Discover Mongolia 2019: Minerals & Mining Business Summit was co-organized by the Ministry of Mining & Heavy Industry (“MMHI”), the Business Council of Mongolia (“BCM”), and the Mongolian National Mining Association (“MNMA”) and held over the 26th September to 28th September 2019. These are the key events and their focus:
1. September 26 (Morning) – Investor’s Tour
Sponsors of and speakers at Discover Mongolia, collaborative partners of the IAP, and select persons by the Chairman (in total 29 people) “toured” the city to have meetings with key figureheads from the MMHI, the Responsible Mining lobby group in the Parliament, and the Bank of Mongolia
- MMHI – E. Batbold (Director of Strategy and Policy Planning) & Mr. M. Dagva (Advisor to the Minister)
- Parliament – A. Undraa (MP and Chairwoman of the Responsible Mining lobby group)
- Bank of Mongolia – B. Bayardavaa. (Director General of Monetary Policy)
2. September 26 (Afternoon) – IAP Meeting #2: Minister’s Workshop
- Invited IAP panelists and collaborative partners of the IAP attended a closed-door (Chatham House rules) workshop in the afternoon, 38 were in attendance.
- The following presentations were made:
- A shortened version of the “Case for Change” by the Chairman
- “Overview of the International Exploration and Mining Sector” by Richard Schodde, MinEx Consulting Pty Ltd
- Issues associated with the current legislations by D.Tsogbaatar former Minister of Mining
- A supplementary presentation on “Necessary reforms to the regulatory system for natural resources in Mongolia”
- Remarks on AMEP-2 by Australian Ambassador, Dave Vosen
- Discussions with attendees followed the presentations addressing:
- Oil & Gas sector
- Geological prospectivity
- Status of the exploration sector and licensing system
- Status of the tax regime impacting the sector
- Proposed constitutional amendments
- Social licensing (both local and state level)
- A survey was held with the questions based on slide 2 of the three-slide “snakes and ladders” deck on the resource investor’s thought model prior to making an investment in any jurisdiction.
- Survey respondents across all organization groupings generally rated Mongolia’s competitiveness and attractiveness for resource sector investment to be poor
- The following presentations were made:
3. September 27 – 17th Annual Discover Mongolia Forum (2019).
- It is estimated that 500 were in attendance
- Four panels were held with topics on:
- Why invest in Mongolia’s resource sector?
- Accessing growth with high-valuation upsides
- Accessing growth with high-valuation upsides: Energy
- Supporting Mongolia’s development
4. September 28 – Site visit to Oyu Tolgoi
Demonstrated the immense contributions that can be made by supporting tier-1 resource projects and that they are responsibly operated.
I. INVESTOR TOUR
The investors tour gave the opportunity to have a deeper insight into the latest policy developments and macroeconomic statistics for those that were identified in providing for or aiding in foreign investment to Mongolia’s resource sector.
A. MMHI – Mr. E. Batbold, Director of Strategy and Policy Planning & Mr. M. Dagva, Advisor to the Minister
Mr. Batbold presented the current issues facing the MMHI and his recommendations. These are:
Artisanal mining – negatively impact the mining sector’s reputation since their operations do not adhere to regulations
- Outlaw all forms of artisanal mining (except for operations that adhere to Resolution 151)
Public awareness – lack of respect or understanding of mining and its contributions to the GDP
- Public education efforts by establishing a training and research organization under the MMHI (with a focus on rural areas)
Shrinking land under exploration licenses – exploration is decreasing
- 500 amendments submitted in August to simplify the mining law (on Mining and Explosives, Concentrate, Registration of Oils, and Supply of Water Infrastructure)
- Increase geological exploration expenditure from 13.1B MNT to 24.6 B MNT
Mr. Batbold additionally discussed several ongoing projects in various stages:
- ETT IPO Project (will be used to fund water supply and infrastructure + railway to Sainshand)
- Gold and copper smelter/refinery
- Development of the Asgat Silver Deposit
- Rare Earth Element geological service
- EITI Changes
- Oil refinery
- OT Parliamentary Session
Mr. Dagva added on to the discussion with a focus on state owned enterprises, privatization, and politicization. He also touched upon increasing FDI and attracting investors – key problems that the IAP are also trying to address. Additionally, the MMHI are seeking the assistance of CODELCO to learn cases of good and bad governance, with the aim to prevent outcomes of the latter.
Mr. Dagva’s ending remarks were on ETT and three benefits that would be raised from its IPO: (1) raise money like OT/and provide tech services to Mongolia; (2) support infrastructure projects in Southern Gobi; (3) Other SOEs will following this good example.
B. Parliament – Dr. A. Undraa (MP)
Dr. A. Undraa discussed the current status of the constitutional amendment, the OT evaluation working group, public perception.
- Impose new limitations on the parliamentary branch
- Strengthen the executive branch
- Change how judges are appointed in the judiciary branch
- Movements to dissolve the parliament prior to next year’s elections
- Amendments to the mining sector ≠ nationalization, but tier 1 projects are being targeted by the new populist revisions to the constitution
OT Parliamentary working group
- The report has been submitted to the speaker and is now being reviewed by the Economics Standing Committee who will submit a resolution to the Parliament
- But the review is being delayed due to constitutional amendments and upcoming budgetary discussions
- Mongolia’s low population means news will have a greater impact on the agenda and public perceptions
- Successful mid-size and smaller projects have given the public a favorable view towards mining
C.Bank of Mongolia – Mr. B. Bayardavaa
Mr. Bayardavaa made a presentation titled “Mongolian Economy: Policy and Challenges”. He described the current macroeconomic status of Mongolia – crucial pieces of information on determining the probability of any project to generate a return. Currently, the economy is recovering from the crises that occurred in 2016-2017. There is a challenge in that this recovery must be maintained – medium term outcomes regarding debt are dependent on the profitability of Oyu Tolgoi and Tavan Tolgoi.
2. 17TH ANNUAL DISCOVER MONGOLIA FORUM (2019)
Discover Mongolia was held to re-establish Mongolia’s economic potential by increasing its competitiveness and attractiveness to the global investor, in line with the goals of the IAP. To achieve this objective, the forum this year held panel sessions that would directly address it.
Additionally, to further drive into audience members that Mongolia is still competitive and attractive, the chair of each panel curated questions that would drive discussions on those two topics. This is detailed below:
Why invest in Mongolia’s resource sector?
Cameron McRae (Chair)
How had will you actually drive your businesses to make your businesses truly world class?
(To Nandinjargal): What is the Ministry doing or thinking at the moment to rejuvenate the exploration pipeline?
(To Armando Torres): What will the underground bring to Mongolia, not just to OT, but to the country in intangible terms? Will social benefits increase with the underground mine?
(To Gankhuu): With the number of projects you have on the table, what is the overarching approach to raising capital?
(To Tsogtbayar): What is the thinking for an integrated approach for prioritizing projects?
Accessing growth with high-valuation upsides
Bilguun A. (Chair)
(To Peter Akerley): Can we briefly go over what you had to go through to discover the project you’re working on right now?
(To Munkhbat): Mr. Munkhbat can you talk about the discovery of OT?
(To David Paull): David can you go over the discovery of Ovoot and timing?
(To Sam Spring): What does it mean for international investors to look at the Gobi region and its investment potential?
(To David Paull) What makes Mongolia unique geologically?
(To Peter Akerley)In terms of exploration, how well is Mongolia actually explored?
(To Sam Spring): Sam you have done research on the landscape of exploration licenses in Mongolia? Can you give us some insight on how many licenses there are and how are going to expire over the next few years?
(To all): In one sentence, what would be a key event to attract investors back to Mongolia?
(To Sam Spring): A new significant discovery
(To everybody): Opening up of the exploration licensing system again in a globally competitive manner.
Accessing growth with high-valuation upsides: Energy
Byambasaikhan B. (Chair)
(To Craig Lang): Craig you mentioned that the copper market is going to deficit in 4 years’ time. How do you see companies such as those who presented today resolving funding to plug that deficit?
(To Neil Young): Neil, how do you plan to raise funding for future exploration with CBM as a new field in Mongolia?
(To Munkhjargal): So you have a new project like Neil’s in CBM. Do you think these new fields will be able to secure financing?
Supporting Mongolia’s development
Gankhuu P. (Chair)
Jean Pascal Nganou
(To Byambasaikhan): Byambasaikhan, should we be focusing on our own projects and seeking to make them successful in their own rite? Or should we wait for geopolitics to play out?
(To Jean Pascal Nganou): Jean, with mining being a pillar of the economy, can it afford to turn its back on mining?
(To Cameron McRae): Cameron, we at Erdenes Mongol have very big ambitions to develop major projects. You yourself have developed such projects. What are the factors we must focus on to ensure success?
