The state of the economy doesn’t look promising for next year - high budget deficits, drop-in tugrug rates, the election and a slump in the mining sector are among the challenges faced by businesses. Market analysts are beginning to forecast a mixed climate in the domestic and overseas mining sector.
The foreign market for commodities that directly impact the Mongolian economy is effectively hanging on the US-China trade tensions. The two sides reported progress on trade talks and scheduled signing of the initial negotiations next year. Following this welcome news, the price of copper – Mongolia’s main export product – surged and reached its height in the past seven months. However, uncertainties surrounding the Congress’ decision on President Donald Trump’s impeachment only make things on the market even more anxious and vague.
On the other hand, the Mongolian Parliament’s decision not to cancel Oyu Tolgoi agreements and the Cabinet’s approval of the Parliament resolution to open negotiations with investors have been the most welcome news of the past years. Nevertheless, several fuzzy and challenging issues persist if we look closely at the resolution. The magazine presents you with an article outlining the resolution and its future processes.
Counting out Oyu Tolgoi, the domestic mining sector brings little “good tidings”. China has started curbing its coal imports as predicted and warned by economists. Mongolia’s hopes of exporting 42 million tons of coal scattered in the dust. Whether it’s luck or not, the budget approved by the Ministry of Finance had a positive balance thanks to high coal prices. The coal market is expected to shrink next year due to underlying factors such as steel production slowdown and higher coking industry reserves. Throwing caution to the wind, our Ministry of Finance just had its budget approved fully of optimism.
In the latest development, the Government decided not to issue new exploration licenses for an entire year. While the decision’s justification of “cleaning up festering issues in the mining sector” is both accurate and true, whether or not it would take form, in reality, it is up for debate. What’s certain is that the Government’s policy to revoke existing licenses and refuse new ones, exacerbated by a foreign investors’ inclination to escape the crisis, would completely freeze the entire mining sector of Mongolia. Therefore, the country cannot expect much from the mining sector. “Kudos!” for not stopping Oyu Tolgoi, at least.
It is early to relax for OT
Rio Tinto notified of its approval to the Parliament’s resolution, reaffirming the validity of the Mongolian Parliament’s position on OT agreements, and notifying their readiness to sign a deal with the Cabinet.
What to consider in refinancing debts
If the conditions are met for a global economic crisis, the rate may reach 0 percent, as highlighted by analysts. Weakening USD may prove advantageous for countries like us who are seeking out loans and bonds.
Royalty issue not finalized
Sources are saying that citizen S.Bayarmaa’s report to the Constitutional Court complained not only about the Government imposing multiple overlapping taxes, but also about their economic pressure on the processing sector, especially processing plants and
Mongolia amends the Constitution
The hottest topic in the country’s socio-political sphere in the past five months, the amendment bill plays a crucial role in correcting past errors and resolving future challenges, as viewed by the Parliament members.
Chinese coal output and import climb
In addition, a new report published this month by the International Energy Agency mentioned that global coal consumption is forecasted to rise in the next five years. Especially, consumption growth in Asian countries would make the biggest impact.
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