Sunday, July 24, 2011

[cpsinewswire] [CPSI NewsWire: Xanadu/Noble JV Acquiring 2nd Project]

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Close: Mongolia Related ASX Listed Companies, July 22, 2011




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XAM closed up 3.5c to 58.5c

Xanadu Mines Ltd Acquires New Coking Coal Exploration Project As Part Of Strategic Alliance With Noble Group Limited 

July 22 (Reuters Key Development) Xanadu Mines Ltd (ASX:XAM) announced the finalization of a farm-in agreement on the Javkhlant exploration project (the Project), as part of its strategic alliance with Noble Group Limited (Noble).

The Project is located in the south western Gobi Altai Province of Mongolia, approximately 22 kilometers from the Burgastai border crossing point into China and only 200 kilometers from the Chinese rail network at Hami.

The earn-in agreement will be undertaken via Ekhgoviin Chuluu LLC (EC), the Joint Venture vehicle established to seek out and develop new coking coal opportunities as part of the strategic alliance between Xanadu and Noble.

Under the terms of the agreement, EC can earn up to 80% of the Javkhlant coal exploration licence by meeting various spending commitments over two years. These include up to USD 230,000 on drilling to earn the first 60%, followed by a commitment to complete a JORC resource to earn a further 20%, taking EC's interest to 80% of the Project. 

Link to article

Link to XAM release


MER closed down 0.5c to 6.5c


Jul. 22, 2011 ( -- Vancouver, B.C.: Meritus Minerals Ltd. (TSXV:MER) (OOTC:MERMF) (MML)(TSX-V - MER)(the "Company") announces it will be conducting a non-brokered private placement of up to 8 million units (the "Units") at a price of $0.05 per Unit to raise proceeds of up to $400,000. Each Unit will consist of one common share and one a share purchase warrant with each warrant entitling the holder to acquire one additional common share of the Company at a price of $0.10 per share for a period of 12 months from closing (the "Warrants"), subject to the right of the Company to accelerate the exercise period of the Warrants to 15 days if, after the 4 month hold period has expired, shares of the Company trade above $0.15 for a period of 15 consecutive days.

Finders' fees in accordance with TSX.V policies may be payable in respect to the placement.

The proposed private placement is subject to approval of the TSX Venture Exchange and the funds raised are to be used on the Company's exploration properties and for general corporate purposes.

Link to release


CAM plans drilling at Handgait molybdneum projects

July 21 (MetalBulletin) Central Asia Metals will start work on a new drilling project at its Handgait molybdenum project in Mongolia, ceo Nick Clarke told MB. The company will spend around $500,000...

Link to article (subscription)

CAML looks for new projects in Kazakhstan, Mongolia

July 20 (MetalBulletin) Kazakhstan and Mongolia-focused Central Asia Metals (CAML) is looking for further development opportunities in Mongolia, possibly with a view to selling them on, in addition to the sale of its Ereen project in the country. Ereen, which is 150km north of Ulan Bator in Mongolia, was being prepared for sale as long ago as November 2010,...

Link to article (subscription)

Link to CAML Presentation, July 2011



July 22, Mongolia Mining Corporation (HK:975) -- Reference is made to the announcement of the Company dated 23 May 2011.

On 20 July 2011, NIC and Uniservice Solution have been selected, through competitive tendering process, as a supplier of fuel products to the Group and as a service provider for the provision of supporting services for the Company's offices located at Ulaanbaatar and camps located at the UHG deposit, Baruun Naran deposit and TKH, respectively. On 22 July 2011, the Group entered into the following agreements:

(i)            Service Agreement between Uniservice Solution and the Group, whereby Uniservice Solution conditionally agreed to provide office and camp supporting services to the Group for a period commencing from the date of the EGM at the earliest to 31 December 2013 for a total consideration of US$73,193,551; and

(ii)           Fuel Supply Agreement between NIC and the Group, whereby NIC conditionally agreed to supply fuel products to the Group for a period commencing from the date of the EGM at the earliest to 31 December 2013 for a total consideration of US$667,471,067, and NIC may sub-contract its obligations under the Fuel Supply Agreement to Shunkhlai and Gobi Oil.

The Office and Camp Supporting Service Agreement will be terminated on the date of the EGM when the Service Agreement becomes effective.