(To Kristen Livermore): Kirsten, you mentioned how politics is local and brief, while mining is global and long-term. How long did it take in Australia to improve the perceptions of the public?
After the conference, a reception was held at New York and London Room, Shangri-La Hotel Ulaanbaatar.
4. SITE VISIT TO OYU TOLGOI
Sponsors and speakers were invited to visit Oyu Tolgoi and their operations. The goal for the site visit is to address Work Group 1, “Facilitate greater support for large projects”. The site visit was held in both Mongolian and English. Prior to entering the site, participants had to attend a mandatory safety induction, demonstrating the fact that tier 1 operations had workplace safety as their number one priority. Afterwards, the following areas were visited (in chronological order):
- Museum: Participants learned the history of OT, current reserve estimations, and models of the ore body. This section of the tour was headed by the OT’s head geologist.
- Core warehouse: Up to 800m of historical drill core samples were shown.
- South Oyu open pit: Participants were ushered to a lookout point to have a bird’s eye view of the operations currently ongoing.
- Mazaalai mess hall: Lunch was served in this clean and modern facility.
- Hazard park: A state-of-the art facility showing various hazard scenarios and how they can be mitigated with following proper regulations and using the right PPE. At the tailend, demonstrations were held with audience participation.
- Chandmani facility: Participants were taken by Ward Anderson (Underground Surface Construction Manager) to the recently finished building housing the entrance/exit of the underground, and control room for Phase 2. As of the visit, it was undergoing a soft start, moving ~50 people from the old building to the new per week.
- Bagging facility: The site visit to the bagging facility once it resumed from its planned shutdown for maintenance.
Table of Contents
- Opening remarks
- Tatsuya Hamada, CEO of MobiCom and BCM Board Member
- A.Undraa, MP, Chair of the Sustainable Development Goals Subcommittee
- Jon Lyons, Vice President of Erdene Resource Development Corp. and BCM Board Member
- Digital Transformation in Mongolia
- Digital Transformation in Government
- New Era of AI
- Digital Literacy in Mongolia
- Panel Discussion
- Future of the Internet
- Customer Service
- Next Generation Cybersecurity
- Game Changer for Technology
- Evolved: How We Can Deal with Next Generation Attacks
- FireEye: Overview
- Security in the IoT Era: Device Visibility and Control
- Data Analytics and Cloud Computing
- Go Digital: ICT Accelerating the Digital Economy
- Driving the Enterprise Digital Transformation
- Machine Data Insights into the AI World
On June 18, 2019, MobiCom and the Business Council of Mongolia (BCM) jointly organized the “Digital Enterprise 2019” conference at the Shangri-La Hotel. Mr. Tatsuya Hamada, Chairman and CEO of Mobicom and Member of the Board of Directors and Executive Committee of the BCM, delivered the opening speech of the conference. He is also the Chair of the BCM’s Growth and Innovation Working Group.
Remarks by Tatsuya Hamada
Mr. Hamada, with the sum of human knowledge in the palm of his hand
MobiCom’s entire business is placing heavy emphasis on digital transformation (DX), with entire units and many executives, including Mr. Hamada, involved.
Today, there is no government or enterprise that is not interested in digital transformation. In public service and business operations around the world, it is now the norm. DX, which could be said began with the computer, is no longer in the conceptual stage; today it is in the implementation stage. Given the pace of technological advancement, the pace of innovation and DX has grown exponentially. Acronyms such as AI, VR, IoT, and AR – artificial intelligence, virtual reality, internet of things, and augmented reality – are common parlance today.
3 important elements of DX:
- Unification and improvement of customer experience.
- Fundamental review and restructuring of existing business models.
- Creation and establishment of new business
Society, the economy, and businesses are changing before our eyes. DX is not just a project; it is more like an entire cultural shift, a transition into a different paradigm. Today and more so in the future, it will become an essential driver of success. In the public sphere, e-government initiatives around the world have taken hold, including in Mongolia.
Remarks by A.Undraa, Member of Parliament
Ms. Undraa Agvaanluvsan is an MP who is the Chair of the Sustainable Development Goals Subcommittee.
One of the current major debates in politics right now is the process of constitutional amendments. In addition to improving enhancement of democracy, human rights, and justice, the constitutional amendments also address economic issues such as economic freedom, economic development, and the business environment. The digital sphere is a key part of that development, noted Ms. Undraa.
Mongolians are a uniquely adaptive people. Traditionally, this was a necessity due to the climate and nomadic culture. However, this also has enabled Mongolians to become quick learners, and a people who adapt rapidly, whether that be to a climate or to technological progress. For example, Facebook usage in Mongolia is the highest per-capita in Asia. Despite a population of around 3 million people, registered personal phone numbers exceed that number, meaning that on average one person carries at least one mobile number, and many people carry more than one. Society is connected through many networks and connections.
Corruption is a major problem in Mongolia. E-government initiatives will be a major aspect of combatting corruption, noted Ms. Undraa.
Introduction to the BCM by Jon Lyons, BCM Board Member and Vice President of Erdene Resource Development Corp.
Mr. Lyons explaining the great work we do at the BCM
Click here to view presentation
Mr. Lyons chose to deliver his presentation on behalf of the BCM in Mongolian, to the delight of Mongolian attendees. He briefly introduced the BCM and its vision and mission to attendees. As the Vice Chair of the BCM’s Growth and Innovation Working Group, he works closely with Mr. Hamada.
An important idea he mentioned was the idea of “increasing the size of the pie.” Everyone and every sector has its own specific interests; however, working together to create an improved business environment benefits all the players.
DIGITAL TRANSFORMATION IN MONGOLIA
The first session of the conference saw presenters speak on digital transformation in government, the new era of AI, and digital literacy in Mongolia.
Digital Transformation in government
Presentation not available to the public
Mr. B.Batjargal, Vice Director of the Mongolian National Data Center, gave a presentation of what kinds of activities have been happening when it comes to digital transformation in government.
The government is striving to improve public services for citizens and businesses. At the one-stop service center of UB, about half of services delivered concern capital city registration.
Another initiative that people may be familiar with is the ATM-like document procurement machines seen around major city hubs, such as the central post office. Here citizens can get birth certificates, various forms of ID, etc. without going to an office.
A comprehensive transition requires infrastructure first and foremost. Then you need the digital ecosystem. Third, there is the question of information security.
The National Data Center was established in 2009 by the government. In 2019, a Disaster Recovery Center subdivision was established.
Regarding the regulatory environment, three key policies are in place.
Before the current base system, there was no unified standard for exchange of information, and government bodies would exchange information freely in whatever form or method they desired.
Regarding cybercrime, Mr. Batjargal stated that we are currently in the 5th generation of cybercrime, the “mega” era. There have been several occasions where government organizations, the military, and even Khaan Quest proponents were hacked. Out of 183 million daily requests for information exchange, about 3 million are malicious.
New Era of AI
Presentation not available to the public
Gabit Bazar is the Founder and Chairman of Infinite Solutions LLC, an IT solution provider and investment venture with a focus in fintech, and enterprise software solutions. He has launched successful startups in Silicon Valley, Denver, and New York. He also co-founded Nest High School, a new school with a special curriculum in IT and tech.
Perhaps the breakthrough moment and the real beginning of AI was the IBM-created AI Deep Blue beating chess grandmaster Gary Kasparov in a game of chess.
“Deep learning” seeks to emulate the neural connections of a brain, in that it can process data and “learn” from that data, altering its own decision-making algorithms to be better or more accurate or more befitting of a situation in the future.
There are a couple limitations to AI: massive amounts of data, super computer power, top AI scientists, and singular defined domain.
In July 2016, the Google Home’s speech recognition error rate was 8.5% percent. In less than one year, in May 2017, this rate had fallen to 4.9%. Megvii Technology’s Face++ application used in China can recognize 3 million faces in one second. In 2012, self-driving cars made 1 error per second. In 2017, they had an average error rate of 1 error per year.
Some threats presented by AI include job replacements and the question of whether a fair, shared economy can be realized. AI will replace the majority of workers in entire industries. Mechanical, repetitive, and physical jobs are more at risk than creative professions.
Even jobs that require a human touch, such as teachers and doctors, will work in conjunction with AI. Research that takes months may be conducted nearly instantaneously.
What does Mongolia need to do? Update its educational system. Collaborate: don’t hog data. Learn from the best.
In the past, the goal of education was getting good grades, to get a good job, and start a family, etc. Today, we must emphasize skill sets over grades, spend quality time, and work with time.
