
Govt agree Khan Resources (KRI:CSE) $70m settlement (PR 06-Mar)
Top 3 Macro and Risk Headlines
Govt $500m bonds, 10.877% yield (Finance Asia 30-Mar)
Protest over foreign mining concessions (Associated Press 30-Mar)
IRENA est. potential 15,000 TWh/a from solar and wind (PV Tech 20-Mar)
The Mogul's View
The previous govt was hostile to foreign investors, lost their confidence, and ruined the economy. Now Mongolia also suffers from poor global commodity prices and a harsh winter. The Nov-2012 5-year $500m bond coupon was 4.125%. The coupon on the new issue is more than double. The current govt has worked hard to restore confidence but it is ironic that Mongolia relies on foreign investment, expertise, and aid more than ever. The MMC default makes Tavan Tolgoi operations more urgent and the Marubeni deal is a sign that the govt wants to increase production much sooner. The govt will be in a weak negotiating position.
Fun Fact: Ninja mining (illegal, amateur, dangerous, black market gold mining) has been re-branded. The Mongolian NGO XAMODX, with help from the govt and the Swiss Agency for Development and Cooperation, has sold its first “Fairmined Ecological Gold” produced from “sustainable ecological mining”, without industrial use of mercury or cyanide (Montsame 24-Mar)

​The Mogul Report 29-Feb-2016
Top 3 Company Headlines
Centerra (CG:TSE) permit to mine Gatsuurt gold deposit (Reuters 04-Feb)
MHPS contract to upgrade power plant (Energy Business Review 08-Feb)
Mongolian Airlines’ passengers up 14.7%, flights 13.7% (Montsame 22-Feb)
Top 3 Macro and Risk Headlines
Govt seeks $1.3bn loan from China for coal railway (Bloomberg 23-Feb)
Air pollution endangers children’s health (UNICEF 25-Feb)
Livestock endangered by drought and harsh winter (AP 26-Feb)
The Mogul's View
Some say that this unusually harsh winter (“dzud” in Mongolian) began in August. The govt has been forced to seek foreign aid for the first time in 6 years. People burn anything to stay warm, which creates high pollution. In a dzud most livestock die in spring, before the grass returns in May. A new deal with China to export meat has begun. This measure should help to limit financial losses.
Foreign direct investment (FDI) decreased approx. 80%, from $2.1bn to $380m in 2013-14 (World Bank, 2015 figures pending). The Mogul expects FDI will remain low for 2015 but talks for loans with other national governments have begun - $1.3bn for a coal railway (China), $1.3bn to buy fuel (Russia), and $1bn for infrastructure (India), which totals approx. 27.5% of Mongolia’s 2014 GDP. The Mogul thinks that Mongolia is playing a clever game of geopolitics to survive in difficult times.
Fun Fact: Leonardo DiCaprio (now Oscar Award-winning) bid $95,000 at a charity auction for amfAR, an AIDS research group, for a Mongolian expedition vacation (People Magazine 11-Feb)

The Mogul Report 31-Jan-2016
Top 3 Company Headlines
Mongolian Railway & Shenhua plan Tavan Tolgoi rail (News.mn 22-Jan)
Franklin Templeton Asian Bond Fund hit by Mongolia debt (Bloomberg 28-Jan)
Mongol Post 34% privatisation IPO (Mongol Messenger 15-Jan)
Top 3 Macro and Risk Headlines
Prime Minister survives no confidence vote (Bloomberg 29-Jan)
Mongolia to tap dollar bond market (FT 14-Jan)
Russia writes off 97% Mongolian debt (TASS 27-Jan)
The Mogul's View
Mongolian bonds are suffering. The yield was pushed to 10.5% this month on the 10-year $1bn 5.125% issue, maturing 2022. The Mogul suspects that traders think more about the general condition of global commodities than the specific case of Mongolia.
The Mogul also suspects that traders focus on the wrong political risk. Parliamentary instability and the no confidence vote are not interesting. The govt intends to raise money on the dollar bond markets. The no confidence vote was based on economic grounds. The PM’s survival makes it difficult to challenge the decision to borrow. The govt will also have plenty of money to spend on the voters before the general election in June. This is clever political timing. Economic timing may be a secondary concern.
Fun Fact: Hillary Clinton was asked about her most distinctive visit to another country. She chose the experience of drinking fermented horse milk (airag) in Mongolia (CNN 24-Jan)

The Mogul Report 31-Dec-2015
Top 3 Company Headlines
Rio Tinto confirms $4.4bn Oyu Tolgoi funds (Reuters 15-Dec)
Germany $750m loan guarantee for Tsagaan Suvarga (UB Post 04-Dec)
Zhongrun (SHE:00506) MOU to develop Eruu Gol iron ore (UB Post 07-Dec)
Top 3 Macro and Risk Headlines
Railway freight falls 17.6% over 2015 (News.mn 16-Dec)
Govt to create internet land market (News.mn 23-Dec)
Parliament votes to abolish death penalty (Amnesty 04-Dec)
The Mogul's View
Mongolia had a very difficult year. China and commodity slowdowns partially explain the freight decrease. Increased domestic production of concrete and building materials is also a substantial factor. The govt has responded to the challenge by quickly approving exports of a wide range of products from unprocessed leather to hay. The Chinese removal of quarantine requirements for meat products (they trust Mongolian testing) will be very helpful.
The Mogul expects a great 2016. Mongolia can produce minerals very cheaply but transports mostly by truck, which is expensive. Bayanjargal Byambasaikhan, CEO of Erdenes Mongol, the largest state-owned resource developer and 100% owner of Tavan Tolgoi, estimates that when railways are ready, costs will be reduced by as much as 70% (Nikkei Asian Review 10-Dec). This will make Mongolia incredibly competitive.
Fun Fact: Hollywood actor, Nicolas Cage, agreed to return a $275,000 dinosaur skull to Mongolia after learning it was stolen (BBC 22-Dec)

The Mogul Report 30-Nov-2015
Top 3 Company Headlines
Rio Tinto Oyu Tolgoi finance decision due early 2016 (Reuters 26-Nov)
EBRD $70m loan to Khan Bank for SMEs (PR 27-Nov)
UB Railways & Korail export MOU (Mongol Messenger 13-Nov)
Top 3 Macro and Risk Headlines
Russia, Mongolia, China economic corridor official launch (PR 04-Nov)
Trade union leader sets self on fire in mining sale protest (Daily Mail 16-Nov)
Mongolia seeks permanent neutrality status at UN (AP 02-Nov)
The Mogul's View
S&P downgraded Mongolia from “B+” to “B” but upgraded its outlook from “negative” to “stable”. Fitch gave a similar assessment of the State Bank but reaffirmed Khan Bank’s rating and outlook. Moody’s support for the Development Bank of Mongolia “remains strong”. The overall implication is that Mongolia faces difficulties but there is a path forward. The Mogul is pleased that the big 3 ratings agencies agree with him. See September’s Report below.
S. Erdene, the leader of the Solidarity Trade Union at Erdenes TT, set himself on fire at an alarming press conference. He suffered 40% burns before going to hospital in critical condition. This event reflects the distrust and fear that many Mongolians feel toward China and, to a lesser extent, foreigners in general. The govt must take a long term view and not be deterred. Mongolia will not develop without foreign investment, expertise, and cooperation. The Mogul hopes that diplomatic neutrality (UN) and a Russian balance to China (economic corridor) will reassure Mongolians.
Fun Fact: MIT launched a new pilot programme in Mongolia that will include initiatives in faculty development, urban planning, and entrepreneurship (PR 20-Nov)

The Mogul Report 31-Oct-2015
Top 3 Company Headlines
Govt approve $1.3bn Mongolyn Alt copper & concrete deals (UB Post 13-Oct)
TD Bank $500m bond issue (News.mn 01-Oct)
Stock exchange to start repo market (News.mn 01-Oct)
Top 3 Macro and Risk Headlines
Japan free trade deal signed (Nikkei 22-Oct)
Austerity proposed in draft govt budgets (News.mn 02-Oct)
$150m ADB loan to support social welfare (ADB 01-Oct)
The Mogul's View
The govt budget will be $500m short by the end of this year. Mongolia’s GDP is $12.5bn. The proposed austerity measures will cut government jobs, cut salaries, streamline govt agencies, and privatise more state-owned enterprises.
Mining exports declined 9% (coal dropped 22%) year-on-year in the first 8 months of 2015. Approx. 88% of all exports go to China. A free trade agreement with Japan is very welcome news. The World Bank’s Doing Business Report 2016 ranked Mongolia 56th out of 189 countries, 6th in Asia-Pacific, improving 3 places. Ease of doing business and diversification away from China have never been more important.
Fun Fact: DNA evidence suggests that dogs were domesticated in Mongolia (New Scientist 19-Oct)

