🌄 Good day!

📬 Wishing you a great start to the new week. Here’s a recap of last week’s key political, economic, and capital market news and major events.

🗞️ In this week’s issue:

• National Wealth Fund Reform Aims to Boost Mining Revenues and Ensure Transparency

• “Copper Processing Complex” project

• Cooperation with the Sultanate of Oman in the fields of wealth funds and investment

• CMM Market Update

• Market News

🟣 National Wealth Fund: Working Group Established to Oversee Law Implementation

In spring 2024, Mongolia passed the Law on the National Wealth Fund, aiming to implement a new system to fairly distribute the benefits of national resources to citizens. However, a full year after the law’s adoption, it has remained unclear whether the fund has actually begun operating in practice.

🧭 One Year Since the Law Passed – Is It Finally Moving Forward?

Since taking office, Prime Minister Zandanshatar G. has made revitalizing the National Wealth Fund and accelerating the law’s enforcement one of his major commitments. As part of this, he announced that starting from August 2025, the Government will form a working group to ensure that revenues from strategic deposits are directed into the fund and distributed to citizens in an accessible manner.

🏗 What is the National Wealth Fund? – The 3 Component Funds

The National Wealth Fund is divided into three component funds:

1. Stabilization Fund

   • Source: Budget surplus and unspent balances

   • Purpose: To offset economic downturns and compensate for shortfalls in budget revenue

2. Future Heritage Fund

   • Source: Dividends from mineral deposits and a designated share of the royalties from mineral resource use

   • Purpose: To build a pension reserve (until 2050)

3. Sustainable Development Fund

   • Source: Revenue from the sale of shares of state-owned enterprises

   • Purpose: To directly distribute returns to citizens and support household finances

🛠 The Newly Formed Working Group Has Been Tasked With the Following Duties:

• Establish a mechanism to channel revenues from 16 strategic deposits into the National Wealth Fund

• Negotiate with deposit holders and explore options to increase the state’s ownership

• Develop an inclusive model for distributing benefits to citizens

• Draft a comprehensive reform of the royalty and tax packages

• Propose amendments to relevant legislation

• Examine possibilities for the state to hold 100% ownership in certain deposits

• Appoint special representatives to work directly at each deposit site

Under the Prime Minister’s directive, the working group must present its initial results by August 11, 2025. While the group’s composition and mandate are clearly defined, there is still no transparent reporting or concrete announcement of results, leaving uncertainty over how, through which channels, and to whom the projected benefits will be delivered.

⚠️ Key Concerns and Risks in Implementing the Fund:

• The distinctions and coordination between the different funds remain unclear

• Weak systems for asset management and oversight

• Lack of precision in transparency and accountability mechanisms

• Past corruption controversies related to the “Future Heritage Fund,” among others

🟣 Mining: Moving from Raw Materials to Value-Added Production…

🏗️ The Government of Mongolia is accelerating efforts to develop value-added production in the mining sector, with a particular focus on copper and steel.

📈 Under the 2024–2028 National Action Program, the “Copper Processing Complex” project will process 560,000 tons of copper concentrate annually, producing 125,500 tons of cathode copper along with by-products such as silver, gold, and sulfur. The plant is projected to generate USD 56.8 million in net profit per year and recover its investment within 7.7 years.

The Government views this project as a strategic step toward shifting away from an economy overly dependent on raw material exports and strengthening the domestic economy. Minister of Industry and Mineral Resources Damdinyam G. emphasized the importance of moving beyond raw resource extraction to developing value-added production within the country.

⚙️ “Erdenet Mining Corporation” Secures 55 Years of Proven Reserves and Expands Capacity

During a meeting in Bayan-Undur, officials reviewed the operations of Erdenet Mining Corporation and highlighted ongoing projects under its development strategy through 2031. Geological surveys have confirmed that the company’s proven ore reserves have reached 3.4 billion tons, ensuring operational capacity for the next 55 years.

🟣 Mongolia to Cooperate with the Sultanate of Oman in Wealth Fund and Investment Sectors

Last week, the President of Oman’s Investment Authority, Abdul-Salam bin Mohammed Al-Murshidi, was received at the State Palace for a meeting. During the discussion, the two sides exchanged views on cooperation between the two countries in sectors such as economy, investment, mining, agriculture, and renewable energy.