It’s not about regurgitating texts and formulas, but solving complex issues that require interrelated skill sets and personal attributes: “learn how to learn.” It’s not about just having a good job, but working with passion. It’s not just about starting a family, but spending quality time with them.
Digital Literacy in Mongolia
Click here to view presentation
Ms. A.Byambajargal is the Founder of the Faro Foundation Mongolia, and is an advocate for public education on digital literacy in Mongolia.
Digital literacy means the ability of an individual to find, evaluate, and compose clear information through writing and other mediums on various digital platforms. This includes communicating, handling info and content, transacting, problem solving, and being safe and lawful online. Facebook is by far the most widely-used social media platform in Mongolia. Faro also works in partnership with Facebook to improve digital literacy.
It is safe to say people born after 2000 are digital natives. The older generations are the ones who have more problems concerning digital literacy, the “digital immigrants.”
Byambajargal initiated a Digital Literacy Library in Mongolia, which seeks to educate individuals on things such as privacy, security, critical thinking and evaluation, functional skills, and other aspects of good online practices. It also includes “profile exploration” of a person’s online presence, analyzing how aligned one’s online persona is in line with their real-life persona. The program includes curricula designed for teachers, students, and parents.
It’s going to take 10 years for digital literacy to be fully implemented in the education sector, so must start thinking about that long-term today.
The three presenters were then invited back on stage for a panel discussion, moderated by Mr. Munkhzorig, the Head of MobiCom’s IT Division.
Question for Batjargal: What role does the private sector play in digital development in relation to government?
There are many public-private partnership initiatives going on. The government is cooperating with business to create better platforms for their sectors. One such example is with the 4 major telecom operators. There are two good systems in place right now that we mentioned earlier. As for the future, who knows what might come.
Question for Gabit: You mentioned that big companies such as Google and IBM have sometimes stopped requiring college degrees. Your Nest High School will specialize in IT. Does that mean they will graduate high school and go right into work in IT?
Gabit: High school in Mongolia means 10th, 11th, and 12th grade. What we’re going to do is introduce a fourth year of high school. That year is purposed for training. Our goal is not just to prepare them for a job, but to give them choices: the choices one needs to make to find oneself, to strive to do what they desire, to try work and see if they like it or not.
Don’t think of the school as purely an IT school. IT and AI will explode in the next decade, but that doesn’t mean everyone and everything will be working as IT engineers. We will still have doctors, lawyers, and teachers. However, those jobs will be different from today. That is what we aim to prepare students for.
Question for Byambajargal: Where does Mongolia rank in terms of digital literacy?
Byambajargal: Digital literacy itself is not something that has been around for very long. The program we teach is taught in only 58 countries. Some digital literacy leaders include Canada, Finland, and Australia. Our work with Facebook has also not been going on for very long. We are one of the newest enrollees; however, we are learning and progressing very rapidly compared to how new we are. Mongolia has not been ranked in terms of digital literacy, but we will be within 5 years. Our digital literacy program is recognized for best practice for Asia. It is very different teaching digital literacy to 40 year olds compared to teens and 20-something individuals.
Question for Batjargal: What is going to be the government’s role in updating the educational system to improve digital literacy?
Batjargal: This is a bit outside of my area of expertise, as it concerns something more related to national-level policy at the Ministry of Education I would assume. What I can say is that we learn fast. As far infrastructure development, we are a large territory, but I still think we can progress rapidly.
Question for Gabit: You have been working at Infinite Solutions for over a decade. What difference do you see today compared to a decade ago?
Gabit: Back then, something people really simply did not accept was the price of software. You see all the counterfeit Windows used in computers in Mongolia. That’s why we geared our business more for the US. I believe this has improved. The government’s “Khur” system is a brilliant creation that makes life easier for a lot of people. Back in the day, we used to have this mentality of “we’ll do it our own way.” Today, we are seeing that we can’t do everything that way, which is a good development.
Question from Mergen from the audience: How should we reach more people? We are quite behind in the IT world. How can we accelerate the process of educating youth?
Gabit: The reason why we established Nest High School is related to a point made earlier, that only 2.8% of high school graduates choose IT majors. Back in the day and still to this day, kids dream of graduating and entering top global companies. We want to train those future engineers, but not to prepare them to go abroad to work for Apple, Google, Baidu, Tencent, or whatever. Sure, we encourage them to go work with them for a few years. But what we really want is to bring them here. We want to partner with American and Chinese major companies, to bring their experiences and business here.
Byambajargal: Facebook is interested in Mongolia. They say they want to open an office here. However, one thing that is clearly lacking in Mongolia is English-language skills. Compared to China, Mongolia is ages behind. We have to prepare the coming generations in language and IT in order for them to achieve success in the global environment. Mongolians also lack teamwork skills. There is a cultural difference. The younger generations are getting better at this. I just want to reiterate that we must emphasize the education sector.
Future of the Internet
Click here to view all presentations (p. 34, English-Mongolian mix)
Mr. Ts.Idermunkh is the CEO of MobiNet, a subsidiary of MobiCom. He has 15 years of managerial experience in the telecom and service industry.
The total ISP contracted bandwidth is 68 Gbps. Of the 300,000 ISP users, 70% use speeds of 2-5 Mbps. Mongolian internet penetration was at 65% in 2018. Internet speeds are lower than the global average. Speeds to foreign connections are even slower, ranked 161st in the world.
By 2022, 80% of all global traffic will be video, up from 70% in 2017. 60% of the world will be using internet, up from 45% in 2017, and the number of connected devices per person will rise to 3.6, up from 2.4 in 2017. High definition and ultra-high definition video usage is increasing, whereas as standard definition has remained steady for the past several years.
Furthermore, cloud services and storage is rapidly rising, behind only YouTube and Facebook.
The future of the internet will bring more internet cache systems (CDN), more cloud computing, more reliable and stable internet peering. Advancements in security should also arrive. Faster speeds is a given. The key is good support and service.
Click here to view all presentations (p. 48, English)
Ms. Bayarmaa is the MobiCom’s Chief Experience Officer.
MobiCom’s customer support center received 37,000 contacts daily. 98% of contacts are through the phone, but customer inquiries through social has been increasing lately, at 2% currently. The company was the first to establish a dedicated call center, and also serves as outsourcing to major domestic companies based on its model. In 2011, it began implementing 25 KPIs. It also introduced designated call distribution, relaying a customer’s call to a specific agent based on the needs of the customer and abilities of the operator.
On top of simply answering questions from customers, operators also listen to customers and relay messages to management.
Their customer care center features a smart greeting (based on time of day), smart routing (depending on postpaid, enterprise, prepaid, etc.), and a different IVR leading to a different customer care agent.
To handle the millions of calls it received annually, they calls must be forecasted, based on time, day, season, etc. It then organizes is work force based on that forecast to handle peak call hours. The most important thing is customer experience.
Furthermore, customer service is implementing “Customer Journey Analytics.” This looks at a customer’s call in historical context, taking into consideration what other inquiries the customer sought previously, what phones he used in the past, their data usage, past transactions, etc. It even takes into consideration things such as a customer who may have left a previous call or left a branch unsatisfied. The “contact center” is transforming into a “customer experience center” that is predictive and proactive. Instead of waiting for the customer to relay a problem, it will seek to proactively detect potential problems and proactively address that for the customer, or offer ways to improve satisfaction with available services. Essentially, it will be more personalized customer service based on analytics.
NEXT GENERATION CYBERSECURITY
The second portion of the conference invited cybersecurity experts from abroad to introduce their companies and products, focusing on IT security in the era of digital transformation.
Game Changer for Technology
Click here to view all presentations (p. 64, English)
Norman Lam is Vice President and GM for Greater China operations for Juniper Networks.
Juniper was founded in 1996 and is headquartered in Sunnyvale, CA. In 2018, it had $4.6 billion in revenue with business in 43 countries employing 9,300 people. It is considered a leader in data centers, as rated by Gartner as well as Forrester Wave. Its JUNOS Contrail Automation system is rated higher than comparable software by Cisco and Dell. It is ranked #1 in product reliability, service & support, security, and technology innovation by SP Vendor Ranking. One of the biggest security R&D programs is at Juniper.
Mission: “Connect everything. Empower everyone.” Vision: “Engineering simplicity.”
50% of enterprise applications will be in the cloud by 2020. In 2022, about $8 trillion will be spent on fighting cybercrime globally.
Juniper helps companies build clouds, connect people to clouds, distribute clouds to enable 5G and IoT, and deliver the software-defined network. In the near future, we will all be using “complex clouds.”
9 out of 10 of the most capitalized companies are tech companies.
The top 2 priorities of digital transformation are security and automation. When talking about clouds, there are many types. From the many types, we have to talk about hybrid clouds when keeping the customer in mind. The key is how to connect everything in a secure way – different machines in different places. Juniper’s software is designed not only to build a platform, but to manage it and also expand it.
