When mining powerhouse Erdenes Tavan Tolgoi JSC (ETT) and the Mongolian government signed Resolution No. 181 in 2012, effectively distributing 3 billion ETT shares to the entire population of the country, no-one had anticipated the devastating effects of a global pandemic occurring just a decade later. Now, after two years of hardships caused by the challenges of Covid-19, the dividend paid to those 2,512,000 Mongolian shareholders is making a real difference.
Mongolia’s economy, overly dependent on trade with its two giant neighbours, Russia and China, has been severely impacted by the pandemic. While the border with China only reopened for trade on the 15th of October after having been shut for months, trade at the Russian border has also been severely limited, while travel restrictions remain in place for ordinary citizens until at least next year. As net imports and exports have plummeted, unemployment has become a worrying problem.
To make matters worse, average household income has shrunk at the same time as prices have risen due to supply chain issues. The dividend payout on the 1,072 ETT shares owned by every Mongolian citizen is therefore a tremendous boost to the Mongolian economy, reeling from the effects of the pandemic, and has offered a welcome respite from everyday hardship for many people.
The mining company has been able to pay a dividend despite a difficult trading environment, managing to sell an impressive 15.5 million tons of coal in 2019, which generated 2.7 trillion MNT in revenue. Then in 2020 the company distributed MNT 179.8 billion in dividends on the 1,072 shares owned by 2.5 million Mongolian citizen shareholders, and contributed MNT 736.1 billion in taxes and fees to the state budget in the same year. Shareholders received a dividend of MNT 90 per share, averaging MNT 90,000 (86,000 MNT after tax) or 30 USD, per person. Added together, this massive distribution came at exactly the right time.
Kh. Delgermurun | Principal, “Narnii Khan Khuuhduud” Kindergarten
For Delgermurun Khurelmujaan, a married 31-year old kindergarten principal and mother of two, the dividend was a stroke of great fortune. After bearing a child with a visual disability in 2013, she dedicated herself to becoming a special needs teacher, and currently works as a principal at the Narnii Khan Khuuhduud Kindergarten for special needs (Children of the Peak Sanctuary) in Ulaanbaatar.
Despite his disability, her young son is eager to learn. He attends a mainstream secondary school with some friends of his age, where his reading challenge became even more apparent. His parents were then told about a specialist software package with the potential to revolutionise the way he learns, but with the price tag of 225,000 MNT (79 USD) it was simply beyond their means. With a combined household income of 1,400,000 MNT or 490 USD per month, they had just enough to meet their primary household needs. A combined dividend of 257,850 MNT (90 USD) was paid to their families by ETT and the government of Mongolia, and suddenly the doors of learning opened once more. With the software at his disposal, Delgermurun’s little boy can convert his written textbooks to audio files and listen to them as diligently as any other children his age.
Ts. Tseveen | The elderly
Tseren Tseveen is another Mongolian woman whose life has changed because of the dividend payout. As a young woman, Tseren worked as a cook at the Ministry of Defense of Mongolia. She mothered five children and currently lives in Gachuurt with her two grandchildren, aged 15 and 17. Since retiring, she has been selling grains to feed pigeons at the entrance to Gandan Monastery to help support her family. When Tseren retired, she realised how important her friends were, and needed to balance seeing them with a way to supplement her pension and meet her daily needs. Her pension is only 350,000 MNT or 122 USD per month. If she has a good day at the Monastery, she makes an additional 20,000 MNT or 7 USD per day. Still, she struggles to make ends meet, and must also cater to the needs of her two teenage grandchildren.
To sell her grains, this 89-year old grandmother travels more than 20 kilometres from Gachuurt on the city’s western side to the central area Gandan Monastery. To do this, she has departed at 8am every morning, through the bitter cold of winter, for the past 17 years. Then last year Tseren received a dividend MNT 257,850 or 90 USD from Erdenes Tavan Tolgoi JSC, and a new opportunity emerged. Instead of using the windfall to buy grain and pay for transport, she invested the lump sum in materials needed for making children’s shoes, a craft she’s enjoyed since her early days. Making shoes for children, surrounded by the occasional friendly visitor, keeps her young, she says. She now sells her crafted shoes at the market, earning more than she did selling grain, and is able to spend more time with the special people in her life.
N. Munkhtulga | Student, National University of Mongolia
Munkhtulga Nyamjav, a 21-year-old student of Information Systems at the School of Applied Science and Engineering at the National University of Mongolia, is another citizen shareholder of ETT. Despite his youth, he is relatively independent and works while studying to pay for utilities and rent, and spends his evenings picking up new skills. Munkhtulga took part in the Hackathon 2020 programming competition among Mongolian universities as a UI/UX designer and project manager and is multilingual, able to converse in English, Spanish and Chinese.
Last year, he received a dividend of MNT 86,000 (after tax) from Erdenes Tavan Tolgoi. This talented and dedicated young man’s income had been disrupted by the impact of border closures on the economy, which saw his earnings fall. The dividend pay-out was an unexpected and welcome surprise, and instead of using it to supplement his household income, he immediately enrolled in an online training to improve his design skills. His investment has already paid off, as Munkhtulga has managed to find additional work as a junior designer for a marketing company, with prospects for continued employment when he finishes his studies.
ETT and the Mongolian government have combined to offer a remarkable shareholding structure to Mongolian citizens, where everyone participates in the natural wealth of the country. With all the logistics that this entails, ETT’s shareholder numbers might be second to only Reliance Power in India, which had around 3.46 million shareholders several years ago. While some governments may struggle with determining the effectiveness of social benefits to alleviate poverty, such as food banks in England, concern can be raised about their limited long-term ability to turn people’s lives around. Meanwhile, ETT and the Mongolian government now have clear indication that cash payments allow recipients to choose from a range of options that is unique to each person, giving people the agency to change their own lives, on their own terms.