To facilitate Uniservice Solution in its provision of services under the Service Agreement, on 22 July 2011, Energy Resources, Enrestechnology, Transgobi and UHG WS, each a whollyowned  subsidiary of the Company,  entered into the Sale and Purchase Agreement with Uniservice Solution whereby each of Energy Resources, Enrestechnology, Transgobi and UHG WS conditionally agreed to sell and Uniservice Solution conditionally agreed to purchase the Assets.


Uniservice Solution is a wholly-owned subsidiary of MCS Holding which indirectly owns a 100% shareholding interest in MCS Mining Group Limited, a substantial Shareholder. As such, Uniservice Solution is a connected person of the Company within the meaning of the Listing Rules. Accordingly, the transactions contemplated under the Service Agreement and the Sale and Purchase Agreement constitute continuing connected transactions and connected transaction of the Company, respectively.

NIC is an associate of each of Petrovis Resources Inc, a substantial Shareholder and Dr. Oyungerel Janchiv, a non-executive Director. Shunkhlai, a sub-contractor of NIC, is an associate of Mr. Batsaikhan Purev, a non-executive Director. Gobi Oil, a sub-contractor of NIC, is no longer a connected person of the Company from 21 June 2011. As such, each of NIC and Shunkhlai is a connected person of the Company and the transactions contemplated under the Fuel Supply Agreement also constitute continuing connected transactions of the Company.

Link to release


Asia Coal: Annual Report

July 22, Asia Coal Limited (HK:835) –


During the year, the Group continued to engage in coal mining business and distribution of health and beauty products and services and has also expanded into coal transportation business.

In the coal mining segment, the Group continues to hold the mining right to the Saikhan Ovoo coal deposit in the Bulgan province of Mongolia. The JORC compliant Resources Report prepared by an independent technical adviser shows estimated resources for the Saikhan Ovoo coal deposit in excess of 190 million tonnes as follows:

JORC Class

Volume, m3














During the year, the Group has engaged 中煤國際工程集團武漢設計研究院 (Wuhan Design & Research Institute of Sino-Coal International Engineering Group) (the "Design Institute") for the feasibility and coal mine and washing plant design in relation to the Saikhan Ovoo coal deposit. The design calls for an estimated production capacity of 2.5 million tonnes of raw coal per annum. The Design Institute is still in the process of preparing the feasibility and design.

During the year under review, the Group has also expanded into the coal transportation business and provides trucking transportation in Mongolia and from Mongolia to China. The Group has encountered various problems such as border crossing control and truck driver management which has limited the transportation volume and is now in the process of correcting the problems.


Link to report


Puget Ventures Inc. Files Prospectus

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 22, 2011) - PUGET VENTURES INC. ("Puget") (TSX VENTURE:PVS) (the "Company") has filed a preliminary short form prospectus with the securities regulatory authorities in British Columbia, Alberta, Manitoba and Ontario with respect to a marketed offering of subscription receipts.

The offering will be for 15,239,000 subscription receipts at a price of $1.05 per subscription receipt for total gross proceeds of $16,000,950. Puget has engaged Mackie Research Capital Corporation to act as agent in the financing.

Upon satisfaction of the release conditions, each subscription receipt will entitle the holder to a unit comprised of one common share of Puget, and one-half of one common share purchase warrant exercisable at $1.50 for a period of 36 months following completion of the offering. The release conditions include the completion of the acquisition by Puget from Imperial Mining Holdings Ltd. of all issued and outstanding securities of Pafra, a wholly owned subsidiary of IMHL, and owner of the Karakul Project, located in Russia's Altai Republic in Southern Siberia, and in Mongolia.

The proceeds will be used to advance and develop the Karakul Project, continue the exploration work at Puget's Werner Lake Belt region in northwest Ontario, Canada, and for working capital purposes.

Link to release

Related: Shareholders of Puget Ventures Inc. Vote to Approve Deal That Will Transform Company Into Global Cobalt CorporationMarketwire, July 21


UPDATE 2-Japan complains to Mongolia over Tavan Tolgoi bidding

* Japan says 'extremely regrettable' if Japanese firms excluded

* Four Japanese trading firms sent letter of complaint -sources

* No official response from Mongolia (Adds details, analyst comments)

By Yuko Inoue

TOKYO, July 22 (Reuters) - Japan has joined South Korea in complaining to Mongolia over the bidding process for part of its massive Tavan Tolgoi coal development project, as firms from both countries appear to have been excluded even though they were allied with some of the apparent winning bidders.