5 step migration to digital enterprise:
- Device led
- Architecture led
- Operations led
- Business led
- Customer led
The final stage needs to be driven by the customer’s needs.
Evolved: How We Can Deal with Next-Generation Attacks
Click here to view all presentations (p. 80, English)
Stan Ho is the Sales Engineer Manager of China and Mongolia of Sophos Group.
Sophos is a UK company based in Oxford. It has 3,500 employees serving over 300,000 customers. Since its establishment in 1985, the company has acquired many companies in the IT and cybersecurity industry. The company uses AI to detect malware, being a leader in endpoint protection and unified threat management.
By the end of 2019, over 1 billion unique malware samples will exist. Modern antivirus programs are becoming increasingly useless. In 2018, over 16,000 software vulnerabilities were reported.
Sophos’ flagship product is the Intercept X, which uses deep learning, which has higher detection rates and gets better with more data compared to traditional machine learning. The Intercept X is a next-gen endpoint solution that has anti-exploit, anti-malware, anti-ransomware, root cause analysis, as well as machine learning.
Next-gen firewalls are becoming more popular among enterprise customers. Sophos offers the XG Series in this regard, which has modular desktop options for LTE, DSL, and WiFi. This firewall also utilizes deep learning technology, and convicts 3,500 files weekly. When an endpoint is compromised, the firewall will detect who is compromised, and provide automatic response within seconds.
Many of the company’s cyber security solutions can be controlled via Sophos Central, which can be used as a dashboard, by the admin, or as self-service.
All these can be combined into a Synchronized Security suite.
Click here to view all presentation (p. 110, English)
Lawrence Li is Channel Account Manager for FireEye Greater China.
FireEye is a global cybersecurity firm with 4 Operations Centers worldwide. It has tracked over 35 nation-state sponsored APTs (Advanced Persistent Threats). In 2018, the firm published 24,000 intelligence reports with the back of over 700 threat researchers, platform engineers, malware analysts, intelligence analysts, and investigators.
One key thing about FireEye is that it employs actionable intelligence. It has nation-grade capabilities, with adversarial intelligence and campaign intelligence. It can tell you where a threat is coming from, who is behind it, what they want, and how they operate.
Today, if you have bitcoin, you can just buy malware from the underground economy. Furthermore, normal software usually cannot detect zero-day exploits.
The FireEye ecosystem comprises three aspects: services, technology, and intelligence. For the service part, it protects cloud services and third party data and solutions. It offers expertise on demand. The front line is to prevent an attack, but in the case of being too late, it can also tell you how it happened and take steps to prevent this in the future.
For the tech part, it features network security, email security, and endpoint security. It offers anti-phishing protection for emails. For endpoint, it doesn’t do antivirus at all, but does EDR – endpoint detection and response. Normally, hackers will drop a payload and raise its privileges to admin level, and try to affect multiple devices.
According to Forrester, FireEye is a leader in Cyber Incident Response Services as well as EDR, ahead of IBM, CrowdStrike, Kaspersky Labs, and Flashpoint. Regardless of whether it’s intelligence, or products, or EDR, they are all connected. APTs require lots of intelligence from an advanced vendor.
Security in the IoT era: Device Visibility and Control
Click here to view all presentations (p. 133, English)
Michael LaFuente is a Snioer Technical Consultant at ForeScout Technology. ForeScout has over 2,900 customers in 80 countries, with over 4.7 million devices in the device cloud.
IoT connected devices will grow from today onward. Thus, we must rethink IoT security concerns, by prioritizing understanding, increasing IoT security funding, and increasing resources (such as work force).
Due to a lack of understanding of IoT, most enterprises are willing to accept a high level of risk in IoT. There is disagreement on who should lead IoT security matters, between whether it should be IT-led or LoB-led (Line of Business).
In a study by Forrester, 70% of responders states they are confident in their IoT security, yet when ask how confident they are that they can identify 100% of IoT devices, only 18% state they could.
Why don’t they do anything about it? Budget constraints, believe traditional approach encompasses IoT, and senior leadership doesn’t see the need for it. To address this, we have to promote a security culture. Make people aware of the risks. We must improve visibility of devices, and we also need the necessary tools for control of those devices. Also, by segmenting properly, even if an attack occurs, we can slow the spread of an attack in the network.
ForeScout’s product vision is to become the de facto standard for device visibility across an extended enterprise. This spans across a campus, the IoT, data center, the cloud, and operations. The base for all this is device visibility. ForeScout can help you identify any device that touches the network. Upon identification, it can tell you whether that device is compliant. Next, it can provide network access control. After that is network segmentation, and finally, incident responsible.
Presentation not available to the public
Ling Wu is the Principal Strategy Marketing Expert at Huawei Technologies.
What is the digital economy? It is the intelligence revolution that is following the information revolution, which can be called the digital economy 1.0. Today’s intelligence revolution can be considered the digital economy 2.0. We are harnessing AI to process quantities of information that was not possible before.
Compared to the digital consumer, the digital industry is a much bigger piece of digital transformation. ICT is becoming a general purpose technology, just as the international combustion today is an everyday piece of technology. By 2025, Huawei sees $5 trillion of opportunities in ICT, and 5G is seen as a key technology driving the ICT industry to meet new historic opportunities as a foundation for intelligence. As 5G is rolled out, it forces synergy with other technologies, such as IoT, surveillance, new energy, control systems, manufacturing, etc.
Many nations are implementing national initiatives to support a digital economy. It is envisioned that productivity will increase of 25% by 2025 with ICT acceleration of the economy, and it is estimated that for every 16-20% growth in ICT, GDP will grow by 1%.
Shenzhen’s Safe City Project: Lowest criminal rate in history. Due to over 400,000 cameras installed with 100PB of data storage, homocides dropped from 270 in 2007 to 24 in 2017, most of them detected within 24 hours.
Long Gang District e-governance: 90% online delivery of services; 70% of data shared between agencies; internal process down by a third; and public satisfaction of over 95%. This is all on 1 network, 1 cloud, and 1 database.
Green Data Center for Dubai Int’l Airport: power consumption down 30%; Time for delivery down from 24 to 13 months.
Mobile payments in China has been growing at an ultra-rapid pace. In major cities, you have no virtual need for a paper currency or even a wallet, with all transactions done through your mobile phone, thanks to the LTE network.
Alibaba’s smart warehouse requires just a few members of staff to handle millions of kg of packages, due to robots and IoT.
Earlier in 2019, the first remote operation was conducted on a pig through the 5G eMBB network.
ICT Triggers Vertical Digitalization Integration. Given sufficient penetration of internet, cloud computing, big data, mobile payments, and bandwidth,
Broadband is the foundation on top of which a digital economy must be built.
As an ICT Industry benchmark, China’s only competitor today is the US, and the two are neck and neck.
In China, the government invested $720 billion in 4G, but companies received over $2 trillion in revenue from that investment.
One rising star in ICT infrastructure is Malaysia, which has rapidly developed in this regard in a very short amount of time. This is thanks to a high level of investment by the government in ICT.
The future is an intelligence society of all things connected: smart parking, connected city lighting, smart water, smart metering, connected elevators, internet of vehicles, smart homes, etc.
Driving the Enterprise Digital Transformation
Click here to view all presentations (p. 158, English)
Huaming Wu is a Senior Consultant for VMware.
VM has over a thousand VMware service professionals, serving over 5,000 customers including global top 500 enterprises, including in education, finance, government, technology, healthcare and pharma, and manufacturing. In 2018 alone, the company received multiple awards coveted by businesses and the IT industry.
VMware creates an experience that makes the cloud invisible and easy to control so that customers can focus on transforming their business. Brands will eventually refine and revitalize its purpose. RPA and AI will join forces to create digital workers for more than 40% of enterprises. 25% of leaders will use automation to address the talent scarcity squeeze. Finally, investors are looking at the top 4 industries: manufacturing, retail, financial services, and transportation. That is why transformation is necessary.
Application needs are driving IT strategies and directions. Thus, data center and cloud solutions must match the needs of each application. The challenge for IT is to increase IT agility while reducing complexity and risk. The more scalable it is, the more it can extend to any cloud, and the faster the time to market, the faster the IT agility.
China Mobile Communications Corporations is the largest telecom corporation by market capitalization, and also the largest mobile phone operator by number of subscribers, with over 902 million subscribers as of June 2018. 2nd tier and 3rd tier tech support teams are managers and experts of VMware.
Machine Data Insights into the AI World
Click here to view all presentations (p. 177, English)
Yantao Hu is a Senior Consultant for Splunk North Asia. Splunk’s mission is to make machine data accessible. It is organizing the .conf19 on October 21-24 in Las Vegas.
