Vladislav Portnov is the Chairman of the Mongolian Trade and Industry Council in Ulaanbaatar, Mongolia. We interviewed him regarding Mongolian relations, the most profitable investments, the intricacies of commodities stock-exchanges, management best practices and much more. We found our discussion with Mr. Portnov by all means valuable and inspiring.
First of all, the main goal is to strengthen what exists and restore what has been lost. 100 years is not a very long time for Mongolia. The Council headed by me is a full-fledged Mongolian NGO that is why I can afford my own approach to different issues. The plans are simple and specific such as to visit Ulaanbaatar in the second half of August 2021 and reconnect with my friends, partners and mentors. No names at this point, if you permit.
Indeed I dedicate a lot of time to working on Mongolian projects, communicating with the political, cultural and business elites of Mongolia. I have been working for seven years with this country. Mongolians demonstrate respect towards me and for sure it is a mutual attitude. In reality, my business partners and friends are practically fluent in Russian. What kind of Russia did they learn about thanks to me? We talk about foreign policy and the Buddha Dharma, we practice target shooting, take part in intergovernmental meetings, and sometimes we can just go to the store with my Mongolian mentor – exAmbassador of Mongolia to the Russian Federation, Honourable L. Khangai to buy arrows. Yes, archery (shooting on foot and on horseback) is one of the most popular sports in Mongolia.
I would like to comment on the industry with which I deal: rock-gold mining sector of Mongolia. The growth is huge. More than 70% of Mongolia’s nonferrous and precious metal deposits have not yet been explored. Another large and modern project is the recently opened airport named after Genghis Khan. The airport is a big project (the joint project of Mongolian and Japanese investors); obviously an attractive one. Currently we are resuming negotiations with our Mongolian business partners on the construction of a modern, high-tech satellite-city on 400 hectares near the airport
There is definitely a need for Russian customs practices to make some adjustments to increase import from Mongolia. The problem of extremely high import duties from the Russian side has existed for a long time and this is readily exploited by the USA having come up with the so-called “Third Neighbor Trade Act”. The Act initiator is one of the senators of the state of Florida, if my memory serves me right… At the same time, America, in contrast to the inertia of the reforms of Russian customs practices with Mongolia (the tax duty on goods can reach maximum of 40%), creatively declares the USA the third trade partner of Mongolia.The USA also strongly encourages the import of Mongolian cashmere, which by the way is in demand among the leading premium brands, including the Italian ones.
Briefly, I hope that after the official part, where I am involved, a permanently acting intergovernmental working group will be created. Of course, I intend to join such a working group as the Chairman of the Russian-Mongolian Trade and Industry Council in Ulaanbaatar and as an entrepreneur with work experience in the USA, Europe and Mongolia.
Industrial metals, including copper, provide tremendous growth, however, it is more linked to trends – depending on the development of industry and technology. Sometimes someone specifically tries to “move the market”. We all remember the recent silver boom: according to analysts, it was connected with “hitting on” the hedge funds (pardon the slang).
I have a business partner in London and together we are raising Alt Mungu Capital Fund (in translation from Mongolian: Gold Silver Capital, while in Mongolian mungu also means money). The purpose of the Fund is to invest in resource companies. This is an exciting business case where we also participate with our own money. I am also selectively interested in the acquisition of private equity of mining companies, of course. In the case of investments in shares and in the acquisition of private equity, the optimal scenario is as follows: a junior company with a reserve of gold C-C1 on the balance is presented on the market, so the already carried out geological surveys allow us to provide a completely accurate economic forecast, but the banks normally would refuse to finance exploration – the ideal time for a private investor to enter the stage. Here the two most effective scenarios are: to raise capital on the TSX (Toronto Stock Exchange) or in London, and it makes sense to do this only if there is a real strategist.
Yes, of course. A strategic investor who actively buys back the company’s placed shares from the moment of the listing. This is an absolutely legal scheme, some customers are interested in it from the standpoint of the client’s books, plus it “warms the market”, but this is secondary. IPO just for IPO’s sake (without a strategy investor) of junior companies, we do not consider, unless it is really an uncut diamond, if you know what I mean, we don’t do that.
Yes and no. An MBA will help you to shake up your internal “collider”, if you will: we can say they teach how quickly to think big, estimate the model. Add to that knowledge of the industry and the country and away you go!
I think Mongolia chose me.
