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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


Energy

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
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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

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Fuel Prices in Mongolia Expected to Stabilize

By Elena Fehrbach

May. 2 – The Government of Mongolia is expecting the fuel prices in Mongolia to stabilize due to diversification in the quantity of fuel suppliers. The current situation in Mongolia is almost 100 percent fuel dependence from Rosneft, one of the key fuel producers in Russia. Such direct dependence causes unexpected fluctuations in fuel price due to company’s corporate and regional conditions. The Deputy Minister of Mongolia is discussing the amendment to the fuel purchase agreement allowing Mongolia to buy fuel from Rosneft based on international market prices. Continue reading

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Potential of Oil Shale in Mongolia

By Elena Fehrbach

Apr. 18 – Oil shale in Mongolia has been on the radar of technical experts and investors for a number of years already, but the actual potential of oil shale development in Mongolia has never been widely discussed. Preliminary “greenfield” estimates assume 800 billion tonnes of oil shale are available in Mongolia. The preliminary estimate was completed in 1990 based on exploration of about 19 per cent outlined oil shale area. Though the final amount of oil shale is not defined yet, it is clearly a promising opportunity for Mongolia to establish a fuel independence. Continue reading

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Russian Fuel Imports Discussed at the Government Level

By Elena Fehrbach

Feb. 18 – A delegation of government representatives from Mongolia headed by the Deputy Minister for Mining has visited Russia to discuss fuel trade issues with representatives of the Ministry of Energy of Russian Federation and Rosneft fuel producing company. The Government of Mongolia has made an attempt to clarify the import conditions with the major supplier of fuel into Mongolia. According to the estimates completed by the Central Bank of Russia, the export price for fuel delivered to Mongolia is about US$300 higher than export prices for other countries. It should be noted, that the current volume of fuel export from Russia to Mongolia is about 95% of the total scope of fuel import to Mongolia. Continue reading

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Construction on First Mongolian Oil Refinery Postponed to 2015

Jul. 23 – Construction on the Darkhan-Petroleum oil refinery with an annual capacity of 1.7 million tons of liquid fuel – which would be sufficient to supply Mongolia’s entire demand of gasoline, diesel and jet fuel – has been postponed to the end of 2015. Originally it was planned to begin operation in 2014.

The Mongolia-Japan joint refinery in Darkhan-Uul aimag would have a processing capacity of 44,000 barrels per day of crude oil, or 2 million tons a year, and it would be able to produce 1 million tons per year of diesel fuel, 630,000 tons annually of gasoline and 60,000 tons per year of jet fuel. Continue reading

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Eight New Gates Open for Coal Transportation Between Mongolia and China

Jun. 11 – The recent opening of eight new border gates between Mongolia and China exclusively for coal transportation will significantly increase coal export capacity between the two nations, SouthGobi Resources Ltd. said in a statement.

Coal was previously transported out of Mongolia at Shivee Khuren-Ceke through a single gate approximately eight meters wide, which would allow empty trucks into Mongolia in the mornings and loaded trucks into China in the afternoons, the company said in a Hong Kong stock exchange filing. Continue reading

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Mongolia’s Oyu Tolgoi Copper-Gold Mine on Track for 2012 Start

Apr. 3 – Ivanhoe Mines has reported that construction of the Oyu Tolgoi (OT) copper-gold mining complex is advancing toward its planned start-up in 2012 with commercial production scheduled for the first half of 2013. The project is currently 72.7 percent complete, according to the company.

Ivanhoe, which began investing in the project in April 2011, has spent US$4 billion on the Oyu Tolgoi complex. In total, including drilling exploration and preparation work on the mine, the company has currently spent US$10 billion on the project.

OT – located 550 kilometers south of Ulaanbaatar and 95 kilometers from the China-Mongolia border – has large copper, gold, silver and molybdenum reserves. The mine is subdivided into three sections:

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