Top predictions for 2019 by Splunk:
- AI and machine learning breaks out of the lab
- Security in the wake of heightened compliance regulations and evolving digital environments
- IT operations transform to focus on application mobility
- IoT claims its stake in the modern organization.
NASDAQ uses Splunk UBA for insight into internal threats and data science-driven approach. UBA is active directory intelligence – “the root of all evil.” It uses unsupervised ML analysis to do this.
Vodafone also implemented Splunk AI, to improve efficiency and speed of service restoration post planned and unplanned outages to ensure application uptime. It implemented decisions based on real time performance resulting in efficient queue throttling, and also applied machine learning to predict ticket priorities, categories, assignees and resolutions. This resulted in cost savings, reduced SME dependency, and improved customer experience.
Deutsche Bahn implemented Condition-Based Maintenance (CBM). It analyzed train door machine data using machine learning, because maintenance and repair costs exceeded estimated. It detected anomalies using DBSCAN (from the machine learning toolkit). This reduced service interruptions, brought even distribution of stress to mechanical components, and gave foresight into potential failures.
Blackstone uses Splunk’s anti-phishing software to detect malware in emails. This brought down the speed of the process from over half an hour to about 40 seconds.
Aspects of Industry 4.0, the age of the smart factory:
- Information transparency
- Decentralized decisions
- Technical assistance systems
BMW began using the technical assistance system to rework its process. They collected data from tests such as crash tests, brake tests, and chassis tests, and used Splunk machine learning to provide an assistance system. This allowed qualified recommendations to be provided to workers.
After the conference, a networking reception was held at Agartha restaurant on the 3rd floor of the Shangri-La.
- End -
The Business Council of Mongolia’s (BCM) Monthly Meeting was held on 21 October 2020 in the Ballroom of the Shangri-La Hotel, with Chairman Ts.Tumentsogt hosting for an audience of around 120 people.
This was the first in-person meeting held in the year 2020, as restrictions on gatherings to prevent an outbreak of COVID-19 in Mongolia have been lifted. Mongolia still has no cases of community transmission, with all the cases of COVID-19 being imported. This Monthly Meeting was sponsored by Newcom Group.
The meeting started off with an update on Mongolia’s economic outlook by Bank of Mongolia Governor Mr. B.Lkhagvasuren. Although there still remains a high level of uncertainty, the global economic recovery has been better than expected. The world’s economy is forecasted to contract by 4.4 percent this year, whereas previous estimates stated 5-6 percent. Mongolia’s economy is expected to contract by 2 percent in 2020, and grow by 6 percent in 2021. More details from the update can be found in the Governor’s presentation linked below this recap.
The rest of the BCM Monthly Meeting continued in two segments: an Ambassador’s Roundtable with Ambassadors of six embassies, and then a panel discussion on green economic growth and green finance.
Chaired by CEO of Bloomberg TV Mongolia Mr. E.Dolgion, the Ambassador’s Roundtable featured the following ambassadors:
- H.E. Ms. Catherine Ivkoff, Ambassador of Canada to Mongolia
- H.E. Mr. Jörn Rosenberg, Ambassador of Germany to Mongolia
- H.E. Ms. Laura Bottà, Ambassador of Italy to Mongolia
- H.E. Mr. Michael S. Klecheski, Ambassador of the USA to Mongolia
- H.E. Mr. Mohinder Pratap Singh, Ambassador of India to Mongolia
- H.E. Mr. Traian Hristea, Ambassador of the European Union to Mongolia
Ambassadors briefed the audience on how COVID-19 has impacted their respective countries as well as the various social and economic measures their governments have taken in response. Many countries are also developing various vaccines, and Indian Ambassador Mohinder Singh mentioned he has hope that India will have a vaccine ready around February of next year. Furthermore, Mongolia’s removal from the EU list of non-cooperative tax jurisdictions – the “greylist” – seems imminent. “I believe we will very soon witness a happy ending,” stated Traian Hristea, EU Ambassador to Mongolia.
After a short break, a panel discussion was held on the theme “Green Economic Growth and Green Finance,” moderated by Investment Director at Newcom, Ms. M.Namuun. Newcom Group is a vanguard of Mongolia’s green energy sector. It established Mongolia’s first green power project in the Gobi region, and currently has multiple renewable projects under implementation. On the panel were:
- Mr. Arnaud Heckmann, Principal Urban Development Special, East Asia Department, ADB
- Dr. Z.Batjargal, National Focal Point, Green Climate Fund
- Dr. D.Gan-Ochir, Chief Economist, Bank of Mongolia
- Mr. E.Orchlon, Chief Investment Officer, Newcom Group
- Ms. G.Tuul, Director of the Eco Banking Department, XacBank
Panelists emphasized that the effects of climate change are not something to anticipate in the far future, but rather something that is affecting the country today, as desertification is already reducing pastures. Mongolia is “drying up.” Mongolia needs about USD 13 billion by 2030 to reach various green targets. Though this may seem like a huge figure, about USD 8-9 billion will probably be secured, and Dr. Batjargal believes we have an 80-90% chance of the targets being fulfilled. The BoM has started recording Green Loan Statistics, and will soon publish a manual for environmental and social risk assessment. However, green loans currently account for only 2.2% of total loans in Mongolia.
The issue of climate change is incredibly complex an addressing it will require the participation of virtually every sector of society. Thus, it is key that various public and private initiatives have cohesion, so that the various measures have greater synergy, stated Mr. Heckmann from the ADB.
More information on the Monthly Meeting can be found from the Editor’s full notes linked below.
- Editor's full notes
- Economic Outlook (Mongolian) - by B.Lkhagvasuren, BoM Governor
- The BoM's Role in Green Finance (English) - by D.Gan-Ochir, BoM Chief Economist
2020 ОНЫ 10-Р САРД ЗОХИОН БАЙГУУЛСАН МОНГОЛЫН БИЗНЕСИЙН ЗӨВЛӨЛИЙН БҮХ ГИШҮҮДИЙН САРЫН УУЛЗАЛТЫН ТОЙМ МЭДЭЭ
Монголын Бизнесийн Зөвлөл (МБЗ)-ийн Бүх Гишүүдийн Сарын Уулзалт 2020 оны 10-р сарын 21-ний өдөр Шангри-Ла зочид буудлын Танхимд 120 орчим гишүүний бүрэлдэхүүнтэй зохион байгуулагдаж, Удирдах Зөвлөлийн Дарга Ц.Түмэнцогт нээлтийн үгийг эхлэв.
Монгол Улсад COVID-19 вирусын дэгдэлт гарахаас урьдчилан сэргийлэх үүднээс уулзалт цуглаан зохион байгуулах хоригийн хязгаарлалтыг цуцалсантай холбогдуулан 2020 оны анхны биечилсэн Бүх гишүүдийн Сарын уулзалт байлаа. Монгол улсад COVID-19-ийн олон нийтэд дамжин халдварлах тохиолдол одоогоор бүртгэгдээгүй байна. Уг сар бүрийн уулзалтыг ивээн тэтгэсэн - Иьюком Групп.
Уулзалт Монголбанкны Ерөнхийлөгч Б.Лхагвасүрэнгийн Монгол Улсын эдийн засгийн төлөв байдлын талаархи шинэчилсэн мэдээллээр эхэллээ. Тодорхой бус байдал үргэлжилсээр байгаа хэдий ч дэлхийн эдийн засгийн сэргэлт хүлээгдэж байснаас илүү сайжирсан байна. Дэлхийн эдийн засаг энэ онд 4.4 хувиар агшина гэж таамаглаж байсан бол өмнөх тооцоогоор 5-6 хувьтай байсан. Монгол Улсын эдийн засаг 2020 онд 2 хувиар буурч, 2021 онд 6 хувиар өсөх төлөвтэй байна. Шинэчлэлийн дэлгэрэнгүй мэдээллийг энэхүү тоймын доор байгаа линк дээр дарж прэсэнтазтай танилцан харна уу.
Уулзалт хоёр хуралдаанаас бүрдсэн бөгөөд эхний хуралдаанд зургаан улсын Элчин сайд нар оролцсон, дараагийн хуралдаанд ногоон эдийн засгийн өсөлт ба ногоон санхүүжилтийн талаархи хэлэлцэв.