Japan's complaint adds to the confusion over the hotly contested deal to develop the world's biggest untapped coking coal deposit after South Korea earlier this month called the process "unclear and unfair."

Mongolia said this month it had picked U.S. miner Peabody Energy , China's Shenhua and a Russian Railway- Mongolia consortium out of six preferred bidders to develop the west Tsankhi deposit, but later said the decision was not final.

Tavan Tolgoi is a coveted project for Japanese and South Korean steel firms in particular which rely on Australia for the majority of their coking coal needs, and were faced with tight supply early this year after devastating floods hit Queensland -- the heart of Australia's coal mining sector.

But Japanese and South Korean firms were not mentioned in the announcement even though they are part of the consortium that includes Russian Railway.

Instead, the announcement said Russian Railway was now part of a consortium with Mongolian firms, but it was unclear which firms were being referred to.

Japanese trading firm Mitsui & Co was also not mentioned although it is a partner of China's Shenhua.

The complaint said Mongolia had persistently called on Japan to help with the development of its mineral resources and that President Tsakhia Elbegdorj `in a visit last November stressed that bilateral partnerships in minerals development would be mutually beneficial, a government source, who asked not to be identified, told Reuters.

"If it transpires that Japanese firms are not included in the winning camps, it would go against what the two governments have been working towards", the Japanese letter was quoted as saying.

"It would be extremely regrettable."

But Japanese and South Korean government officials said they have not yet received any official response from Mongolia.

Oscar Mendoza, chief operating officer of the Ulan Bator-based Frontier Securities, said while some of the original bidders have been informed that their bid has been rejected, there was no indication that the Japanese and Korean firms had been formally eliminated from the process.

He said Mongolia originally wanted Shenhua, Peabody and the Russian consortium to decide what stakes would be allocated to their Japanese and Korean partners.

"Erdenes (the state-owned firm in charge of Tavan Tolgoi) said the allocations would be decided internally and it would be up to each company what the percentage would be. If it is going to Shenhua, they have the discretion to decide how much is going to Mitsui."

Company sources said the four Japanese trading firms in the consortium with Russian Railways -- Itochu Corp , Sumitomo Corp , Marubeni Corp and Sojitz Corp -- have also jointly filed a complaint with Mongolia but have yet to receive an official response.

The Tavan Tolgoi coal mine features high-quality hard coking coal, which is used a lot by Japanese steelmakers and demand of which is growing fast in China.

"Demand for hard coking coal is steadily rising," said Takashi Murakami, analyst at SMBC Nikko securities.

"In addition, Japan's trading firms are eager to add high-quality coal assets as they aim to diversify their resources portfolio," he said.

The west Tsankhi block of Mongolia's Tavan Tolgoi coal deposit holds approximately 1.2 billion tonnes of mostly high-priced coking coal used in steel making.

But the area lacks the roads and railways needed to quickly and economically deliver the coal tomarkets. It also lacks the power and water supplies to support big mining camps.

Link to article


UPDATE: Japan Talking To Mongolia, Not Complaining About Tavan Tolgoi

-- Japan foreign ministry denies filing complaint to Mongolia

-- Neither Japan government nor companies have confirmed Japan is excluded

-- Mongolia urges Japanese investment in railway to export coal

(Adds Japan and Mongolia officials met this week in fifth and sixth paragraphs, possible Japan-Mongolia rail investments in seventh paragraph, Japan bidders' names and comments in the final two paragraphs)

July 22, TOKYO -(Dow Jones)- Japan's Ministry of Foreign Affairs said Friday that there have been recent high-level talks with Mongolia over the role of Japanese companies in developing the country's huge mineral reserves, but contrary to a recent report, there was no official complaint from Tokyo about the bidding for a major coal project.

The rights to be mine operator of Mongolia's planned Tavan Tolgoi coal mines, which contain some of the world's largest untapped coking coal reserves, are being hotly contested, including by neighboring Russia and China.

A recent announcement by Mongolia after a two-year bidding process didn't list Japanese or South Korean companies among the winners, although several had been in short listed consortiums whose other members were named. Mongolia said the winners were China's Shenhua International Ltd. (SHU.AU), Peabody Energy Corp. (BTU) and a Russia-Mongolia consortium.

