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Mongolia Mining Report Q3 2016

  • June 2016
  • -
  • Business Monitor International
  • -
  • 62 pages

Includes 3 FREE quarterly updates

BMI View: Mongolia's mining sector growth will accelerate on the back of foreign mining investment, arobust infrastructure framework and the country's strategic close proximity to major export markets such asChina. Projects such as Rio Tinto's Oyu Tolgoi mine will significantly increase the country's mining outputover the coming years.

Latest Developments & Trends

- In May 2016, Rio Tinto and its subsidiary Turquoise Hill announced the final and formal approval forthe expansion of the Oyu Tolgoi copper-gold mining project, which will cost a total of USD5.3bn-400mn more than initially expected. In December 2015, Rio Tinto announced the company's procurementof a combined USD4.4 billion from 20 lenders to fund the expansion of Oyu Tolgoi.

- On May 18 2015, an agreement was reached between Turquoise Hill and Mongolia's government to goahead with the USD5.3bn underground expansion. The end of the deadlock between the Mongoliangovernment and Turquoise Hill Resources over the Oyu Tolgoi mine in Mongolia's South Gobi regionfurther supports our view of rapid long-term growth in Mongolia's gold and copper output. Anincreasingly favourable investment climate will allow overseas miners to take advantage of the country'sconsiderable gold and copper reserves. The Oyu Tolgoi mine will be the sector's key growth driver andaccount for around one-third of Mongolia's economy once the mine reaches full production capacity in2021.

- Despite calls for greater resource nationalism over the past quarters, we believe the Mongoliangovernment will tone down its anti-foreign investment stance against miners. The government's policypriorities will shift away from the populist tones outlined during the 2013 election campaign, back to amore market-friendly platform. However, anti-foreign investor sentiment amongst the public remains amajor issue, and is the key reason why the government took a more pronounced hard-line stance towardskey foreign investors in the country, notably global mining major Rio Tinto. The split in the supercoalition is a signal that political will power to push through deals is waning. We are not optimistic on theprospects for progress on the Tavan Tolgoi projects as the government is unlikely to want to tackle theissue with an election around the corner.

Table Of Contents

Mongolia Mining Report Q3 2016
BMI Industry View 7
Table: Mongolia Mining Industry Value 7
Latest Developments and Trends 7
SWOT 8
Industry Forecast 10
Mongolia - Coal: Upcoming Elections To Determine Future Growth 10
Latest Developments 10
Table: Mongolia Coal Production Forecast 10
Table: Mongolia - Select Coal Projects 11
Structural Trends 13
Mongolia - Copper: Oyu Tolgoi To Drive Growth 17
Latest Developments 17
Table: Copper Production Forecast (Mongolia 2012-2020) 17
Table: Mongolia - Select Copper Mine Projects 17
Structural Trends 18
Gold: Solid Growth Ahead 20
Latest Developments 20
Table: Gold Production Forecast (Mongolia 2012-2020) 20
Table: Mongolia - Select Gold Projects 21
Structural Trends 21
Industry Risk Reward Ratings 24
Mining Risk/Reward Index 24
Rewards 24
Industry Rewards 24
Country Rewards 24
Risks 24
Industry Risks 24
Country Risks 25
Asia Risk/Reward Index 25
Key Takeaways 25
Latest Revisions 26
Table: Asia - Mining Risk/Reward Index 27
Regulatory Development 28
Mining Reforms To Lift Exploration 28
Trade and Investment Risk Analysis 29
Commodities Forecast 33
Commodities Outlook 33
Table: BMI Commodities Price Forecasts 33
Competitive Landscape 34
Improving Environment To Attract More Foreign Investment 34
Table: Mongolia - Financial Data Of Key Listed Companies 35
Company Profile 36
Centerra Gold 36
Latest Results 39
Table: Centerra Gold - Key Financial Data 39
Turquoise Hill Resources 40
Latest Results 42
Table: Turquoise Hill - Key Financial Data 42
Global Company Strategy - Rio Tinto 43
Table: Select Commodities - Price Forecasts 45
Company Analysis 45
Table: Rio Tinto - Key Projects 51
Table: Rio Tinto - Key Financial Data 52
Regional Overview 53
Asia Overview 53
Slowing Iron Ore Production 53
Indian Coal Consumption To Outperform 54
China and India To Lead In Outbound Investment 55
Indonesian Ban Moderation Ahead 56
Chinese Coal and Steel Sectors To Consolidate Slowly 58
Methodology 59
Industry Forecast Methodology 59
Sources 60
Risk/Reward Index Methodology 61
Table: Weighting Of Indicators 62

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