Bloomberg TV Mongolia-ийн Гүйцэтгэх захирал Э.Долгионоор удирдуулсан Элчин сайдын дугуй ширээний уулзалтад дараахь Элчин сайд нар оролцов:
- Канад Улсаас Монгол Улсад суугаа Элчин сайд хатагтай Кэтрин Ивкоф
- Холбооны Бүгд Найрамдах Герман Улсаас Монгол Улсад суугаа Элчин сайд Ноён Ёорн Розенберг
- Бүгд Найрамдах Итали улсаас Монгол Улсад суугаа Элчин сайд хатагтай Лаура Ботта
- АНУ-аас Монгол Улсад суух Элчин ноён Майкл С. Клечески
- Энэтхэг Улсаас Монгол Улсад суугаа Элчин сайд Мохиндер Пратап Синхгх
- Европын Холбооноос Монгол Улсад суугаа Элчин сайд ноён Трайан Христеа
Элчин сайдууд оролцогчдод КОВИД-19 тэдний улсуудад хэрхэн нөлөөлсөн болон үүний эсрэг авсан нийгэм, эдийн засгийн хэд хэдэн хариу арга хэмжээний талаар товч танилцуулав. Хэд хэдэн улсууд олон янзийн вакцинуудыг гаргахаар ажиллаж байгаа бөгөөд Энэтхэг Улсаас Монгол Улсад суугаа Элчин сайд ноён Мохиндер Пратап Синг дараа жилийн 2-р сар гэхэд Энэтхэг улс вакциныг гарган авна гэдэгт найдаж байгаагаа илэрхийлэв. Түүнчлэн, ЕХ-ны хамтарч ажилдаггүй улсуудын жагсаалт буюу “саарал жагсаалт”-аас Монгол Улс гарах нь гарцаагүй байгаа. Европын Холбооноос Монгол Улсад суугаа Элчин сайд ноён Трайан Христеа тэрээр хэлэхдээ: “бид тун удахгүй энэ асуудал сайнаар дуусахыг харна гэдэгт итгэлтэй байна”.
Богино хугацааны завсарлагын дараа дараагийн дугуй ширээний уулзалтыг Ньюком группын Хөрөнгө оруулалт хариуцсан захирал, хатагтай М.Намуун “Ногоон эдийн засгийн өсөлт ба ногоон санхүүжилт” сэдвийн хүрээнд удирдан оролцов. Ньюком групп нь Монголын ногоон эрчим хүчний тэргүүнд эгнээнд ажиллаж байгаа юм. Ньюком групп нь Монголын анхны ногоон эрчим хүчний төслийг Говийн бүсэд эхлүүлсэн ба мөн бусад хэд хэдэн төслүүдийг хэрэгжүүлж байгаа юм.
Дугуй ширээний уулзалтанд дараах төлөөлөгчид оролцов:
- АХБ-ны Зүүн Азийн газрын Хотын хөгжлийн ахлах мэргэжилтэн ноён Арнауд Хекманн
- Ногоон цаг уурын сангийн Үндэсний зөвлөх Др. З.Батжаргал
- Монголбанкны Ерөнхий эдийн засагч Др. Д.Ган-Очир
- Ньюком группын Хөрөнгө оруулалтын захирал Э.Орчлон
- Хас банкны Эко банкны газрын захирал Г.Туул
Төлөөлөгчдийн үзэж байгаагаар уур амьсгалын өөрчлөлт нь холын ирээдүйн асуудал биш бөгөөд харин энэ нь өнөөдөр энэ улсад нөлөөлж байгаа асуудал буюу цөлжилт аль хэдийн бэлчээрийн газрыг хорогдуулаад эхэлчилсэн байна. Монгол Улс “хатаж” байна. Монгол Улсад 2030 он гэхэд хэд хэдэн ногоон зорилтыг хангахад 13 тэрбум ам.доллар шаардлагатай. Энэ нь хэдийгээр их хэмжээний сонсогдож байгаа ч гэсэн 8-9 орчим тэрбум ам.доллар нь бэлэн байхаар тооцож байгаа ба Др. Батжаргалын үзэж байгаагаар бид дээрх зорилтыг хангах 80-90 хувийн боломж байгаа юм. Монголбанкны зүгээс Ногоон зээлийн статистикийг бүртгээд эхэлсэн бөгөөд удахгүй байгаль орчин, нийгмийн эрсдэлийн үнэлгээг хийх аргачлалыг боловсруулан гаргахаар ажиллаж байна. Одоогоор Ногоон зээл нь Монгол Улсын хэмжээнд нийт зээлийн дөнгөж 2.2 хувийг бүрдүүлж байна.
Уур амьсгалын өөрчлөлтийн асуудал нь маш төвөгтэй бөгөөд нийгмийн бүхий л салбарын оролцоог шаардаж байдаг. “Тиймээс хувийн салбарын болон төрийн уялдаа холбоо илүү үр дүнтэй ажил хийхэд чухал ач холбогдолтой юм” гэж ноён Хекманн онцлов.
Сар бүрийн уулзалтын талаарх илүү их мэдээллийг доорх холбоосноос авна уу.
1. Редакторын бүрэн хэмжээний тэмдэглэл
2. Эдийн засгийн төлөв (Монгол хэлээр) - Б.Лхагвасүрэн, Монголбанкны Ерөнхийлөгч
3. Ногоон санхүүжилтэд оролцох Монголбанкны үүрэг (Англи хэлээр) - Д.Ган-Очир, Монголбанкны Ерөнхий эдийн засагч
After the meeting, a Networking Event was held at the Brussels Belgian Beer Cafe.
The guest of honor at this meeting was the Minister of Mining and Heavy Industry, D.Sumiyabazar. The BCM conducted this October meeting as a continuation of the recently organized 2019 Discover Mongolia Mining and Minerals Business Summit, and aimed to provide members with information on the sector’s challenges and required reforms, asking the question of if Mongolia’s most important sector is already in crisis.
New member introduced:
- ADT Law Firm Mongolia (website)
This is the first time we held a Monthly Meeting at the MNCCI, and the BCM has been collaborating with the MNCCI and will continue to foster the cooperation on important issues.
The BCM co-organized the 17th Discover Mongolia conference with the Ministry of Mining and Heavy Industry and Mongolian National Mining Association (MNMA). This year’s event achieved its core objectives of connecting mining and exploration companies with policy-makers and wider stakeholders in Mongolia as well as providing a first-hand experience for many international investors who visited Mongolia.
Through the dialogue that took place during the 17th annual Discover Mongolia, our members and participants were able to gain insightful knowledge on industry trends and outlook, voice their concerns to policy-makers, and recommend solutions during three days of intensive discussions and activities.
The BCM also was the main organizer from the Mongolian side for the Boao forum for Asia, which was well attended.
On the 23rd of October, the BCM is organizing a Business Tour of the Data and Call Center of Mobicom Corporation.
In November, under the scope of the Memorandum of Understanding (MoU) between the Business Council of Mongolia (BCM) and the China International Council for the Promotion of Multinational Corporations (CICPMC) signed on 20 August 2019, the two organizations agreed to strengthen cooperation and promotion of business opportunities between their respective members in Mongolia and China. Therefore, the BCM is hereby inviting members to attend “The 12th International Roundtable of Multinational Corporations Leaders” (IRMCL), which is being held from November 21st to 22nd, 2019 in Beijing, China.
This conference is an international, large-scale and high-level conference co-sponsored by the China International Council for the Promotion of Multinational Corporations (CICPMC), and several United Nations organizations, including the United Nations Development Programme (UNDP), and United Nations Conference on Trade and Development (UNCATD), among others.
SPEECH BY MINISTER OF MINING AND HEAVY INDUSTRY D.SUMIYABAZAR
Dear guests and representatives,
Ladies and gentlemen, good afternoon to you all.
I am pleased to be here today at the BCM’s monthly meeting to share the policies of the resource sector as well as development trends and projections for the sector, connecting them to issues surrounding governance, competitiveness, and investment, and I am eager to discuss and exchange ideas on these topics with you.
The Government of Mongolia is working to create a system that is open to investors, with a transparent legal environment, one that fosters economic stability, and protects the interests of business people.
As for our ministry, we are implementing policies and conducting certain works to develop the legal environment for the sectors of geology, mining, crude oil, and heavy industry, as well as to develop responsible mining.
Mongolia received USD 23.9 billion in foreign direct investment between 1990-2018, USD 17.5 billion, or 73%, of which was made in the mining sector. This shows clearly the role this sector plays in the economy.
Despite that, due to instability in the commodities market, investment in the sector swung from 262% to -70% in four years, which was a bitter experience we must be sure to remember. Although this can be explained due to the cyclical nature of the sector on one hand, on the other hand we must also realize that our domestic situation had a direct impact.
I have established in partnership with the BCM the International Advisory Panel (IAP) comprising representatives of major companies engaged in exploration and extraction. The purpose of this is to work closely with strategic investors and address issues they face in a more organized and practical way.