Certainly. If we abstract from the fact of past lives EXCLUSIVE INTERVIEW Luxury Magazine 6 1 EDITION | 116 in this conversation, that for me as a Buddhist is part of my worldview and values, then I was approached by some English bankers from Zurich. They were planning a business trip to Ulaanbaatar and, presumably, they decided that the Mongols would welcome them better with me. This made sense to me – many of my Mongolian colleagues and friends, for example, have graduated from MGIMO and RUDN. Then as now, I was actively engaged in commercial real estate; I had just returned from that annual MIPIM real estate forum in Cannes. Of course, my reaction to the invitation was the following: I will fly if there are meetings with the owners of the assets. We agreed and I accepted the offer of the Englishmen. The first trip was a successful one; the business trip for them was seen as a one-off, just for reconnaissance, so to speak, office meetings and acquaintance. Within 2 weeks, I was flying to Hong Kong on my own for the annual Mongolian Investment Forum. The relationship started. I began to understand people. By the way, playing a long game and delving into business practices: these really are the most important components of doing business, in Mongolia as well. While communicating with the Mongolians, it is very important to interact as an equal; at least that’s how I communicate. If the person is older you should show respect, but briefly and continue to communicate briefly and clearly. That is the secret to success
Back to your question about potentially distractive ambitions in the gold mining sector… Believe me, there are many of them. The resource should be evaluated, and then the evaluation methodology should be evaluated. Even Australian JORC assessment method that is very well accepted by the banks shouldn’t be taken for granted.
JORC, according to banks, covers the credit risks while financing. Technically they are right – the credit committee arranges financing and if something happens it sighs and sends reports to shareholders – everyone saves face. Later you can still blame this or that region. (Laughs.)
If this is an investor of the Rio Tinto class (by the way, they are seriously presented and on a large scale in Mongolia) or the Glencore level commodity trader, then, bluntly speaking, he knows what he is doing, he’s got his own due diligence and own compliance and he himself tunes it as he deems appropriate. Whilst I work with private large and mid-cap companies that are to some extent aware of what they want to achieve in Mongolia.
The objects for foreign direct investments that at this stage I offer in Mongolia – from 45 million euros with consideration of all the costs of the field development, you can buy a field (licenses, including production licenses) for 15 million euros, while taking into account the production budget. The volume of reserves is from 28 tons, only rock-gold
I have worked in Africa, the Democratic Republic of Congo. The reserves, in particular of copper and rare earths, are rich, but the region is extremely toxic from the viewpoint of internal politics, child labour in mines, sanctions, and the level of poverty is such that people do not have a morsel to feed on. Naturally, I do not recommend going there to my clients. And in fact, I would say this – my region is Mongolia and, selectively, projects in Russia, also geographically closer to the Mongolian border.
The creation of the fund as a form of flow and asset management is definitely yes. We also understand the most applicable blockchain jurisdictions. From my perspective, so to speak, “field work” jurisdictions that are well understood by me with the most adaptable blockchain technology law are Liechtenstein and Switzerland.
Endless blue sky
My father taught me when I was a child – shoot as you exhale, and this exhalation is already good enough to make an accurate shot. Skeet shooting also requires knowing your target. Almost KYC (Know Your Client), yes? (Smiles.) There are targets that need to be taken a little ahead and almost at the “hovering” point. There are very fast ones, where the lead is such that the technique is more reminiscent of the “sea battle” slot machine from Soviet times. I don’t like it. I like beautiful shots – where there is less predictability, it is interesting to shoot off the cuff, but these targets (discs) are closer; a distant target must still be taken with the technique and on the exhale.
To master the skill, would be an exaggeration in my case, but I have been fascinated by Chinese martial arts for a long time. During my first trip to Hong Kong (by the way, to the same Mongolian investment forum), I found the Wing Chun school and took lessons from the son of a student of Master Yip Chun. There is a very cool Wing Chun school in Moscow directly descended from the Master in Hong Kong. Wing Chun develops me tremendously. I remember that in Hong Kong, before agreeing to give me private lessons, the Disciple of Master Yip Chun interviewed me – it should be noted that in the East to this day they on their guard against an invasion of spies from other schools of martial arts. I just calmly answered the questions with a deliberate but light British accent. And suddenly, during one of the answers, I said the word “geometry”. You are accepted, I heard the answer. Such is geometry.
To know the true value of everything, without satori, you know, in order to continue to desire to explore the world. In 2021 intend to travel to a place where in this incarnation I have not yet been. But that will be another story and perhaps another interview.