The Mogul Report 30-Sep-2015
Top 3 Company Headlines
Rio Tinto $4.5bn Oyu Tolgoi expansion by Nov (Reuters 17-Sep)
Golomt Bank full custody licence, NRI (TYO:4307) platform (PR 28-Sep)
Darkhan, Peak to build 102km road (UB Post 22-Sep)
Top 3 Macro and Risk Headlines
Gross external debt $21.6bn (Bank of Mongolia 02-Sep)
Govt say $4bn Tavan Tolgoi deal unlikely soon (Reuters 03-Sep)
Mongolia faces “dzud” deadly freezing winter (Reuters 01-Sep)
The Mogul's View
GDP 2015 estimate is $12bn (IMF). The govt plans more privatisations, the World Bank is advising on welfare efficiency, and ministers’ pay will decrease 30%, a strong symbolic gesture.
Oyu Tolgoi expansion is great short term news for Mongolia’s finances. Long term its life will be extended by 100 years. The Mogul is unconcerned by low copper prices or China slowdown. Other countries face the same problems but cannot beat Mongolia’s production or next-door transport costs. Competitors face more pressure when OT produces more copper and lowers global prices.
Mongolia Mining Corp (975:HK), coal producer, struggles with its debt obligations. Its bond yield recently reached 97%. Moody’s has downgraded its status to “Ca” and expects default next year. It would be foolish to make a deal now to develop the giant Tavan Tolgoi coal mine.
Summer drought killed 80% of wheat crops. Livestock need more to eat in a cold “dzud” winter. The govt will import wheat and control exports. The govt plans to export $1bn of beef, more than normal, to avoid waste from livestock deaths and culls.
Mongolia faces difficult challenges but The Mogul sees a manageable path forward.
Fun Fact: Mongolia celebrates 800th birthday of Kublai Khan, conqueror of China (AFP 23-Sep)

The Mogul Report 31-Aug-2015
Top 3 Company Headlines
ErdenesTT, Elgen,& Korea Gas Corp methane plant (MM 21-Aug)
Monpolimet opens cement factory, 1m tons per year (MM 21-Aug)
Bridge Group,Farmdo,&govt MOU,20MW solar plant (MM 21-Aug)
Top 3 Macro and Risk Headlines
PM fires 6 cabinet ministers from coalition partner (FT 07-Aug)
Coal exports fall by 2.5 million tons (UB Post 16-Aug)
New privatisation list released (News.mn 19-Aug)
The Mogul's View
The Mogul is not concerned by PM Saikhanbileg’s decision. The ministers were from an unpopular party (MPP) which developed a poor reputation for economic management. The previous PM (from the MPP) lost a parliamentary vote of no confidence in Nov-2014. The MPP did not vote for their PM, they abstained. Saikhanbileg has enough MPs to run a minority govt until the election in 2016. The coalition break-up is perhaps expected. It gives parties time to show clear differences to the voters. The election, not the break-up of the coalition, is the real source of political risk.
Fun Fact: The Globe Theatre is on a world tour celebrating 450 years since Shakespeare’s birth. The tour will visit every country. Hamlet was staged in Ulaanbaatar. (Mongol Messenger 21-Aug)

The Mogul Report 31-Jul-2015
Top 3 Company Headlines
Govt to sell stakes in Tavan Tolgoi & stock exchange (Bloomberg 06-Jul)
Consortium electricity sale deal with govt (UB Post 30-Jul)
Google Street View launches in Mongolia (Business Insider 23-Jul)
Top 3 Macro and Risk Headlines
Record low for Tugrik/USD with low copper prices (Bloomberg 08-Jul)
Drought, 80% crops dead this summer (UB Post 24-Jul)
Rail MOU signed with S.Korea (News.mn 20-Jul)
The Mogul's View
The govt will issue 404 more mining exploration licenses, support gold miners with loans, and sell stakes in 10 state-owned enterprises by the end of the year. Efforts continue to restore business confidence. The Mogul is pleased.
China, which receives approx. 90% of Mongolia’s exports, faces economic trouble. Will this be a problem? Development of transport links continues. The Tugrik is the cheapest it has ever been. Mongolian coal will be much cheaper to buy and easier to access than Australian coal.
Fun Fact: Oriental Brewery will plant 150,000 trees by 2020 in the Gobi Desert as part of an effort to prevent desertification (Korea Times 09-Jul)

The Mogul Report 30-Jun-2015
Top 3 Company Headlines
Govt to honour $100m Khan (KRI:TN) ruling (Mining.com 29-Jun)
Rio Tinto to invest $250m in Oyu Tolgoi this year (Reuters 26-Jun)
Sharyn Gol (SHG:MSE) signs 4 nation coal deal (Bloomberg 19-Jun)
Top 3 Macro and Risk Headlines
Rmb 1bn ($161m) bond debut (Finance Asia 26-Jun)
World Bank to give $100m for budget deficit (UB Post 25-Jun)
UAE to start $1bn Mongolia investment fund (News.mn 04-Jun)
The Mogul's View
Govt action to restore business confidence is being rewarded – new investment, appetite for Mongolian bonds, and an improved S&P credit rating (B+/B) for the state-owned Development Bank. The Mogul will watch levels of debt but is confident about economic growth and development.
Mongolia is the only country in the world that has a good relationship with N. Korea, S. Korea, China, Russia, Japan, and the USA. Sharyn Gol’s coal (see above) will be delivered to S. Korea through Russia, from a N. Korean port. Many N. Koreans work in Mongolia and the UN has rightly called for an end to their forced labour conditions (UPI 10-Jun). These issues will attract more attention as Mongolia develops. It must take action but avoid offending N. Korea. This puts Mongolia’s international diplomacy to the test!
Fun Fact: Researchers confirmed the existence of a secret railway built by Stalin in 1942 in Mongolia as part of plans to fight against Japan (Asahi Shimbun 11-Jun)

The Mogul Report 30-Apr-2015
Top 3 Company Headlines
Govt approves new phase of Rio Tinto mine (Yahoo News 06-Apr)
Shenhua (1088:HK) signs 1.2 million ton coal deal (Reuters 19-Apr)
Govt seeks to annul Khan (KRI:TN) $100m ruling (FT 27-Apr)
Top 3 Macro and Risk Headlines
TD Bank to issue govt-guaranteed USD bonds (Reuters 30-Apr)
China proposes economic corridor with Russia & Mongolia (RT 02-Apr)
German planners to design new eco-city (Deutsche Welle 08-Apr)
The Mogul's View
The decision to appeal against the Khan ruling is not helpful, but it is understandable. There is a large amount of money at stake. The govt would be irresponsible not to argue its case. The govt is taking other impressive steps to rebuild trust with foreign investors. The PM said that the govt accepts the blame for disputes with Rio Tinto and has extended its agreement with World Bank political risk insurer, MIGA. This is necessary for large project finance. The Mogul thinks that the Shenhua deal (above) shows that Shenhua-led consortium is likely to be awarded the deal to develop Tavan Tolgoi soon.
Yield on govt 5-year dollar bonds (due Jan-2018) rallied to a 22 month low of 5.87% from an all-time high of 9.79% on 21-Jan. BAML, ING, and Deutsche Bank will manage TD Bank’s new bond sale. Mongolia’s outlook has changed radically since February (see February’s report below) when the govt failed to attract any bids at auction for its medium term bonds.
Fun Fact: On a visit to Switzerland President Elbegdorj signed a memorandum with the International Olympic Committee to host the 2040 games (UB Post 03-Apr)

The Mogul Report 31-Mar-2015
Top 3 Company Headlines
Govt claims tax dispute breakthrough with Rio Tinto (Reuters 31-Mar)
Govt ordered to pay Khan Resources (KRI:TN) $100m (FT 03-Mar)
Tavan Tolgoi deal delayed by debt problems (Bloomberg 10-Mar)
Top 3 Macro and Risk Headlines
Merkel wants airline & commodities cooperation (Reuters 03-Mar)
Ferrostaal (FRSL:GR) to begin building $115m wind farm (Bloomberg 17-Mar)
Govt & private sector to establish free zones (Mongol Messenger 06-Mar)
The Mogul's View
A breakthrough on Oyu Tolgoi is good but the govt did not give any details and Rio Tinto has said nothing. The govt missed the $4bn Tavan Tolgoi deal deadline but it is correct to honour the outstanding $150m debt to Chalco (2600:HK).
Foreign interest in Mongolia is reviving. Germany is interested in infrastructure, commodities, and tourism. France signed an MOU on small business development. Japan’s Narita International Airport Corp wants to invest in the new Ulaanbaatar international airport, planned to open in 2017.
It appears that the new Prime Minister is making progress with Mongolia’s business problems and restoring some confidence. The Mogul remains optimistic, but still cautious.
Fun Fact: Long Lost Fortress of Genghis Khan Discovered in Mongolia (Huffington Post 02-Mar)

The Mogul Report 28-Feb-2015
Top 3 Company Headlines
Novel Sunrise $7.5m for 29.3% SouthGobi (SGQ:TSX) (PR 24-Feb)
Rio shun govt plan to swap OT equity for royalties (Reuters 12-Feb)
Management change at Erdenes Mongol (News.mn 06-Feb)
Top 3 Macro and Risk Headlines
Govt requests IMF cooperation (Bloomberg 04 -Feb)
Mongolia receives no bids at bond auction (FT 11-Feb)
Japan, Mongolia sign economic partnership (Japan Times 11-Feb)
The Mogul's View
SouthGobi’s story shows how seriously govt decisions have failed. In 2012 the govt blocked Chinese state-owned Chalco (2600:HK) from buying 60% of SouthGobi  for $926m. Novel Sunrise is an unknown offshore British Virgin Islands company of Chinese origin.
The request to the IMF is worrying. In the last 2 years foreign investment decreased 85%, the MNT fell 30% against the USD...but in 2014 GDP growth was 7.8%. The Mogul suspects that the govt is trying its luck, trying to get easy money so that it can spend as much as it previously planned. Regardless, it is a wise precaution in case new directions fail...
An unusual X-Factor style mobile phone poll showed 54% for foreign investment vs. 44% for budget cuts. This gave the new PM a mandate to make offers to Rio Tinto and hire a pro-business CEO at the state umbrella corporation Erdenes Mongol, which owns 34% of Oyu Tolgoi. The agreement with Japan is also reassuring.
The Mogul is cautiously optimistic.
Fun Fact: Mummified monk in Mongolia not dead, say Buddhists, he is in a “deep meditative trance” (BBC 04-Feb). The Mogul thinks he’s just resting – pining for enlightenment.