"We have not confirmed if Japanese companies are indeed excluded in the first place," a ministry official said. "We are still trying to find out."

The clarification comes after Reuters reported Friday, citing unnamed government officials, that Japan had filed a complaint with Mongolia over the bidding process for the right to develop Tavan Tolgoi.

Separately, a senior Mongolian government official said Friday that talks were continuing. "The Japanese and the Koreans are unhappy and are working to get themselves in," he said.

Japanese Vice Foreign Minister Yutaka Banno said Tuesday that he hoped " Japanese companies participate in developing Mongolia's mineral resources including the Tavan Tolgoi coal mine" in a meeting in Tokyo with Mongolia's Minister for Road, Transportation and Construction Khaltmaa Battulga, MOFA said in a statement on its website.

Battulga responded by saying Mongolia "expects Japanese companies' participation in mineral resource development projects and related infrastructure businesses such as railroad," the MOFA statement said.

Battulga also called for Japanese firms to invest in a state-run rail company planning to link the coal mine with Russia, The Nikkei newspaper reported Thursday.

Most of Mongolia's coal is exported to China, weakening its ability to negotiate prices. The rail link would make it easier to export coal to Japan and elsewhere, via Russia, Battulga said.

On July 5, South Korea's government complained that the bidding for the contract had been unfair.

Itochu Corp. (8001.TO) Sumitomo Corp. (8053.TO), Marubeni Corp. (8002.TO) and Sojitz Corp (2768.TO) were originally part of the Russian consortium, while Mitsui & Co. (8031.TO) had partnered Shenhua.

A spokesman for Itochu, who leads Sumitomo, Marubeni and Sojitz in the bidding, said Friday it is unclear whether they have been excluded or not.

Link to article


Mongolia Prepares for Flood of Money

July 22 (Bloomberg) Hurrying into her cramped office deep within Mongolia's huge Soviet-era Government House, Parliament member Sanjaasuren Oyun, 46, is flushed with excitement, a smile creasing her usually serious face.

She hands papers to her young female assistant and exchanges some quick words in the low guttural murmur of Mongolian. Dressed in a pinstriped suit, with a pearl necklace, hair cropped to a business-like shoulder length, and an iPad tucked under her arm, she turns to a waiting reporter.

"Sorry to make you wait," she said, switching smoothly to English, which she picked up as a student at Cambridge. "It's an important debate we are having today. We are considering a freeze on new exploration licenses."

Outside, it's a still-chilly, late-May afternoon in Ulaanbaatar, no sign of green along its potholed dirt roads. But the capital city of about 1 million people is already being transformed by forces greater than the change of seasons, Bloomberg BusinessWeek reports in its July 25 edition.

A freeze on licenses to explore for minerals is no small matter in Mongolia, a country undergoing a resources boom, as miners such as London-based Rio Tinto Group and China's Shenhua Group compete for the right to extract coal, copper, gold, molybdenum and uranium.

It's a resource play that's expected to bring a flood of money into the impoverished country over the next decade, centered around huge mining projects such as the Shivee Ovoo and Tavan Tolgoi coal reserves, valued at about $300 billion and $400 billion, respectively, and the copper and gold mine Oyu Tolgoi, worth some $300 billion, according to Quam Asset Management Ltd. in Hong Kong, which runs a Mongolia-focused investment fund.

Wealth, Wise Use

Oyun is at the center of the country's efforts to pick its way between wealth and wise use. She is a geologist who once worked for the biggest investor in Mongolia's mining industry, Rio Tinto, yet she has made a career pushing for the rights of ordinary Mongolians and fighting corruption.

She is also part of the nation's young democratic history. On the wall in her office is a picture of her brother Zorig, a member of Parliament who seemed on his way to becoming prime minister when he was killed in 1998. His murder is still unsolved.

Investor Talks

On the Parliament floor, members are demanding that the Mineral Resources and Energy Minister Dashdorj Zorigt step down for his handling of negotiations with foreign investors.

"The situation is a bit different from before," Oyun says, gesturing at a television broadcasting the debate. "When we made our first mining legislation in 1997, we were desperate to attract investment, but no more. We can be more demanding."