In addition, companies joining the “Voluntary Responsible Mining Codex” – purposed for introducing standards in responsible mining and fostering the sustainable development of the sector – means that when companies conduct operations in the countryside, they receive not only the official permissions from government agencies, but also gain the invaluable social license from the local citizens.
The capital market is growing in Mongolia, and major projects have begun listing on the stock exchange. In 2018, an exploration company listed on the Toronto Stock Exchange dual-listed on the Mongolian Stock Exchange. This is going to intensify going forward, and companies have expressed their interest in newly dual-listing.
Although it seems that competition between state-owned and private companies is going to increase, the truth of the matter is that state-owned enterprises (SOEs) cannot keep up with the pace of business compared to private companies. Due to the fact that the issues faced by SOEs, such as infrastructure and lag in technology and methods, are costly and time-consuming to address, it is vital that we make these companies public shareholding companies and improve their governance and efficiency.
As you may know, the government and parliament have agreed to offer up to 30% of the company which owns the special permit for one the largest coking coal deposits, Tavan Tolgoi, on an international and the domestic stock exchanges. Currently the government is providing the official permissions necessary to make preparations to list the company. “Erdenes Tavan Tolgoi Mining” – the company to be listed – has been established and operations have commenced.
The capital raised through the IPO will be used to finance projects and programs on roads, railways, power, and a coal washing plant, amounting to USD 5.2 billion in costs. First, this will improve the quantity and quality of Mongolian coal exports. Second, we are aiming to supply coking coal to countries in Northeast Asia by improving regional transport and logistics integration with Russia and China.
In the mid and long-term future, a major part of our goals is to develop a coal-chemical plant, as well as get started on exploration and extraction of coal bed methane.
Since the commencement of the Oyu Tolgoi underground mine’s development as planned up to today, USD 9.1 billion has been spent in Mongolia, which has had the positive influence of accelerating economic growth and business activity. Following the OT project, there are benefits which cannot be quantified by money, such as world class mining management, new technology, and work force. When the next OT is implemented, this will enable us to approach the project with experience, with a work force, in a knowledgeable manner.
In order to develop the exploration sector, increase resource reserves, and reduce risks for investors engaged in mineral exploration, several works have been planned and are being implemented, including:
- We are formulating individual policies and strategies for gold, copper, rare-earth elements, raw materials for batteries, coal, and uranium. In the past we had a general policy for minerals as a whole, but now we are creating policies and strategies for each type of mineral.
- The “National geological database” program has been approved, and we are now working on creating a geology and exploration database in line with international standards.
- We have had great success in cooperation with the Australian government in detailed research studies on each of the staple minerals, making them open and accessible electronically.
Ladies and gentlemen,
Although we recognize the need to develop non-mining sectors and diversify the economy, seeing from market conditions and global development trends, the mining sector will continue to be a pillar sector and the main driver of development for the next 20-30 years.
Thus, I believe the prudent thing to do is to bolster our competitiveness, take full advantage of our geographical and other comparative advantages, and adhere to sector policies that will foster this.
Under this scope, we are aiming to diversify commodities and their types exported. The fact that mineral exports amount to USD 6 billion, with copper and coal accounting for 75% of that, shows that we are not taking complete advantage of the opportunities we have. Therefore, the MMHI is going to implement policies to develop other mineral sectors, namely gold, iron ore, spar, and uranium, into a billion-dollar sector.
We are engaged in talks with neighboring countries concerning transportation of mining products, construction of trade infrastructure, developing transit transportation, and creating competitive tariff conditions.
To expand rail and road networks, current projects under implementation include the Tavan Tolgoi-Gashuun Sukhait; Tavan Tolgoi-Zuunbayan; and Tavan Tolgoi-Oyu Tolgoi-Khangi rail and road projects. Furthermore, we have reached an understanding with Oyu Tolgoi on the issue of constructing the Tavan Tolgoi power plant. To resume construction of the 240-km Tavan Tolgoi-Gashuun Sukhait route, we have established the “Tavan Tolgoi Railway” company.
Alongside with Tavan Tolgoi infrastructure, the government has decided to construct the Nariin Sukhait-Shivee Khuren railway. By implementing these projects, the value of deposits and exports will rise significantly.
The mid-term outlook for the Mongolian economy is positive. The mining commodities market is relatively stable. Relations and cooperation with neighboring countries has reached new levels. At this time, as parliament and the government make decisions to intensify implementation of major projects, we are creating favorable conditions and opportunities to invest in Mongolia.
To increase mineral exploration and extraction; to raise the level of processing and enriching; to introduce high-efficiency technology; to comprehensively implement infrastructure projects, your involvement as entrepreneurs is important.
There are 13 major projects of tremendous significance to development in the mining and heavy industry sector approved by the government, and they need MNT 22.4 trillion, or USD 8.4 billion, in financing. On top of that, if you consider other sub-projects and programs to follow these major projects, you have the full opportunity to work with us on a long-term, mutually beneficial basis.
Mongolia’s mining sector has the full potential to compete globally. I believe that on top of geological reserves and high prospectivity, a favorable legal and regulatory environment has been created. As of 2018, Mongolia has agreements with 43 countries on mutual protection and support for investment and double-taxation treaties with 26 countries.
In conclusion, I call on you, entrepreneurs, investors, and wealth creators, to take full advantage of Mongolia’s resource reserves and opportunities, so that we may develop together.
VIDEO OF POST-DISCOVER MONGOLIA INTERVIEW WITH RICHARD SCHODDE, MINEX CONSULTING; A. BILGUUN, CHAIRMAN OF THE MNMA; AND SAM SPRING, BCM RESOURCE & ENVIRONMENT WORKING GROUP NON-BOARD VICE CHAIR AND CEO AND PRESIDENT OF KINCORA COPPER LTD.
The audience was shown a video of an interview conducted by Mr. Bilguun with Richard Schodde and Sam Spring after the Discover Mongolia forum.
Click here to watch the video.
Click here to view the presentation.
PANEL DISCUSSION: DEVELOPMENT SOLUTIONS FOR THE RESOURCE SECTOR
Board Director Mr. Tumentsogt, CEO of Erdenes Oyu Tolgoi, moderated a panel discussion, with some esteemed panelists:
- Mr. Ankhbayar, Director of the Heavy Industry and Oil Policy Implementation Regulation Department of the Ministry of Mining and Heavy Industry
- Mr. Bilguun, Chairman of the Mongolian National Mining Association
- Mr. Jean Pascal Nganou, World Bank Senior Economist
- Mrs. Kirsten Livermore, Team Leader of the Australia-Mongolia Extractives Program-2
- Mr. Achit-Erdene, CEO of the MICC
- Mr. Manduul, Executive Vice President of ETT Mining LLC
- Mr. Otgonchuluu, Economist
Ankhbayar: I glad to be here today to provide some information on the oil refinery. The refinery is a major project reflected in the government’s 2016-2020 action plan. It is being financed through a 1 billion USD credit line from the government of India, and was signed during Modi’s visit to Mongolia. During President Battulga’s recent visit to India, another agreement for additional funding was signed. We tried five or six times to get started on an oil refinery in the past, but for various reasons they fell through. The refinery will give Mongolia two or three key benefits. First, Mongolia is currently almost entirely dependent on Russia for petroleum. It will reduce that dependency. Second, a comparable project in the oil sector has not been implemented in the oil sector for 30 years. Thus, it will bring in modern know-how and our engineers and experts will benefit. We have already sent a cohort of students to India to study in this regard. Third, it will advance the Ministry’s objective of producing more value-added products.
What is the supporting infrastructure going to be like for the refinery, such as transport, supply of crude oil, and other such things?
Ankhbayar: The oil refinery itself is located about 600 km away from the source crude oil. Of the crude oil areas in Mongolia, we supply 1 million tons of raw crude oil to China. Whether that will be transported to the refinery by rail or road is still being discussed. Speaking of infrastructure in general, the Zuunbayan railroad is going to be the first horizontal (latitudinal) railroad in Mongolia. There is also the possibility to export to Russia. We have established a working group. I think we are leaning more towards the railroad solution.
Question for Bilguun: The BCM and MNMA recently successfully co-organized the Discover Mongolia forum. As a co-organizer, how do you see the outcomes of the forum? You are one of the people who pay great attention to improving the reputation of the sector. What are some of the outcomes of the forum? How was investors’ sentiment?