The Mogul Report 31-Jan-2014
Top 3 Company Headlines
SouthGobi (1878:HK) employees guilty of tax evasion (Bloomberg 30-Jan)
Govt bonds slump as Rio (RIO:LSE) spat stalls mine (Bloomberg 26-Jan)
Mongolia & London stock exchange deal extended (News.mn 20-Jan)
Top 3 Macro and Risk Headlines
Govt holds text message vote, mining v austerity (FT 30-Jan)
$28bn plan to modernise Ulaanbaatar (FT 23-Jan)
Moscow/Beijing high speed rail to bypass Mongolia (UB Post 09-Jan)
The Mogul's View
Apologies for the recent non-arrival of The Mogul Report. The editor who took over last year has not been producing regularly so other arrangements are being made. The Mogul apologises that the report has not been produced on time or to the appropriate standard.
There will be no “View” until a suitable new editor is found.
Fun Fact: Three suns in Mongolia! A rare “parhelion” phenomenon occurred this month. A parhelion is an optical illusion caused when sunlight passes through snow crystals in the air (Daily Mail 23-Jan)

The Mogul Report 31-Dec-2014
Top 3 Company Headlines
Govt restarts bidding for Tavan Tolgoi (Reuters 03-Dec)
PM says he’ll fix conflict with Rio Tinto (RIO:LSE) (Bloomberg 12-Dec)
Fitch affirms XacBank at “B Outlook Negative” (Reuters 16-Dec)
Top 3 Macro and Risk Headlines
Grand Coalition formed to lift economy (Bloomberg 01-Dec)
Texan budget expert to help govt fix finances (NY Times 25-Dec)
Development Bank gets $300m loan (Mongol Messenger 19-Dec)
The Mogul's View
Apologies for the recent non-arrival of The Mogul Report. The editor who took over last year has not been producing regularly so other arrangements are being made. The Mogul apologises that the report has not been produced on time or to the appropriate standard.
There will be no “View” until a suitable new editor is found.
Fun Fact: “Mongolia’s Got Talent” is preparing to launch. Mongolia is one of the last regions in the world without Simon Cowell’s television show.

The Mogul Report 30-Nov-2014
Top 3 Company Headlines
Rio (RIO:LSE) hopeful PM change to unblock OT (Bloomberg 10-Nov)
Nur Holdings buys coal logistics co. for $150m (News.mn 03-Nov)
Best Shoes to supply 30% dom. market (Mongol Messenger 07-Nov)
Top 3 Macro and Risk Headlines
New PM approved with vow to revive growth (Bloomberg 21-Nov)
US businessman files UN human rights claim (Bloomberg 25-Nov)
Power plant to attract over $1bn investment (UB Post 18-Nov)
The Mogul's View
Apologies for the recent non-arrival of The Mogul Report. The editor who took over last year has not been producing regularly so other arrangements are being made. The Mogul apologises that the report has not been produced on time or to the appropriate standard.
There will be no “View” until a suitable new editor is found.
Fun Fact: Landlocked Mongolia a Surprise Hit at the Asian Beach Games (WSJ 20-Nov). Half of the 34-strong squad had never seen the ocean before.

The Mogul Report 31-Oct-2014
Top 3 Company Headlines
Rio Tinto (RIO:LSE) prepared to write-off Oyu Tolgoi (The Australian 30-Oct)
Clean Energy to build 4 wind farms in the Gobi (News.mn 28-Oct)
Mongolia joins Google Street View (News.mn 21-Oct)
Top 3 Macro and Risk Headlines
Mongolia to build narrow & wide gauge rail (Mongol Messenger 31-Oct)
Mongolia co-founds Asia Infrastructure Bank (UB Post 21-Oct)
Prices drop & Mongolia miners “burning cash” say Moody’s (Bloomberg 27-Oct)
The Mogul's View
Apologies for the recent non-arrival of The Mogul Report. The editor who took over last year has not been producing regularly so other arrangements are being made. The Mogul apologises that the report has not been produced on time or to the appropriate standard.
There will be no “View” until a suitable new editor is found.
Fun Fact: It was announced on 09-Oct that Mongolia will host the World Sumo Championship next year in Jul-2016.

The Mogul Report 30-Sep-2014
Top 3 Company Headlines
Rio Tinto (RIO:LSE) and govt close gap in copper dispute (FT 22-Sep)
WPP (WPP:LSE) buys majority stake in local ad agency (BBC 19-Sep)
London & Mongolia exchanges 3-year development deal (PR 09-Sep)
Top 3 Macro and Risk Headlines
Govt outlines steps to reduce default risk (FT 10-Sep)
Russia rekindles old ties with Mongolia (Bloomberg 04-Sep)
MIAT new flight to Singapore via Beijing (Channel News Asia 24-Sep)
The Mogul's View
Apologies for the recent non-arrival of The Mogul Report. The editor who took over last year has not been producing regularly so other arrangements are being made. The Mogul apologises that the report has not been produced on time or to the appropriate standard.
There will be no “View” until a suitable new editor is found.
Fun Fact: Most people do not realise that “Genghis Khan” is a title which translates to something like “Supreme Lord”. The man’s real name was “Temujin”.

The Mogul Report 31-Aug-2014
Top 3 Company Headlines
Govt delay pay, Macmahon (MAH:AU) halts TT mining (Bloomberg 20-Aug)
Rio Tinto (RIO:LSE) in tax dispute over OT (SMH 14-Aug)
EBRD finance $65m Senj Sant dry cement plant (News.mn 05-Aug)
Top 3 Macro and Risk Headlines
Chinese Pres. visit results in many new trade deals (Reuters 22-Aug)
Foreign debt reaches $19.88bn (UB Post 20-Aug)
State to increase budget through privatisations (UB Post 07-Aug)
The Mogul's View
Apologies for the recent non-arrival of The Mogul Report. The editor who took over last year has not been producing regularly so other arrangements are being made. The Mogul apologises that the report has not been produced on time or to the appropriate standard.
There will be no “View” until a suitable new editor is found.
Fun Fact: Mongolia has another judo world champion. G. Boldbaatar wins the men’s 60kg category (Mongol Messenger 29-Aug)

The Mogul Report 31-Jul-2014
Top 3 Company Headlines
TD Bank pulls dollar bond due to Europe debt turmoil (Reuters 11-Jul)
KEPCO to build power plant in UB (News.mn 28-Jul)
Govt blames Rio Tinto (RIO:LSE) for Oyu Tolgoi delay (Bloomberg 08-Jul)
Top 3 Macro and Risk Headlines
Data shows Mongolia at economic & financial risk (Fitch 08-Jul)
World Bank lowers growth forecast to 9.5% (UB Post 24-Jul)
Foreign exchange reserves dwindle to $1.6bn (UB Post 03-Jul)
The Mogul's View
Apologies for the recent non-arrival of TMR. The editor who took over last year has not been producing regularly so other arrangements are being made. The Mogul apologises for the report not being produced on time or to the appropriate standard.

The Mogul Report 31-Jan-2014
Top 3 Company Headlines
MIBG, RESCAP Announce Merger (MIBG 07-Jan)       
Mongolia sees Oyu Tolgoi deal this month  (Mining 12-Jan)
HBOil Announces the Conversion of its Convertible Loan Notes (HBOil 13-Jan)
Top 3 Macro and Risk Headlines
Moody’s Warns on Mongolia’s Banks (WSJ 08-Jan)
Mongolia Minerals Law Changes May Lead To Lifting Of License Ban (Bloomberg 22-Jan)          
Mongolian President Sets New Reform Goals (Nikkei Asia Review 23-Jan)
The Mogul’s View
Mongolian capital market was quite dormant in 2013. We (BDSec) expect the second half of 2014 will be much active due to the new Securities Market Law implementation. So far, a few number of companies have announced their IPO as well as M&A deals. And there is been some solid improvements in the situation of Oyu Tolgoi (OT) mining.
At this moment, we believe stocks are cheap considering macro-economic upside potential  of Mongolia and fundamentals of each stocks. Our quantitative note on Mongolian Stock Exchange listed companies have been published last week and the note can be access at this [link].
Fun Fact: According to the World Health Organization, Ulaanbaatar, the capital city of Mongolia, is regarded as the second most polluted city on the planet. Gateshead’s Gradon Architecture, a British firm, has submitted design proposals for 50 energy-efficient homes in the city. The initiation is phrased by the local news as “tackling Mongolia’s COLD WAR”.