🏦 Studying Oman’s Experience to Develop the National Wealth Fund

Prime Minister Zandanshatar G. presented Mongolia’s National Wealth Fund and expressed interest in learning from Oman’s wealth fund experience to develop the fund in line with international standards.

The Oman Investment Authority is the country’s main entity that accumulates funds from oil and natural gas revenues and makes international investments. Both sides emphasized the strong potential for cooperation in this field and discussed establishing mechanisms for joint projects, research, and knowledge exchange.

🌍 Expanding Investment Cooperation

The Prime Minister noted that Mongolia, with its abundant natural resources, vast territory, and strong renewable energy potential, has significant opportunities for investment collaboration with Oman. He highlighted the Government’s ongoing policies to attract foreign investment and underscored the need for funding in mineral exploration and infrastructure projects.

🤝 Expressed Readiness for Joint Projects

Mr. Abdul-Salam Al-Murshidi outlined the operations and investment areas of Oman’s wealth fund during the meeting, stating that there is full potential — and readiness — to implement joint projects and programs with Mongolia in the mining, agriculture, and renewable energy sectors.

🟣 CMM Market Update

🏢 Plan to Reduce Number of State-Owned Companies from 109 to 87

According to Tsengel B., Head of the State Property Policy and Coordination Agency, the government aims to gradually reduce the number of state-owned and state-participated companies by 20% — from 109 to 87 — during 2025–2028. The plan includes:

• Listing shares on the stock exchange and making them publicly tradable

• Liquidating or merging loss-making companies

• Introducing a new remuneration system for directors

• Implementing structural reforms to support profitable and strategic sectors

Relevant officials have been instructed to present an updated plan for state-owned enterprise privatization by August 15, 2025.

🔹 Companies under consideration for conversion into joint-stock companies include:

• Erdenet Mining Corporation

• Erdenes Tavantolgoi

• MIAT Mongolian Airlines

• Agricultural Exchange

• National Reinsurance Corporation

For these companies, between 10% and 66% of shares could be offered to the public via domestic and international stock exchanges. Additionally, up to 10% of shares in companies operating in strategic mining sectors could also be listed publicly.

The government estimates that these privatizations could generate MNT 3.72 trillion in revenue. The Prime Minister has instructed relevant ministers to finalize and submit proposals to the Cabinet by August 20, 2025, and subsequently present them to Parliament.

💰 Ashid Capital SPC Issues Asset-Backed Securities (ABS)

Ashid Capital SPC, a subsidiary of Ashid Capital NBFI, has issued asset-backed securities (ABS) aiming to raise a total of MNT 40 billion, with the primary market offering officially starting on August 7.

📌 Key Terms of the ABS:

• Unit Price: MNT 100,000

• Maturity: 24 months

• Annual Interest Rate: 18%

• Interest Payment: Quarterly

• Principal Repayment: 50% in the 18th month and 50% in the 24th month

The securities are backed by a loan portfolio of over 900 car-collateralized loans valued at MNT 45.2 billion. The portfolio meets 34 legal and financial criteria and consists entirely of performing loans.

🏛️ Market News

📈 [MSE:MNP] “Mongol Post” JSC Reports 383% Net Profit Growth

For the reporting period, Mongol Post JSC recorded a 383% increase in net profit compared to the end of last year and a 759% increase compared to the same period last year.

📈 [MSE:KHAN] Khan Bank JSC Leads TOP-20 Index Companies in Net Profit

In Q2, Khan Bank JSC posted a net profit of MNT 353.7 billion with interest income of MNT 1.37 trillion.

📈 [MSE:APU] APU JSC to Distribute Dividends from First-Half Profits

APU JSC announced it will distribute 71% of its first-half 2025 profit, totaling MNT 69 billion, as dividends to shareholders by February 10, 2026.

📉 [MSE:AARD] Ard Financial Group JSC Net Profit Down 35.16% to MNT 138 Million

Net profit fell from MNT 102 million at the end of last year to MNT 138 million, representing a 35.16% decline compared to year-end, and a 91.06% drop compared to the same period last year.

🟣CMM Services

Capital Markets Mongolia (CMM) advises publicly listed companies on effectively engaging with investors, defining optimal strategies for IPOs and bond issuances, and participating in the capital market in a reputable and efficient manner.