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Mongolia Mining Report Q2 2016

Mongolia Mining Report Q2 2016

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.


BMI Industry View
Table: Mongolia Mining Industry Value
Latest Developments & Trends
SWOT
Industry Forecast
Mongolia - Coal: Ready To Tap Into Chinese Demand
Latest Developments
Table: Mongolia Coal Production Forecast
Table: Mongolia - Select Coal Projects
Structural Trends
Mongolia - Copper: Good News For Growth Prospects
Latest Developments
Table: Mongolia - Copper Mine Production Forecast
Table: Mongolia - Select Copper Mine Projects
Structural Trends
Gold: OT To Drive Growth
Latest Developments
Table: Gold Production Forecast (Mongolia 2012-2020)
Table: Mongolia - Select Gold Projects
Structural Trends
Industry Risk Reward Ratings
Mining Risk/Reward Index
Rewards
Industry Rewards
Country Rewards
Risks
Industry Risks
Country Risks
Asia Risk Reward Index
Australia Stays On Top While India & Myanmar Gain
Shifting Scores Reflect Changing Sector Dynamics
Table: Asia - Mining Risk/Reward Index
Regulatory Development
Mining Reforms To Lift Exploration
Trade & Investment Risk Analysis
Commodities Forecast
Commodity Strategy
Ferrous Metals
Iron Ore: Price Weakness To Continue Over Coming Years
Steel: Oversupply To Drag Down Prices
Non-Ferrous Metals
Aluminium: Continued Weakness, But No Sharp Downturn
Copper: Recent Relief Rally To Fade
Lead: Prices Weakness To Continue
Nickel: Subdued Prices Due To Weak Demand Growth
Tin: Supply Deficits To Underpin Rally In Tin Prices
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
Table: Select Commodities - Performance & BMI Forecasts
Competitive Landscape
Improving Environment To Attract More Foreign Investment
Table: Mongolia - Financial Data Of Key Listed Companies
Company Profile
Centerra Gold
Table: Centerra Gold - Supply Chain Analysis
Latest Results
Table: Centerra Gold - Key Financial Data
Turquoise Hill Resources
Latest Results
Table: Turquoise Hill - Suppliers
Table: Turquoise Hill - Key Financial Data
Global Company Strategy - Rio Tinto - Q2 2016
Company Overview
Company Strategy
Table: Rio Tinto - Key Projects
Latest Financial Results
Table: Rio Tinto - Key Financial Data
Regional Overview
Continued Domination Of Iron Ore Production
Indian Coal Consumption To Outperform
China & India To Lead In Outbound Investment
Indonesian Ban To Continue
Methodology
Industry Forecast Methodology
Sources
Risk/Reward Index Methodology
Table: Weighting Of Indicators

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