The Mogul Report 30-Nov-2013
Top 3 Company Headlines
Rio Unit to Proceed With $2.4 Billion Rights Offer (Bloomberg 27-Nov)     
Areva forms a Joint Venture with Mongolia’s Mon-Atom  (Areva 26-Nov)  
HBOil extends option to purchase offshore DPRK exploration rights (BDSec JSC 14-Nov)
Top 3 Macro and Risk Headlines
IFC Report Urges Mongolian Companies to Improve Corporate Governance (IFC 21-Nov)
Mongolia Parliament Rejects Bill to Raise Country’s Debt Ceiling (Bloomberg 15-Nov)
Mongolia Economic Update November 2013 (The World Bank 6-Nov)       
The Mogul’s View
The President of Mongolia along with other government officials and local businessmen, made an official tour to Myanmar, Vietnam, Singapore and Hong Kong in order to strengthen and develop economic cooperation, in which the matters related to Oyu Tolgoi (OT) were under close attention. It has been stated number of times that the government officials are eager to cooperate on OT yet, the given to foreign markets through international media implies the opposite. Investors should also look at local news to get a true sense on the matter and can benefit from the market perceptions and mispricing through both local and international news comparison.
The Mongolian Stock Exchange is also organizing a roadshow in Singapore, Hong Kong, London and New York to present the capital market of Mongolia and the opportunities that lie in it. From our point of view, the coming year would be one of the turning points for Mongolian capital market because of the new Securities Law implementation.
Fun Fact: Coming back from the trip to North Korea, the President of Mongolia noted three things that drew his attention the most in DPRK: “Few luxury cars in Pyongyang, the fact that people live for the sake of the three people, two of whom already passed away and an anger in people’s eyes”.

The Mogul Report 31-Oct-2013
Top 3 Company Headlines
HBOil tours Rason, North Korea (BDSec 18-Oct)                                                
Marubeni, GDF Suez among final bidders for Mongolia power plant (Bloomberg 15-Oct)
Mongolia Global miner Rio Tinto resumes talks with Mongolian gov’t (Xinhua 15-Oct)
Top 3 Macro and Risk Headlines
China’s Shenhua Agrees to Buy 1 Billion Tons of Mongolian Coal (Bloomberg 30-Oct)
Mongolia President to Visit North Korea (WSJ 23-Oct)        
Investment Fund Law passed (News.mn 3-Oct)                    
The Mogul’s View
Mongolian capital market as well as macro-economic situation drew lots of attention from investors. Mongolian government resumes talks with Rio Tinto, which will greatly stabilizes investment uncertainty surrounding the largest FDI project.  Erdenes Tavan Tolgoi JSC, Mongolian Mining Corporation (975) and Tavan Tolgoi JSC signed memorandum of understanding with Shenhua to export 1 billion tons of coal over 20 years, which we think is indeed positive news for above mentioned three companies as well as the economy which has been hurt by the export slowdown and declining FDI. The fact has been well revealed by the stock prices of Mongolian Mining Corporation (975) and Tavan Tolgoi JSC (TTL).
Fun Fact: Ulaanbaatar, the capital city of Mongolia, has more than 1 million population and there are 10,000 bars and clubs. Also, 9000 stores sell alcohol. However, there are only 2 libraries in the city. The issue became the main reason of college students protest, which took place peacefully for 30 minutes at the Sukhbaatar square.

The Mogul Report 30-Sep-2013
Top 3 Company Headlines
Erdenes TT Plas for Coal Washing Plant Commissioning in 2014 (Zuunii medee 13-Sep)
Rio Copper Venture Replaces Board Members Amid Dispute (Bloomberg 3-Sep)
HBOil JSC Announces Closing of $5 Million Convertible Loan Financing (BDSec 2-Sep)
Top 3 Macro and Risk Headlines
Mongolia to Take Areva Uranium Stake to Help Revive Investment (Bloomberg 17-Sep)
Mongolia to Sell Up to $1 Billion in Samurai Bonds, Premier Says (Bloomberg 15-Sep)
Mongolia Joins Shale Revolution, But at What Cost? (The Diplomat 5-Sep)           
The Mogul’s View
It can be fairly assumed that the government of Mongolia is now well aware of the fact that the macro-economic situation is badly hurt by new laws, regulation and most importantly, an uncertainty of an investment environment. Thus, number of measures have been taken by the parliament to revive foreign direct investment and stimulate the economy.
Mining Minister Gankhuyag stated in news of Sep 11, 2013 that, “If there’s a person with conflict of interest in OT Board it will come out”. The cryptic headline alleging “a person with conflict of interest” is actually a reference to new EOT CEO Ganbold we think. It is our understanding Ganbold was a member of RIO’s Panel Lobby Group, which was evidently a collection of independent experts, in various fields. There is a real danger this association could be exploited by the resource nationalist lobby and the press, should his motives be called into question. Since Ganbold was one of the founding members of the Democratic Party going back to ’91, there is a risk partisan politics could magnify this alleged conflict and impair his ability to focus on resolution with OT over Phase 2 as CEO of Erdenes Oyu Tolgoi. Impact negative.
Fun Fact: The sovereign bond of Mongolia is named as “Chinggis Bond”  and there has already been news of the next issuance which would be named “Samurai Bond” denominated in JPY. The names of the bond issuances became an anecdote that “The next bond issuance would be named “Sun Wukong Bond” if it is denominated in CNY”.

The Mogul Report 31-Aug-2013
Top 3 Company Headlines
POSCO seeking to develop clean energy in Mongolia  (Global Post 25-Aug)
Mongolia, Rio Tinto playing high stakes on copper mine (Reuters 19-Aug)
Mongolia Growth Group Ltd. Announces Private Placement Offering (MGG 21-Aug)
Top 3 Macro and Risk Headlines
Mongolia to scrap controversial foreign investment law (Reuters 27-Aug)
Mongolia Studying IPO of Stake in $6.6 Billion Rio Mine (Bloomberg 9-Aug)
Parliament recalled as falling foreign investment threatens economy (Reuters 16-Aug)
The Mogul’s View
This month, the rapid depreciation of Tugrig (Mongolian currency, MNT) against USD drew significant attention among investors. The reason is mainly related to the cash injection by the Bank of Mongolia, takeover of Savings Bank and the government’s balance of payment deficit. This is definitely not a good news for investors who have already had an investment exposure into Mongolia, yet a compelling risk-and-reward situation for investors willing to take advantage of both local currency depreciation and bottoming equity market.
Due to the declining foreign investment which is threatening the country’s economic growth, the Parliament of Mongolia plans to scrap Strategic Entities Foreign Investment Law, which is also known as SEFIL. It is said to be unclear that the amendment would bring investors’ interest back. But as we are in the country, we are aware that the media put high emphasis on negative news, which partly plays a role in declining foreign investment.
Fun Fact: The representative of the Children’s Palace of Mongolia, which raunched a new rollercoaster on August 23rd, said about thesafety of the rollercoaster, “There was no problem when testing the rollercoaster. First we operated the rollercoaster empty while observing the speed and time. Then, we used our employees for the test drive for 3 shifts—morning, afternoon, and the evening.”

The Mogul Report 31-Jul-2013
Top 3 Company Headlines
Rio Tinto Delays Oyu Tolgoi Expansion; Awaits Mongolia OK (The WSJ 29-Jul)
US$ 5 million EBRD loan to Remicon for more concrete in mongolia (EBRD 01-Jul)
Mongolia to take over Savings Bank as 5th largest lender fails  (Businessweek 22-Jul)
Top 3 Macro and Risk Headlines
Mongolian Stock Exchange market potential of 45 billion USD  (UB Post 07-Jul)
Ulaanbaatar Rents to Jump as KFC, Cinnabon Enter (Businessweek 04-Jul)
Mongolia Election Makes Space for Greater Policy Clarity (Reuters 02-Jul)
The Mogul’s View
The reaction to the news of OT delay of its second phase was very severe, with shares of Turquoise Hill Resources Ltd. (NYSE:TRQ) down nearly 20%. If this latest fight is in fact caused by the Government of Mongolia (GOM), they will have to reverse course quickly. FDI is down another ~30% so far in ’13, the Mongolian Tugrik is very weak, (recently blowing through the 1500 level) and the GOM will not have access to the sovereign credit markets until this is resolved. Bear in mind, Mongolia has ~$2.1B in sovereign debt vs. total annual GDP of ~$11B and this debt is priced in USD.
Another big news was that the Savings Bank of Mongolia was acquired by the State Bank due to its Olon Ovoot project on which the bank took significant amount of loan from Standard Bank. According to the Mongol Bank and State bank officials, this acquisition saves Saving’s bank’s 1.7 mn customers and there will be no lay off among employees. In other words, from a Savings bank customer’s perspective, everything will stay the same except the bank name.