She acknowledges that the politicians may be grandstanding, aiming to embarrass rivals in the run-up to 2012's presidential elections. The energy minister didn't step down, though the freeze on new licenses has been extended through 2011.

The discussion about ensuring Mongolia benefits from its resources is a struggle that pits nomadic herdsmen and environmentalists against well-connected players such as Prime Minister Sukhbaatar Batbold and Baasangombo Enebish, executive director and chief executive officer of coal company Erdenes MGL, as well as global resource giants such as Rio Tinto and Peabody Energy Corp. (BTU)

Mining Protest

Oyun realizes it's time to meet her daughter and rushes outside, where her driver waits with the 5-year-old.

As the car pulls out around Sukhbaatar Square, in front of Parliament, Oyun points out an ongoing protest: Three round felt tents, known as "yurts" or "gers" in Mongolia, have been set up at the far end of the square. Their occupants are demanding the government close the mining industry to foreign companies.

"The gentleman who organized this protest has become something of an extremist --- I'm not sure that's the right word," she says, referring to Tsetsgee Munkhbayar, a former herdsman turned environmentalist.

"He fired guns near mining equipment last year and now says he and his followers may have to take up arms against the government," she continues, frowning. "He is a resource nationalist. But here in Mongolia we need to strike a balance. How to be sensible but also populist -- yes, we face this tension."

Mongolia is empty and remote, perhaps one reason Genghis Khan -- or Chinggis Khaan as his name is spelled locally in English -- set out to take over most of Eurasia eight centuries ago.

Desert, Steppe

On the two-hour-plus flight north from Beijing, the blankness of the Gobi Desert dominates before becoming the sweeping yellow and green of the steppe, then finally long ranges of treeless mountains as the plane approaches Ulaanbaatar. Other than the broad changes in landscape below, little else is seen. There are no buildings, no roads, no people, no trees, nothing much at all, really.

Squeezed between China and Russia, and equal in size to western Europe, Mongolia has just 2.8 million people, making it one of the most sparsely populated countries in the world, notwithstanding the livestock.

Mongolia's National Statistical Office estimates there are 33 million head of livestock in the country, including goats, sheep, horses, cattle and camels. More than a third of Mongols live in the rundown capital, while about a quarter are still semi-nomadic, living in gers and moving their herds along with the seasons.

Mineral Riches

While it may be short on humans, Mongolia is one of the richest nations in terms of natural resources, and that's just the known deposits. Four-fifths of the country is still unsurveyed. Over the next decade, copper production is expected to double, iron ore to triple, coal to grow by six times, and gold and oil by 10 and 13 times, respectively.

Much of that growth will be driven by demand from China, predicts Eurasia Capital, an Ulaanbaatar-based investment bank that focuses on Central Asia and Mongolia.

The biggest prize is Oyu Tolgoi -- or Turquoise Hill -- named after the color of copper oxide as it seeps from the ground, and one of the largest deposits of copper and gold.

Situated deep in the Gobi Desert, it's just 80 kilometers (50 miles) from China's northern border. Canadian company Ivanhoe Mines Ltd. and Rio signed an agreement with Mongolia to develop it in 2009 after the project developer Ivanhoe tried for more than six years to reach a mining accord. Rio last month agreed to increase its stake in Ivanhoe to 46.5 percent.

Burnt in Effigy

Securing the deal wasn't easy; disputes over how much control Mongolia should cede to the foreign miners led to bitter negotiations as well as protests where effigies of Ivanhoe's founder Robert Friedland and then President Nambaryn Enkhbayar were burnt. It was "readily acknowledged" that participants in the demonstrations were paid to parade, Ivanhoe Capital Corp. spokesman Bob Williamson said.

"It is one of the flagship projects that Rio has," said Cameron McRae, president and CEO of Oyu Tolgoi LLC, in his expansive office in the Monnis Tower, one of Ulaanbaatar's new high-rises. With an expected $6 billion in annual revenue from the mine, "it gives the copper group the opportunity to move into one of the top three in the world," McRae said.

Oyu Tolgoi employs close to 3,000 Mongolians. By early 2013 the company plans to invest $7 billion, including building 100 kilometers of road from the mine to the Chinese border, an 85- kilometer pipeline to bring water to the operation, a 180- kilometer transmission line, and eventually a power station that may cost $1.5 billion.

