MATD Rally 2.2% on Confirmation of its License Renewal
Petro Matad (LON: MATD) has announced that its license for production sharing on the Block XX in eastern Mongolia has been extended till July 19, 2013. It has also received permission to abandon test wells in Block IV (southwest) and block V (central) which have not indicated prospective reserves. Shares closed up 2.22% at 46.00 on Wednesday.
Erdenes Tavan Tolgoi Calls for International Diplomacy
The Mongolian National Security Council has officially rejected the proposal submitted on July 22 to allow China, USA, and Russia to mine the western block of Tavan Tolgoi. The draft will be revised and resubmitted at a later date. The two issues that have slowed a definitive decision on the matter are where to list the IPO and who to grant development rights to. The Mongolian Government would like to only list it on the MSE, however, the potential $2-3 billion IPO is almost twice as much as the MSE total market cap of $1.6 billion as of July 25, 2011. In addition, the MSE does not have electronic trading and would not be able to handle the daily trading volume. A multi-city listing would also increase the selling price. Secondly, the allotment of the mine is crucial. Mongolia needs to maintain good relations with Russia and China as it is landlocked in between them. However it also, can't sacrifice future ties with South Korea, Japan, or the USA. Mongolia needs to maintain political leverage over its neighbors while satisfying their demands and avoiding economic dependence to one specific country.
Mongolian Salaries Increase 19% y-o-y
The Mongolian Labor Department reported that the average Mongolian's monthly salary is 486,000 MNT, a 19% increase over last year. Expenses on basic needs were 477,200 MT per month leaving only 8,800 MNT ($7.15) for saving or any "luxuries". An overwhelmingly large lower class is one of Mongolia's biggest socio-economic problems.
Mongolian Central Bank Announces Inflation Targets
The Mongolian Central Bank has made a few suggestions to the Mongolian Parliament on its inflation targets. It will aim for 10% inflation in 2012 and 8% for 2013 and 2014. It reasoned that it is difficult to keep inflation at 10% because parliament is approving a lot of spending projects on top of the huge foreign direct investment and GDP growth. Second, it wants to stabilize the exchange rate; hinting it could intervene if the MNT becomes too strong and makes the manufacturing sector uncompetitive.