The Mogul Report 30-Jun-2013
Top 3 Company Headlines
Erdenes TT Wash Plant Feasibility Study Approved (Business Mongolia 14-Jun)     
Mongolia Taps North Korea Oil Potential to Ease Russian Grip (Bloomberg 18-Jun)
Securities Law will help Mongolian companies raise money (IFLR 21-Jun)
Top 3 Macro and Risk Headlines
Elbegdorj.Ts - Mongolian President Wins Re-Election (Bloomberg 27-Jun)                
Mongolia to cut mortgage rates to support middle class growth (Bloomberg 12-Jun)
Mongolia Opens $122 Million Wind Farm With Aim to Cut Pollution (Bloomberg 6-Jun)
The Mogul’s View
Foreign investors considers the fact that both parliamentary and presidential election is over to be stable political environment at least for the coming 3 years until the next parliament election takes place in 2016. With the election over, the Government of Mongolia (GOM) has the political cover to get Oyu Tolgoi (OT) back on track, which we suspect will happen sooner vs. later.
The new Securities Law will be effective from January 1st of 2014, in which dual listing, international custodian service and new financial products including asset backed securities are legislated.
Fun Fact: The Financial Times stated the presidential election as “an experienced bureaucrat against a famous wrestling champion”.

The Mogul Report 30-Apr-2013
Top 3 Company Headlines
Govt sees pre-election solution to Rio Tinto dispute (Reuters 17-Apr)                                   
Tavan Tolgoi to resume coal exports to China (Bloomberg 19-Apr)                                           
Govt & Genie (GNE:NYSE) sign oil shale agreement (WSJ 19-Apr)                                                             
Top 3 Macro and Risk Headlines
Private firms exempt from foreign investment law (Reuters 19-Apr)                                      
Moody’s puts negative outlook on Mongolian banks (FT 11-Apr)                                                              
Govt plans Russia-China, 627mi, $3.5bn road (Bloomberg 01-Apr)                                                               
The Mogul’s View
Curiously, political turmoil is settling before the Presidential election in June.
Rio Tinto and the govt are equally positive that the dispute over Oyu Tolgoi will soon be resolved. Steps have been taken that allow both sides to claim success. Rio Tinto has set cost-cutting targets (which in any case is good business), appointed a native (but qualified) Mongolian as head of their copper division, and will reduce its dominance in Mongolia by selling the SouthGobi (SGQ:CN) coal project (although now productive, it has been a source of trouble for Rio Tinto), and the original development agreement will remain unchanged.
Fun Fact: Congratulations to Mongolian adventurer Gotovdorj Usukhbayar who on 6-Apr completed his journey to the North Pole!

The Mogul Report 31-Mar-2013
Top 3 Company Headlines
Govt offer 66% stake in Sainshand complex (Bloomberg 21-Mar)
SouthGobi (SGQ:CN) to resume production (Bloomberg 22-Mar)
IFC $20m loan for Khan Bank microfinance (PR 26-Mar)
Top 3 Macro and Risk Headlines
Govt to ease foreign investment law (Reuters 27-Mar)
Japan’s PM visits, makes coal & technology deal (Asahi Shimbun 31-Mar)
Govt offer 49% stake to build Tavan Tolgoi/China rail (Bloomberg 27-Mar)
The Mogul's View
Mongolia is beginning a big coal push!
Japan is seeking alternatives to nuclear power after Fukushima and wants to buy more coal. It will encourage its private sector to invest in developing the giant Tavan Tolgoi coal mine. The Mongolian govt is seeking to build a 260km railway from the mine to the Chinese border. Chalco (2600:HK) will export to S. Korea and Japan. Rio Tinto’s SouthGobi is resuming production citing “signs of improvement” in the coal market.
Govt plans to ease foreign investment restrictions include permission of multiple listings. The Tavan Tolgoi IPO has been repeatedly delayed since 2011, but The Mogul believes we will finally see its triple listing (UB, HK, London) in 2015, as now promised by the Mining Minister (UB Post 24-Mar).
Fun Fact: Camel polo has been declared a tourism brand (Mongol Messenger 15-Mar). The two-humped species, the Bactrian camel, is native to Mongolia.

The Mogul Report 28-Feb-2013
Top 3 Company Headlines
Govt revokes Entree (ETG:CN) licences (Bloomberg 26-Feb)
Orix (8591:TSE) announces $50m PE fund (PR 5-Feb)
Tavan Tolgoi to produce from western block this year (Reuters 22-Feb)
Top 3 Macro and Risk Headlines
Sovereign bond trades 5.85%, highest since issued (Bloomberg 6-Feb)
Road network between provinces by 2016 (News.mn 21-Feb)
Mongolia to host UN World Environment Day (PR 22-Feb)
The Mogul's View
The dispute over Oyu Tolgoi continues!
The Govt now says that OT costs are excessive and is threatening to withhold further funding. The Govt has also frozen and unfrozen Rio Tinto’s bank accounts regarding allegedly unpaid taxes, on which it plans to charge interest. As part of a wider investigation into corruption at the Mineral Resources Authority, the Govt revoked the mining licenses from Rio Tinto 23.6% owned Entree Gold and barred the President of Rio Tinto’s SouthGobi Sands coal miner from leaving Mongolia.
The Mogul believes that the beginning of full production at Oyu Tolgoi will be delayed for many more months...and that fear of “Dutch disease” is a distant memory.
Tavan Tolgoi, in complete contrast, appears to have recovered some focus. The visit from Chinese chief legislator Wu Bangguo (see Last Month’s Report below) must have been very mutually and beneficially cooperative!
Fun Fact: After news that smuggled Tarbosaurus Bataar (close cousin of T-Rex) skeletons were found in the USA, Scotland Yard is now hunting in the UK for the last missing dinosaur (News.mn 04-Feb)

The Mogul Report 31-Jan-2013
Top 3 Company Headlines
Rio Tinto denies halt to Oyu Tolgoi operations (Reuters 30-Jan)
Govt lends $355m to Tavan Tolgoi in Chalco dispute (Bloomberg 24-Jan)
Noble (NOBL:SP) lifts Aspire (AKM:AU) stake to 15% (Bloomberg 10-Jan)
Top 3 Macro and Risk Headlines
Business Council of Mongolia protests Draft Minerals Law (PR 07-Jan)
Draft Securities Law under Parliamentary review (MSE 10-Jan)
Toyo (6330:JP) to build first oil refinery, $600m (News.mn 18-Jan)
The Mogul's View
The Mogul is on the edge of his seat!
Despite a $250m advance payment, the govt’s coal giant, Tavan Tolgoi, stopped delivery to Chinese state-owned Chalco...due to a cash crisis. Chinese chief legislator Wu Bangguo is currently in UB to discuss “mutually beneficial cooperation”. China takes approximately 90% of Mongolia’s exports.
Bloomberg reported that Rio Tinto is considering stopping operations at the Oyu Tolgoi copper-gold mine. This is not entirely unexpected. The govt has tried twice in two years to renegotiate the Oyu Tolgoi mining agreement and has recently drafted a very illiberal Minerals Law. Rio Tinto since made official statements to say that production at OT is on track, but the govt must be deeply concerned. Oyu Tolgoi accounts for approx 30% of Mongolia’s GDP.
The govt has glimpsed economic oblivion. The Mogul believes that the situation is redeemable...but their fate is in their hands.
Fun Fact: Communism is an old fossil, but the UB Lenin Museum will now be reopened as a dinosaur museum. (Mongol Messenger 18-Jan)

The Mogul Report 31-Dec-2012
Top 3 Company Headlines
Beren Mining (BRM:MSE) IPO raises MSE record $95m (MSE 20-Dec)
EBRD $46m syndication boosts XacBank capital (Finchannel 08-Dec)
SouthGobi (1878:HK) lawyer cleared of corruption (Bloomberg 24-Dec)
Top 3 Macro and Risk Headlines
President calls for better investment environment (News.mn 27-Dec)
Ex-Pres Enkhbayar’s sentence cut from 4 to 2.5 years (Xinhua 08-Dec)
JICA introduces metro project in UB (News.mn -Dec)
The Mogul's View
The success of the debut sovereign bond issue (see Last Month’s Report below) has begun to be discounted in a surge of the domestic equity market. The MSE Top 20 has risen 17%, but from a 21 month low. However it is still 47% below its all-time high, so there is work to do to restore investor confidence. President Elbegdorj’s announcement and parliamentary discussion to redraft again the Strategic Investments Law to further increase its friendliness to foreigners are a good start.
The Mogul is optimistic for 2013.
Fun Fact: Drs Amy Hessl (West Virginia University) and Neil Pederson (Columbia University) propose that an unusually warm climate in Mongolia at the time may have given Genghis Khan the ability to build his empire (The Economist 08-Dec)

The Mogul Report 30-Nov-2012
Top 3 Company Headlines
Oyu Tolgoi connected to China grid, production by Feb (FT 05-Nov)
Govt takes lead in MMC (975:HK) railway construction (PR 04-Nov)
Sunkou Solar Mongolia LLC solar panels export to Japan (MM 30-Nov)
Top 3 Macro and Risk Headlines
Debut $1.5bn sovereign issue priced at top of range (WSJ 28-Nov)
N. Korea & Japan discuss abductees in UB (Fox News 15-Nov)
Govt to expand UB No.5 power plant capacity by 20% (Bloomberg 14-Nov)
The Mogul's View
The Mogul is impressed that demand equivalent to almost twice GDP was shown for the debut sovereign issue. The $1.5bn issued is approximately 20% GDP. The 5-year & 10-year bonds are 4.125% & 5.125%. The coupon is almost 200bps lower than when govt-sponsored DBM issued $600m 5-year bonds only 6 months ago. The Mogul thinks there is a contradiction between huge demand for bonds and the MSE 21 month low...
Mongolia continues to improve its international profile. It hosted a meeting of the South East Asian Central Bankers (SEACEN), a delegation of 15 EU ambassadors to China, and joined the Organization for Security and Co-operation in Europe (OSCE). It also arbitrated talks between N. Korea and Japan concerning kidnapping of Japanese citizens in the 70s and 80s. Mongolia is perhaps the only country which enjoys good relations with both N. Korea and the wider international community. The Mogul sees great potential for Mongolia to develop a trustworthy diplomatic reputation, especially given its strategic location between Russia and China.
Fun Fact: The Dalai Lama addressed 700 Mongolian Buddhists in Daramshala, India (Tibet Post 20-Nov). The title “Dalai Lama” (Ocean of Wisdom) is originally Mongolian. The 4th Dalai Lama (1589-1617) was Mongolian.

