Written in Mongolia and read by professionals
in over 160 countries worldwide

Wednesday, July 6, 2011

Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates

Industry Reports

New Methodology for the Minerals Royalty Calculation has been Established

By Elena Fehrbach

The Government of Mongolia has issued new Resolutions Nos. 88 and 89 on the definition and calculation of mineral royalties.

Basis for the royalty calculation and general terms:

  • The royalties on coal exports will be based on the export sale’s contract price of the coal mine owner. The previous royalty was based on the buying Chinese market price.
  • The mineral royalties shall be paid within 21 days after the commodities sale’s completion. In the previous version of the regulation, the royalty was supposed to be paid within the next quarter from the sales date. Continue reading
Posted in Energy, Featured, Markets, Mining, Regulatory Update | Leave a comment

Moody’s Outlook on Mongolian Banks Has Been Revised to “Negative”

By Elena Fehrbach

Jan. 22 – Moody’s Investor Services (Moody’s) has issues a revised rating for three Mongolian ban, downgrading them from “Stable” to “Negative”. The Banks under study are: Khan Bank, Trade and Development Bank and Xac Bank. Other than that, Trade and Development Bank’s baseline credit assessment (BCA) was downgraded from B1 to B2. Moody’s opinion about TDB’s rating downgrade is that the loan portfolio of this bank is too much overweighed against risky sectors, such as construction and mining. Moody’s has also affirmed TDB’s B1 senior unsecured bond and local currency deposit ratings based on assessment of TDB’s systematic importance being the second largest lender in terms of loans in the Mongolian Banking System.

Rating Rationale

Moody’s has commented that the rationale behind the ratings downgrade is that the banks remain vulnerable to deterioration is assets quality and high amount of borrowers against highly intensive changing operating environment. The industrial peculiarity of Mongolia also plays its role. Resource-based industry constitutes the significant part of the economy and due to boom-bust cycles characteristic to such sectors, the operating environment is highly volatile. Continue reading

Posted in Business, Finance, Industry Reports | Leave a comment

Mongolia’s Policy on the Minerals Sector is Under Final Discussion

By Elena Fehrbach

Jan. 5 – The Policy on the Minerals Sector has been first introduced in July 2013 as a legal guideline on the main principles of operation in the minerals sector approved by the government. Since July, the Policy undergone a number of revisions and is now well-shaped for the final discussion by the Parliament. It should be noted, that the Policy is not an equivalent or substitute to the Minerals Law, but a leading document showing country’s direction in the minerals sector.

As for the Minerals Law, the new draft of the Law has been introduced to public approximately year ago and became a reason for a serious criticism on behalf of mining companies and potential investors. The first draft of the Law had a series of unfavorable ownership and operations conditions treated as “unacceptable” in some cases. The Government’s reaction on the criticism was a prompt promise of further work on amendments that would involve specialists from the industry involved in the minerals sector operations directly or indirectly, such as representatives of mining companies, law firms and financial institutions. Continue reading

Posted in Business, Markets, Mining | Leave a comment

Progress on Oyu Tolgoi Negotiations with the Mongolian Government

By Elena Fehrbach

The dispute between Rio Tinto and the Government of Mongolia regarding the development of Oyu Tolgoi, the biggest copper mine in the world is still ongoing. As noted by the Head of Communication of Turquoise Hills, a Mongolian subsidiary of Rio Tinto, the dispute on the remaining issues of conflict can be resolved before the end of 2013. Out of 30 issues in the negotiations agenda, at least half have been already solved. The issues cover aspects related to the budget for the underground mine expansion, management and control structure, confirmation of the spending related to the 1st stage of the project and other issues. Continue reading

Posted in Business, Mining | Leave a comment

Law on Prohibiting Mineral Exploration and Extraction Near Water Sources, Protected Areas and Forests

By Elena Fehrbach

The Mongolian Government is currently reviewing the Law on Prohibiting Mineral Exploration and Extraction Near Water Sources, Protected Areas and Forests. This Law is commonly referred as the “Long Name Law”. The first version of the Law was adopted in 2009 aiming to keep the mineral extraction operation within the environmental framework that would ultimately protect rivers and forests from harmful disturbing. Continue reading

Posted in Business, Legal and Regulatory, Mining | Leave a comment

Mongolia Plans Parliament Session On Oyu Tolgoi Project

By Elena Fehrbach

Aug. 26 – The Parliament of Mongolia has made a decision to organize an extraordinary session which will take place between September 2 and September 6, ahead of the scheduled October session due to ongoing issues deteriorating economic and investment situation in the country. Some of the issues to be resolved during this session are:

  • Amendment of investment laws: Strategic Foreign Investment Law and Foreign Investment Law;
  • Financing issues related to Rio Tinto’s development of the second stage of Oyu Tolgoi project, namely, underground operation that will allow commencement of extraction of the richest copper mineralization;
  • Overall weak commodities market and steps Mongolian Government can possibly take to help local companies operate in challenging conditions Mongolia is currently facing. Continue reading
Posted in Foreign Trade, Mining | Leave a comment

Russia Increases Petroleum Products Export Tax

By Elena Fehrbach

Aug. 1 – Starting from August Russia increases petroleum products export tax by 2.9 percent. Before August Mongolia has been paying from 323.4 to 332.2 USD per tonne of oil with increase to 341.8 USD per tonne since August. The tax has been raised in accordance with Russia’s “60-66-90” tax regulation on export of petroleum products. Continue reading

Posted in Energy, Foreign Trade | Leave a comment

Mongolia to Rent Port Area in Tianjin, China

By Elena Fehrbach

Jun. 18 – Mongolia and China held the intergovernmental meeting in Beijing where representatives has discussed trade and economic development plans. One of the key projects discussed is Mongolian government’s plan to rent 10 hectares of land at the Dunzian Port in Tianjin city. Government officials from Mongolia has visited Tianjin city and port area in Binhai district to get acquainted with infrastructure and business environment. Continue reading

Posted in Foreign Trade, Shipping & Logistics | Leave a comment

Dezan Shira & Associates provide a range of services for companies looking to undertake foreign direct investment into Asia, These include corporate establishment, accounting, tax, payroll, audit and due diligence. To learn more about the firm, please contact one of our specialists at mongolia@dezshira.com, download our corporate brochure or visit at us www.dezshira.com

Dezan Shira & Associates, Twenty years of Excellence

The Asia Briefing Bookstore

Our best selling legal, financial, tax and regional guides to Asia business, industry reports and more…
Click here to view all titles now

China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store


MSE Top 20 Index