Bilguun: Let me be frank, it was not great. We have to realize that in Mongolia, as a jurisdiction, we are competing with other countries. On top of competing with other mining jurisdictions, we are competing with other sectors. There are new economic sectors in North America and South America, such as the tech sector and marijuana sector. The pipeline of projects is really non-existent in Mongolia. There is not land to explore. Why is that? First issue is environmental, and the second is economic. In my opinion, the environmental issue is not related to mining. We believe it’s actually more to do with overgrazing by animals. The other issue we can address is the way mining revenue is divided. According to the mining law, 30% of royalties from mining are supposed to go to the aimags and soums where the mining is happening. Those revenues aren’t flowing back to the communities anymore. We have to restore that, so that people can actually benefit. We believe that is the most practical route.
Question for Nganou: The World Bank recently released its East Asia and Pacific Economic Update, “Weathering Growing Risks.” Can you comment on how the Mongolian economy is doing? How is the trade war affecting us? What is the outlook for this year and the coming years?
Nganou: Today, October 17th, marks the International End of Poverty day. We all know that around 800,000 people in Mongolia live below the poverty line. About 30% of the people in rural areas live in poverty, and about 17% in urban areas. Also, about 50% of people live just above the poverty level. So they are very vulnerable to shocks. There must be multi-part effort by the government to address this. We have seen how in recent history China has lifted many out of poverty. It is no coincidence that this year’s Nobel Prize in economics was awarded to three economists for their work on poverty studies. It is important to foster the linkages related to the mining sector to alleviate poverty, to ensure inclusive, sustainable growth in Mongolia. To answer your question, our region is facing an increasing uncertainty, fostered by a slowdown and a possible global recession, exacerbated by the trade war. We believe that for Mongolia, the momentum over the past 3 years, growth has averaged above 6%. It has been supported by mineral exports, private investment, and FDI. FDI is indeed critical. Private consumption and meat exports have also played an important role. We believe growth will remain positive, although it will be more challenging. We think growth in 2020-2022 will average above 5%. There is uncertainty, however, and investors do not like uncertainty. Weakening in global demand will see a decline in commodity prices, which will affect Mongolia. The government must commit to fiscal responsibility and competitiveness. Mongolia must resolve insolvency, and trade issues at the border. The rights of minority of investors must be protected. We must encourage investment in innovation so that productivity grows.
What is your comment or suggestion regarding sectors other than mining which can create employment, where the government can provide incentives?
Nganou: As a World Bank expert, I am not in support of picking the winners. My broad answer is to enable the environment, in terms of human capital, infrastructure, and institutions. That is critical for any sector to emerge. We don’t believe picking this or that sector is the way to go. You must diversify assets. Human capital is key for any sector to grow.
Question for Livermore: What is the AMEP and what are the future plans for Mongolia’s extractives?
Livermore: The Minister gave a good description in his speech, highlighting the need for an open and transparent environment. He supports and collaborative approach and giving a positive message about mining to the public. He also talked about the positive gains of international standards. That is what we do at AMEP, which is a partnership between the Mognolian and Australian governments, two countries where mining is very important. AMEP is a four-year program. The program for this year was made in a consultative manner. We talked to businesses, ministries, and civil societies, to get a sense of common priorities. One project we are working on is to create a Mongolian valuation code for mineral resources in line with international standards, like ones used in Australia and South Africa. It will be important for companies to be able to list on the stock exchange and other business transaction, by having an independent and robust valuation. We are also working with the Ministry of Finance on remeditation on closures.
There is also MonGeoCat, the Mongolian Geological Catalog, which provides an online catalog of metadata of each piece of geological information that the Mongolian government has. Users can go online anywhere in the world, and search using the map or documents to see what Mongolia has in terms of geoscience and data. It is proving to be extremely successful.
We also participate with the Ministry on the review of feasibility studies, bringing in international standards to make the process more efficient.
We are also working on Coal Bed Methane in Mongolia, and we believe there is potential for development in Mongolia. I have seen with my own eyes how CBM can go from nothing to a major industry in Australia.
The point of AMEP is to be more than the sum of our parts. These projects should individually and collectively improve the investment environment of Mongolia. Each will serve as an opportunity or leverage for greater contributions.
Working in evaluation or listing on stock exchanges, or feasibility studies, what will be your focus among these projects?
Livermore: I suppose each one will have a different set up partners. As an example, for the project on feasibility studies, the ministry is anticipating a review of that regulation. We're still working on the scope of the activities in the industry, but we are already talking to some companies, such as Aspire Mining. We are looking for opportunities to involve the private sector and other stakeholders.
As a first step on work on feasibility studies, we are working to do a roundtable, to understand what the problems are before we start giving technical advice.
Questions for Achit-Erdene: Congratulations on being appointed CEO of Aspire Mining. What is the company working on regarding future development? How do you see the equities market? What are your business objectives for your company?
Achit-Erdene: Aspire Mining is an ASX-listed company with a market cap of around 100 million AUD. It has Mongolian and Australian shareholders, so it is a true partnership between the two. We have a great project in northern Mongolia, featuring about 200 million tons of coking coal. We will invest about 400 million USD over the next two years, mostly in roads. We will build a 560km road, as well as a rail terminal in Erdenet. There will also be a coal washing plant and small power plant to support activities. We plan to do this with Mongolian and international investors. Aspire is seeking to going into production and are trying to obtain permits. The new minerals law says we need to get community approval, which is a good thing. Bilguun mentioned how taxes aren’t going back to the communities. Although the minerals sector has grown tremendously, the poverty level has not fallen as much. So the mineral wealth is not being shared. Politicians have taken this very simple image of trucking coal and minerals abroad, so they just say, look at how all the wealth is being shipped to other countries. Mongolia has potential to develop agriculture and livestock. For the Mongolian economy to be sustainable, we have to diversify the economy. We must invest wisely in reduction of poverty and infrastructure. Mining sector alone cannot resolve poverty. Tax revenues have grown as well, yet poverty is still at around 30%. I think we have one of the most inefficient allocation of tax money.
Question for Manduul: What are the challenges you are facing concerning the IPO of ETT? Every Mongolian citizen owns 1,072 shares. When will they realize its value?
Manduul: In June of 2018, parliament passed a resolution ordering ETT to conduct an IPO. Of course there were many questions, such as the Law on Tenders. There are some things that are vague, especially to foreigners. At the political level, we waited on political consensus on some things, such as what should be the structure of ETT. Should we conduct an IPO for ETT as a whole or on a deposit, or a subsidiary? This past summer it was decided that a subsidiary based on the East Tsankhi mine, and that is to be the focus of the IPO. I see three major risks. First, the global macro situation. There is the increased uncertainty in the region, the trade war, and commodity prices. These are things out of our control, so we have to be wise with our timing. The second issue is investors’ perceptions. This is a national issue. You heard yesterday that Mongolia has been greylisted by the FATF. This will cause increases in transactional costs and borrowing costs, which could affect our IPO. Third, here in Mongolia, at the stakeholder level, there is a wide gap in knowledge, information, and understanding. There is a need to explain and help people understand in order to form a consensus. I believe this will require the most time. The IPO brings benefits other than just financial ones. For example, it will foster governance of international standards at our SOE. This will increase pressures on other SOEs to improve their governance and bring it up to international standards. This in turn will benefit the economy as a whole. Furthermore, this IPO may be for ETT and East Tsankhi, but it will have reverberations into the future. It will open the door for others. Surely there will be other deals in the future. Regarding the 1,072 shares, the IPO is for a subsidiary. However, it will make the shares more valuable and bring us closer to realizing that value.
Question for Otgonchuluu: You are one of the top experts in the issue of competitiveness. Where is the Mongolian mining sector heading? What are the prospects? What should we do more?
Otgonchuluu: If you compare today’s situation to 30 or 40 years ago, we are doing much better. Almost everyone was poor by today’s standards. There was no private property. The most important contribution has come from mining. I have compared the statistics of the effect of mining on GDP, and it’s really a great achievement, in terms of increase in exports and GDP. But people still do not realize this, so we have to work on public education and awareness.
I happy about the policy the Minister is pursuing. The national geological database announced yesterday will also be a very good thing. Lots of things are still in progress. According to the SDGs, the per capita GDP must be around 17,500 USD. Right now it is at around 4,500 USD. How can we triple this number in under 10 years? The only way is mining. The government must be braver, more anti-populist, and must start issuing exploration licenses. Up to 40% of the territory can be explored, whereas now it’s only about 5%. The government must be more brave. Perhaps through a first come first serve basis, as the current tendering process is very complicated. Speaking to people, the majority people are not anti-mining. So the government must be braver.
One more thing, I saw the balance of payment figures. We are currently running an export surplus, which is good, but we have a deficit in services exports, meaning we import more services than export. So I think there is room for development of consulting, especially in mining. If we can develop more auxiliary businesses surrounding mining, there is high potential there. It would also be good for the exchange rate.
After the meeting, a networking reception was held in the Ballroom of the MNCCI.