The Mogul Report 30-Oct-2012
Top 3 Company Headlines
Peabody (BTU:NYSX) restarts Tavan Tolgoi project (Reuters 16-Oct)
Softbank (9984:JSX) & Newcom plan ¥50bn wind farm (Bloomberg 24-Oct)
EBRD $350m loans for Mongolyn Alt Corp copper mine (PR 09-Oct)
Top 3 Macro and Risk Headlines
Mining Minister still wants to change Oyu Tolgoi deal (News.mn 26-Oct)
Govt seeks $7bn for 6000km of new railways (Rail Journal 19-Oct)
China & Mongolia sign agriculture co-operation deal (China Daily 24-Oct)
The Mogul's View
Contradictory statements by the Mining Minister and Foreign Affairs & Trade Minister about Oyu Tolgoi are not helpful. The govt hopes to raise $3bn for Tavan Tolgoi but the IPO has been delayed again until Sep-2013. S&P revised its debt outlook from “positive” to “stable”. All three are likely connected.
SouthGobi (1878:HK) lawyer Sarah Armstrong has met with the anti-corruption agency as part of a bribery investigation into the ex-Chairman of the Mineral Resources Authority. It is positive that the govt is fighting corruption, but foreign media has not focused on this.
Average yearly GDP growth from 2010 to 2050 will be 6.9% (Knight Frank & Citi Private Bank, “The Wealth Report 2012”). Educated and ambitious Mongolians are returning to take advantage of the opportunities. For example, Asashoryu (ex-champion Sumo wrestler), owns 56% of the National Investment Bank of Mongolia, and investments in tourism, property, and mining (Forbes Asia 24-Oct). There will be a large increase in the number of HNW citizens, comparable to other resource rich countries.
Fun Fact: Prominent British charity, Oxfam, will make its first ever investments. It has chosen to make loans to micro-financier Xac Leasing (FT 09-Oct)

The Mogul Report 30-Sep-2012
Top 3 Company Headlines
Development Bank to issue $5bn bonds over 2 years (UB Post 19-Sep)
POSCO,EDF,Sojitz&Newcom to build $1.3bn power plant (FT 24-Sep)
Chalco ends $938m SouthGobi (1878:HK), $308m Winsway (1733:HK) bids (Reuters 03+28-Sep)
Top 3 Macro and Risk Headlines
FTSE Frontier Index watch-list adds Mongolia (MSE 27-Sep)
Govt mining review won’t target Oyu Tolgoi (Reuters 19-Sep)
Russia proposes Mongolia to join APEC (UB Post 16-Sep)
The Mogul's View
Capital markets volume is rapidly expanding. As well as the DB bond issues, MSE equities volumes are 130% more than 2011 after the LSE managed systems upgrade, and the govt has drafted proposals for a far-reaching range of new securities e.g. ETFs, asset backed securities, derivatives. A FTSE inclusion is a suitable and exciting next step for Mongolia. It would help to formalise Mongolia’s excellent prospects and bring it more attention from the world’s institutional investors.
Mongolian infrastructure and living standard development is also impressive. The ADB will loan $217.4m for roads, bridges, and buses in UB. The World Bank and Netherlands solar project has provided 100,000 families with electricity. UB will learn from Japan about urban planning, and the govt will learn from Chile how to manage its new Sovereign Wealth Fund.
The Mogul is proud of Mongolia’s progress.
Fun Fact: Brazil will sign a memorandum to help Mongolia develop its soccer skills (First Post 26-Sep)

The Mogul Report 31-Aug-2012
Top 3 Company Headlines
Govt seeks to cut Turq. Hill (TRQ:TSX) OT profit (Reuters 24-Aug)
Prophecy (PCY:CNSX) fulfils contracts, stops mining (PR 09-Aug)
SouthGobi (1878:HK) drops Tsaagan Tolgoi sale plan (PR 29-Aug)
Top 3 Macro and Risk Headlines
Govt est $10bn to build Sainshand industrial town (MM 10-Aug)
Japan to improve Mongolian railways (UB Post 06-Aug)
Ex-Pres Enkhbayar jailed for corruption (BBC 03-Aug)
The Mogul's View
The share prices of Mongolia-based mining companies have continued to fall, with many close to the bottom of their 52-week range. While low commodities prices and decreased demand from China may be important factors, rhetoric of resource nationalism from the new govt is not reassuring. Minister Ganhuyag’s targeting of the Turquoise Hill (formerly Ivanhoe) Oyu Tolgoi contract, days before the major “Discover Mongolia” investor conference, was unfortunate if the govt hopes to raise development capital.
Fun Fact: Congratulations to the Mongolian Olympics team – 2 Silver, 3 Bronze medals.

The Mogul Report 31-Jul-2012
Top 3 Company Headlines
Ivanhoe (IVN:TSX) raises $1.8bn in rights offering (PR 20-Jul)
SouthGobi (1878:HK) files dispute against Govt (PR 11-Jul)
Nova Mining (NVMN:OTCBB) given lithium licences (PR 02-Jul)
Top 3 Macro and Risk Headlines
Rival left-wing parties form coalition Govt (FT 16-Jul)
Govt plans 2000km of new railways to Russia (MM 27-Jul)
Hilary Clinton visits, praises democracy & freedom (WSJ 09-Jul)
The Mogul's View
The Mogul observes that worldwide commodity prices continue to weaken, and that Mongolia is a massive source of new supply with increasing exports. The World Bank has re-expressed its concerns about the level of Govt spending i.e. rapid infrastructure development (plans for new railways, a natural gas pipeline from Russia, an EBRD funded wind farm, and UB’s 5th power plant). However, the Mogul believes that these developments are good.
Mongolia will find success as a new, low cost producer.
Fun Fact: The medals at the London 2012 Olympics are made from Oyu Tolgoi gold and copper.

The Mogul Report 30-Jun-2012
Top 3 Company Headlines
MMC (975:HK) starts building $800m railway (PR 07-Jun)
Temasek SWF buys 5.5% of Ivanhoe (IVN:TSX) (Reuters 11-Jun)
Rio Tinto expects funds for OT expansion by Dec (Reuters 22-Jun)
Top 3 Macro and Risk Headlines
DPP overtakes MPP, no overall majority (News.mn 29-Jun)
Govt to build pop. 100,000 town for new airport (News.mn 26-Jun)
Pres. Elbegdorj, UN Champion of the Earth laureate (PR 05-Jun)
The Mogul's View
The Mogul is pleased to see that logistics infrastructure is planned to grow rapidly to match demand. MMC estimates its railways will double coal exports to China. SouthGobi (1878:HK) is building new roads for its coal trucks and the Govt opened 8 new Chinese border crossings. Air travel has increased 30% from last year. The new airport is planned to accommodate further rises.
This week’s elections have had a flavor of “resource nationalism”, and a left-wing, anti-foreign alliance may make a governing majority. The Mogul is unconcerned. It is normal in democracies for Govts to interfere but leave the industry intact e.g. Australian mining taxes.
Mongolia needs foreign capital and expertise to develop. After all the planning, money, and building of logistics infrastructure, the Mogul believes the new Govt will also welcome foreign capital.
Fun Fact: The Govt has decided to export 150 Saker falcons (favored by Genghis Khan) to Arabian Gulf countries this year.

