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Mongolia Mining Report Q2 2016

  • March 2016
  • -
  • Business Monitor International
  • -
  • 73 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

- On May 18, 2015, an agreement was reached between Turquoise Hill (a Rio Tinto subsidiary) andMongolia's government to go ahead with a USD5.4bn underground expansion. Accordingly, in December2015 Rio Tinto announced that the company has lined up a combined USD4.4 billion from 20 lenders tofund the expansion of Oyu Tolgoi. The end of the deadlock between the Mongolian government andTurquoise Hill Resources over the Oyu Tolgoi mine in Mongolia's South Gobi region further supportsour view of rapid long-term growth in Mongolia's gold and copper output. An increasingly favourableinvestment climate will allow overseas miners to take advantage of the country's considerable gold andcopper reserves. The Oyu Tolgoi mine will be the sector's key growth driver and account for around onethirdof Mongolia's economy once the mine reaches full production capacity in 2021.

- 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 Q2 2016
BMI Industry View 7
Table: Mongolia Mining Industry Value 7
Latest Developments and Trends 7
SWOT 8
Industry Forecast 10
Mongolia - Coal: Ready To Tap Into Chinese Demand 10
Latest Developments 10
Table: Mongolia Coal Production Forecast 10
Table: Mongolia - Select Coal Projects 11
Structural Trends 12
Mongolia - Copper: Good News For Growth Prospects 16
Latest Developments 16
Table: Mongolia - Copper Mine Production Forecast 16
Table: Mongolia - Select Copper Mine Projects 16
Structural Trends 17
Gold: OT To Drive Growth 18
Latest Developments 19
Table: Gold Production Forecast (Mongolia 2012-2020) 19
Table: Mongolia - Select Gold Projects 19
Structural Trends 19
Industry Risk Reward Ratings 23
Mining Risk/Reward Index 23
Rewards 23
Industry Rewards 23
Country Rewards 23
Risks 23
Industry Risks 23
Country Risks 24
Asia Risk Reward Index 24
Australia Stays On Top While India and Myanmar Gain 24
Shifting Scores Reflect Changing Sector Dynamics 25
Table: Asia - Mining Risk/Reward Index 26
Regulatory Development 27
Mining Reforms To Lift Exploration 27
Trade and Investment Risk Analysis 28
Commodities Forecast 32
Commodity Strategy 32
Ferrous Metals 32
Iron Ore: Price Weakness To Continue Over Coming Years 32
Steel: Oversupply To Drag Down Prices 34
Non-Ferrous Metals 37
Aluminium: Continued Weakness, But No Sharp Downturn 37
Copper: Recent Relief Rally To Fade 39
Lead: Prices Weakness To Continue 40
Nickel: Subdued Prices Due To Weak Demand Growth 41
Tin: Supply Deficits To Underpin Rally In Tin Prices 42
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead 43
Table: Select Commodities - Performance and BMI Forecasts 45
Competitive Landscape 46
Improving Environment To Attract More Foreign Investment 46
Table: Mongolia - Financial Data Of Key Listed Companies 47
Company Profile 48
Centerra Gold 48
Table: Centerra Gold - Supply Chain Analysis 50
Latest Results 51
Table: Centerra Gold - Key Financial Data 51
Turquoise Hill Resources 52
Latest Results 54
Table: Turquoise Hill - Suppliers 54
Table: Turquoise Hill - Key Financial Data 55
Global Company Strategy - Rio Tinto - Q2 2016 56
Company Overview 58
Company Strategy 59
Table: Rio Tinto - Key Projects 62
Latest Financial Results 62
Table: Rio Tinto - Key Financial Data 63
Regional Overview 65
Continued Domination Of Iron Ore Production 65
Indian Coal Consumption To Outperform 66
China and India To Lead In Outbound Investment 67
Indonesian Ban To Continue 69
Methodology 70
Industry Forecast Methodology 70
Sources 71
Risk/Reward Index Methodology 72
Table: Weighting Of Indicators 73

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