The Mogul Report 31-May-2012
Top 3 Company Headlines
Macquarie & BAML to lead $1bn Altain Khuder IPO (Reuters 23-May)
Ivanhoe (IVN:TSX) proceeds with $1.8bn rights offering (Reuters 23-May)
Dutch FMO bank, 5-year $94m loan to Khan Bank (News.mn 18-May)
Top 3 Macro and Risk Headlines
Govt softens 49% foreign ownership cap (Reuters 18-May)
Govt to create $600m SWF for pensions in July (News.mn 02-May)
PM launches Ger area infrastructure project (MM 18-May)
The Mogul's View
The top 10 mines have $2.75tn ($1m per Mongolian citizen) reserves, estimates John Finigan, CEO of Golomt Bank (FT Asia Editor David Pilling’s interview with President Elbegdorj 29-May). The Mogul thinks that Pilling’s comparison to Qatar is incomplete; Mongolia is a democracy, so wealth distribution will be very different.
There is an interesting question for investors. Once the basics are complete (infrastructure, pensions) how will the Mongolians spend their vast mineral wealth?
Fun Fact: A Tyrannosaurus Bataar (cousin of the T-Rex) skeleton auctioned (20-May) for $1.05m in NY may have been smuggled. A court hearing will take place on 01-Jun.

The Mogul Report 30-Apr-2012
Top 3 Company Headlines
Chalco bids for Winsway (1733:HK) and SouthGobi (1878:HK) (FT 02-Apr)
Toyo (6330:JP) and Marubeni (8002:JP) $600mn Oil refinery (UB Post 28-Apr)
E trans lists in first domestic IPO of 2012 (BD Sec 24-Apr)
Top 3 Macro and Risk Headlines
Former president arrested for corruption (UB post 13-Apr)
New airport construction begins with Japanese loan (MM 27-Apr)
ADB designates $740mn finance package (MM 20-Apr)
The Mogul's View
Xenophobic reaction to Chalco's bids and the pre-election timing of the former president's arrest are a useful reminder of political risk, though not of Argentina’s scale. The cancelled XAC bank bond issue shows vulnerability to investor sentiment, yet Tavan Tolgoi’s COO Hancock is confident enough to say they may not now need to sell licences to foreign investors.
New capital sources, such as the €1bn German mineral exploration fund, APIP equity sale, ¥28bn JBIC airport loan and $800mn Prophecy power plant funding continue to emerge.
The Mogul is convinced that confidence in Mongolia is well placed and that, like the Oyu Tolgoi crisis last year, politics will not inhibit progress. Ivanhoe’s profit warning and CEO’s resignation will not halt Oyu Tolgoi either. This project and many others are too important to the nation.
Fun Fact: A 5m high bronze statue of Genghis Khan has been placed near London’s Marble Arch to mark his 850th birthday.

The Mogul Report 31-Mar-2012
Top 3 Company Headlines
Tavan Tolgoi (TTL:MSX) considers pre-IPO CBs (Bloomberg 05-Mar)
Trafigura buys 5% of Golomt Bank for $15.9m (Mongol Messenger 30-Mar)
Ikh Gobi seeks pre-IPO investment $100-$200m (Reuters 21-Mar)
Top 3 Macro and Risk Headlines
Strong demand for Development Bank $600m 5.75% bonds (Bloomberg 06-Mar)
Rail freight up 10%, passengers up 9% YOY (Mongol Messenger 30-Mar)
Clyde & Co begin association with Khan Lex law firm (PR 13-Mar)
The Mogul's View
The Mogul is pleased to see the long-term cost of capital decreasing (despite the Bank of Mongolia’s small rate hike) as evidenced by the Development Bank bond success and the Golomt deal. This nicely complements Trafigura’s coal & iron ore export JV with Origo (OPP:LSX). Priced more than double ADIC’s CB purchase not long ago, it shows significant value growth in this key sector. If Khan Bank is seeing similar +50% loan growth that Fitch mention in their March banking report it will have to ask 53% owner Japan’s Sawada Holdings (8699:JP) for capital.
Mining and infrastructure have high demand for capital. The UB Mayor at the recent ADB event described plans for $9.9bn to improve transport and power by 2030 and the govt plans a new railway company. Newcom and Softbank (9984:JP) have announced a new wind farm project. FeOre (FEO:ASX), WorleyParsons (WEO:ASX) and Black Ridge (BRD:ASX) announced new projects in iron ore, copper and rare earths. Tavan Tolgoi COO, Graeme Hancock, is not sure that the IPO will proceed this year. However, coal output estimates for this year have tripled showing great strength in the business that should support other sources of capital such as the pre-IPO CB.
Fun Fact: T. Bolortuul (light flyweight) and E. Uyanga (light welterweight) are the first Mongolian women to win gold at the Asian Boxing Championships (UB Post 25-Mar)

The Mogul Report 28-Feb-2012
Top 3 Company Headlines
Goldman Sachs acquires 4.8% stake in TD Bank (PR 09-Feb)
Oyu Tolgoi production to begin on schedule in Q3 (PR 27-Feb)
Xanadu (XAM:AU) to sell its thermal coal projects (Bloomberg 02-Feb)
Top 3 Macro and Risk Headlines
Westward railway expansion delayed on financing issues (Reuters 16-Feb)
PM seeks nuclear & rare earth tech trade with Japan (Mainichi 21-Feb)
Tavan Tolgoi (TTL:MSE) secondary issue may delay until Autumn (WSJ 23-Feb)
The Mogul's View
Goldman Sachs’ TD Bank purchase is an excellent endorsement of Mongolia’s prospects. Compared to the terms of Abu Dhabi’s convertible stake in Golomt Bank, The Mogul estimates that GS paid approx $5m for their 4.8% stake. This is an excellent deal for GS. The London Stock Exchange anticipates that the domestic stock market will increase from approx $3bn to $45bn within 10 years. IPO fees for GS, even with a small share, would cover their initial investment.
While some major projects steam ahead (Oyu Tolgoi), others face delays. The Mogul believes this is good news. Steven Barnett (IMF Head of Mongolia) has warned the govt about spending, inflation and the dangers of economic over-expansion. The Tavan Tolgoi issue is estimated to raise $3bn, doubling the current stock market cap. Some minor delays may prevent overheating.
Fun Fact: British explorer William Lindesay has discovered in Mongolia new sections of the Great Wall, the first to be found outside of China (Daily Telegraph 26-Feb)

The Mogul Report 31-Jan-2012
Top 3 Company Headlines
Rio Tinto takes 51% control stake in Ivanhoe (IVN:NYSE) (Reuters 24-Jan)
Sharyn Gol (SHG:MSE) doubles coal reserve est (PR 23-Jan)
Berkh Uul (BEU:MSE) fluorspar site surveyed, joins MSE Index (MSE 19-Jan)
Top 3 Macro and Risk Headlines
Coalition Govt disbands (News.mn 23-Jan)
Mongolia & Japan defence pact signed (Mainichi 11-Jan)
Onch Audit joins Deloitte (Business Council of Mongolia 13-Jan)
The Mogul's View
Elections are in June. While there have been trade union protests and IMF warnings about inflation, there have also been modernising reforms. The Mogul is mindful of political risk but not worried. Development relies on foreign capital and expertise e.g. Asian Development Bank grants to improve microfinance, roads and sanitation in UB’s low income Ger area. The Tavan Tolgoi IPO in May could double the size of the market and GDP growth of 23% is expected this year (Travis Hamilton, Khan Investment). The Mongolian Stock Exchange will meet the same standard as London in 3 years (Tracey Pierce, London Stock Exchange). In its highly readable 21-Jan feature, The Economist anticipates an excellent future for Mongolia.
It will not be in anyone’s political interests to jeopardise Mongolia’s prosperity with foolish gestures.
Fun Fact: It may be a freezing desert (with water shortages in the mining areas) but Mongolia is home to the taimen fish. At 2m long it is the world’s largest species of salmon.

The Mogul Report: Review of 2011
Top 3 Company Headlines
Ivanhoe (IVN:TSX) Oyu Tolgoi  renegotiations scrapped (BBC 07-Oct)
Golomt Bank (unlisted) secures S&P rating (Reuters 08-Nov)
Tavan Tolgoi managers (DB, Goldman) $3bn offer in 2012 (Bloomberg 31-Aug)
Top 3 Macro and Risk Headlines
London Stock Exchange to upgrade Mongolian Exchange (Reuters 18-Feb)
Dalai Lama’s visit attracts minimal China comment (UB Post 08-Nov)
Mongolia almost 50% of Chinese coal imports (Business-Mongolia Dec-24)
The Mogul's View
The euphoric stock market move in Q1 after the epoch-making LSE news was followed by a savage collapse. While the rest of the world, especially Emerging Markets had an awful second half of the year, the MSE rose over 15% to close 2011 up over 48%.
It could so nearly have gone wrong but political pressure to renegotiate critical mining contracts was thankfully resisted. Risk from China, indicated by the muted response to the Dalai Lama’s visit, and from Russia, which lifted its ban on meat imports, both improved in 2011. Mongolia was rewarded with ratings for its largest bank (Abu Dhabi and Credit Suisse backed Golomt) from S&P, issues for its Development Bank and for a number of private funds and foreign-listed firms such as MGG (YAK:CNSX). The structure and capabilities of capital markets are improving rapidly.
The risks to an economy this heavily dependent on commodities are obvious but remember, for example, that border prices for coal entering China and for domestic use are well below global prices.  Lower transportation costs (when infrastructure is in place) should allow Mongolia to continue gaining market share with a dramatic effect on its trade and growth prospects for much needed domestic development.

The Mogul Report 31-Dec-2011
Top 3 Company Headlines
Kobe Steel (5406:JP) & Jiangsu Alcha ¥40bn aluminium JV (Reuters 21-Dec)
FLSmidth (PINK:FLIDY) $105m Mongolyn Alt copper tech deal (Reuters 23-Dec)
Entrée (ECG:TSX) strikes gold on Shivee West project (PR 14-Dec)
Top 3 Macro and Risk Headlines
Development Bank to issue $600m in bonds (News.mn 05-Dec)
N. Korean leader Kim Jong-il dies (BBC 19-Dec)
October coal exports +139% YoY, after +241% in CY 2010 (News.mn 29-Dec)
The Mogul's View
Day-to-day activity has slowed down due to the cold of winter but the govt and business have a lot of major projects planned (with two uranium processing plants in Dornod added to the list this month). Steven Bennett (IMF Head of Mongolia) warns that falling commodities prices and high govt spending present a risk for the economy. The Mogul believes that rapid growth in trade and capital markets improvements mean that Mongolia is well placed to work through these challenges.
The state news agency Montsame included Kim Jong-il’s death in its top 10 stories of 2011. Pyongyang is the closest foreign capital after Beijing and until the Soviet collapse relations had been good. The Mogul once took the train from Pyongyang which runs through Beijing and on to Ulaanbaatar after visiting the embalmed Kim Il-sung, a friendly visitor to UB in 1988 before diplomatic ties broke in 1995. Should relations between North and South Korea (a large investor here) ever normalize, this route would be a key link between Seoul, China and UB, then Trans-Siberian to Europe. The Mogul considers it more likely that China will aim to maintain the status-quo and inhibit any radical changes for decades more.
Fun Fact: Ulaanbaatar is the world’s coldest capital city (forecast low -35°C tonight) but had the world’s second hottest stock exchange this year, up 48%.

The Mogul Report 30-Nov-2011
Top 3 Company Headlines
General Electric and Newcom $100m wind farm (Bloomberg 17-Nov)
Trafigura & Origo (OPP:LSX) iron ore & coal JV (Reuters 07-Nov)
Mongolia Growth Group (YAK:CNSX) CDN$30m offering (PR 21-Nov)
Top 3 Macro and Risk Headlines
Dalai Lama visits Mongolia (UB Post 08-Nov)
PM meets with diplomats from every EU nation (News.mn 25-Nov)
Russia to resume meat imports (News.mn 22-Nov)
The Mogul's View
S&P, Moody’s and Fitch gave their first ratings to Mongolia and leading Golomt Bank. Meanwhile, the Govt is building stronger diplomatic ties with the EU. Mongolia has far to go but is becoming a more regular place to do business.
The Dalai Lama’s visit raised less Chinese protest than usual. The Mogul thinks China likes receiving Mongolian coal for approximately one third of the global market price. However, the development of the Russia rail link will open new markets, decrease dependence on China and raise prices.
Will China be deterred by foreign interests in developing Mongolia or is it simply biding its time?
Fun Fact: A geoengineering trial will keep Ulaanbaatar cool next summer with giant blocks of ice (Guardian 15-Nov)

The Mogul Report 31-Oct
Top 3 Company Headlines
Oyu Tolgoi terms unchanged after Rio Tinto Chairman’s visit (BBC 07-Oct)
Macmahon (MAH:ASX), Operta $500m Tavan Tolgoi deal (Reuters 13-Oct)
Sharyn Gol (SHG:MSE) raises MSE record $14.3m (BD Sec 18-Oct)
Top 3 Macro and Risk Headlines
Mongolia overtakes Australia as top China coal supplier (News.mn 27-Oct)
Italy signs agriculture and investment memoranda (News.mn 19-Oct)
Govt considers listing $5bn railway company on HKSE (Reuters 27-Oct)
The Mogul's View
During a UB state visit Angela Merkel signed mining and technology pacts. The Germans said Siemens, which will help to develop Tavan Tolgoi, could benefit strategically from rare-earth exploration. Mongolia relies on partners like Germany. The relationship is important for both or Merkel would not have visited UB during the Euro crisis.
SHG’s rights issue shows that the domestic capital market is still small. The Mogul expects it to grow rapidly but foreign investment is the force behind 20% GNP growth. Inflation could reach 20% and the Bank of Mongolia rate is 12.25%. The enlarged issue of the first USD Govt bonds has been delayed to 2012. Care must be taken to avoid damaging foreign market demand with a repeat of last month’s Ivanhoe political risk fiasco.
Fun Fact: KFC owner, Yum! Brands, is buying the Little Sheep “Mongolian barbeque” chain (Bloomberg 31-Oct). Did you know that what most Westerners think is “Mongolian barbeque” is actually Chinese stir-fry? The first restaurant of its type in UB was the American BD Grill.

The Mogul Report 30-Sep-2011
Top 3 Company Headlines
Govt wants to redraft deal with Ivanhoe (IVN:TSX) (Lex, FT 26-Sep)
Banpu (BANP:BK) bid $470m to control Hunnu Coal (HUN:ASX) (PR 12-Sep)
Origo (OPP:LSE) launches MSE Liquidity Fund (LSE 12-Sep)
Top 3 Macro and Risk Headlines
Foreign debt is over $8bn, $5.4bn in private sector (Bank of Mongolia 22-Sep)
Prime Minister reveals plan to list Mongolian Rail Co (Reuters 09-Sep)
Just Agro pays 16.2% for 1yr Mongolia Meat Bond (MMB:MSE) (BD Sec 08-Sep)
The Mogul's View
Development depends heavily on mining and foreign capital. The domestic political pressure (MPs petitioned the PM, trade union demand for 300% increase of the minimum wage and high inflation) on the Government to renegotiate deals presents a serious risk. Ivanhoe shares almost halved this month and we await further news about the Rio Tinto (49% stake) chairman’s visit.
With foreign debt at twice the size of GDP, political risk (both to Ivanhoe and from the Tavan Tolgoi delay) raises doubts about the ability to service debt. This will affect cost of capital e.g. for micro-financier XacBank’s plan to raise $300mn in Singapore and the approx 10% of adults who are their customers.
The Mongols’ fate rests in their hands.
Fun Fact: 6002 people gathered in Ulaanbaatar to break the Guinness World Record for most wrestlers in a tournament (Mainichi Daily News 28-Sep)

The Mogul Report 31-Aug-2011
Top 3 Company Headlines
Ivanhoe (IVN:TSX) Oyu Tolgoi mine ahead of schedule (News.mn 04-Aug)
General Wesley Clark’s Envidity launches $1bn refinery (PR 19-Aug)
Golomt Bank (Abu Dhabi & Cr Suisse) finances Tavan Tolgoi (PR 08-Aug)
Top 3 Macro and Risk Headlines
2nd quarter economic growth at 17.3% year on year (World Bank 26-Aug)
Korean high-tech Rare Earth exploration deal (Korea Times 22-Aug)
Govt approves study for 1500km of new railway (News.mn 25-Aug)
The Mogul's View
Rare Earths are vital to technology and diplomatically sensitive. The Central Bank says that Mongolia will be number 2 vs China’s 95% share. Significant exploitable deposits have not been found leading to penny stock GTSO (GTSO:PK) shares collapsing 90%. Korea’s interest (above) could change the situation but a substantial investment vehicle is still lacking.
The Government plans for 6000km of new roads, a nuclear power plant by 2020 and quadrupling the rail network, all driven by rapid growth of mining. McKinsey estimates new lines through Siberia will cost $2.5m/km but railways will increase exports and reduce reliance on China.
LATE NEWS: Lead managers (Deutsche, Goldman) chosen for $3bn Tavan Tolgoi IPO in first half of 2012 (Bloomberg 31-Aug). See last month’s comment on Tavan Tolgoi reprinted below.
Fun Fact: US VP Joe Biden in UB tried archery, watched wrestling and named a horse (BBC 22-Aug). Perhaps he would have liked one of the $12,000 falcons Mongolia is exporting to the Persian Gulf? (News.mn 19-Aug)

The Mogul Report 31-Jul-2011
Top 3 Company Headlines
Peabody (BTU:NYSE), China & Russia cos to mine Tavan Tolgoi (Reuters 04-Jul)
Hunnu (HUN:ASX) doubles Unst Khudag coal reserve est (Fortbridge 01-Jul)
Shangri La (69:HK) and MCS plan larger 5 star hotel (PR 19-Jul)
Top 3 Macro and Risk Headlines
Mongolia Stock Exchange (MSE) plans for $45bn in listings by 2021 (FT 08-Jul)
Mongolia and India sign trading and defence agreements (News.mn 29-Jul)
Government to issue more bonds (Mongolia Stock Exchange 26-Jul)
The Mogul's View
The London Stock Exchange (LSE) has partnered with the MSE and its CEO plans to raise the domestic market size by 30 times in the next 10 years. This shows how radically the financial system and economy are changing in Mongolia.
The Government has partnered with major companies from around the world to develop the Tavan Tolgoi (TTL:MSE) mine and released 10% of shares to the public. This project is being prepared to be a cornerstone of the rapidly growing industrial and capital markets.
Fun Fact: The medals for the London 2012 Olympics will be made from Oyu Tolgoi mine gold and copper (Reuters 08-Jul)