Supercharging Economy

"We are very aware this is transforming Mongolia's economy," says David Paterson, vice president for regional development and communications at Oyu Tolgoi, also noting that capital spending on the project's first stage alone is equal to Mongolia's annual gross domestic product.

Simply getting ready to mine is supercharging the tiny economy. GDP grew 6.1 percent last year and was up 9.7 percent in the first quarter of 2011 from a year earlier.

"The mining sector could very well carry Mongolia for the next 50 years," says Parmeshwar Ramlogan, the Ulaanbaatar-based resident representative for Mongolia at the International Monetary Fund.

Ramlogan predicts Mongolia could grow at double-digit rates for at least the next 10 years, raising per capita income -- now at $2,470 -- fourfold within a decade and making it one of the fastest-growing economies in the world.

Transforming Economies

"There is a time in these transforming economies when normal economic growth goes out the window," says Richard Harris, CEO of Quam Asset Management. "It's like a geological fault that the economy goes through. You are talking about a nomad or shopkeeper in a small town who suddenly becomes a truck driver or a miner. And he goes from earning a few dollars a day to a few dollars an hour. Then you see the economic changes that go with that."

Policy makers in Mongolia have created a so-called human development fund in large part through prepaid taxes from foreign investors in the Oyu Tolgoi mine, and it doles out 21,000 tugriks ($17) to every Mongolian once a month.

Government negotiators are also demanding that the foreign companies that will develop part of the Tavan Tolgoi mine, which holds an estimated 6.4 billion metric tons of coal, pay their taxes early. Plans call for listing shares in the other half of the project in London or Hong Kong, then granting 10 percent of them to Mongolians, making every citizen a shareholder.

Years of Neglect

No place is likely to change as much as Ulaanbaatar. Mongolia was a satellite state of the Soviet Union from 1921 to 1990, and the years of neglect are still evident in the capital, with block after block of battered-looking cement residential buildings lining rutted roads.

A statue of Lenin still stands in front of the Ulaanbaatar Hotel, built in 1961 to house visiting dignitaries from the Soviet bloc. Oyun's grandfather, a Russian explorer, geographer and ethnologist who spent 26 years in Mongolia, was forcibly returned to the Soviet Union in 1939 and died there in a gulag in 1942. His family never learned the nature of his "crime."

Already high-rises are springing up around Sukhbaatar Square. Louis Vuitton, Emporio Armani, Burberry and Ermenegildo Zegna boutiques vie for attention in the blue-glass Central Tower on the southeastern edge of the square.

In the Monet Restaurant, on the building's 17th floor, businessmen in expensive suits dine on Norwegian salmon and Australian prime beef, finishing with a platter of Gouda, Camembert and Roquefort cheeses with wild blueberry crackers.

A bottle of Mouton Cadet Reserve Sauternes can be had for 135,000 tugriks ($108) while diners gaze over the square and beyond to the distant new sports stadium, built with Chinese money.

Irish Pub

At night a wilder side emerges in places such as Seoul Street's Grand Khaan Irish Pub, known for its hamburgers, beer and occasional fistfights, and in the city's numerous strip clubs.

In the notorious Marco Polo Club, Australians and Americans working for mining-equipment companies mingle with visiting European investment bankers, drink Chinggis Khaan-brand vodka mixed with Red Bull, and watch topless Mongolian women pole dance.

Harris Kupperman, 30, runs his own hedge fund, Praetorian Capital Management, based in Miami Beach. On a trip through North Asia last August, he was struck by the economic potential of Mongolia. He's bought a house in the high-end neighborhood of Zaisan with views over Ulaanbaatar. In February he started the Mongolia Growth Fund, raising $36.6 million.

New York Vibe

"All it takes is for you to put your feet on the ground here, you can feel the energy everywhere," he said. "It's unlike anywhere in the world in terms of sheer energy, apart from New York and maybe Hong Kong."

Kupperman has started an insurance company and plans to buy, renovate and rent the dilapidated Soviet-era apartments that fill the core of the capital. After looking at other resource economies such as Qatar, Dubai and Kazakhstan, Kupperman and his partners concluded that real estate and finance are two industries that flourish in mineral boom economies, but without the capital costs and political risks of mining.

Sipping on a Heineken in the View Lounge, a stylish bar on the rooftop of the 11-story boutique Corporate Hotel, Kupperman notes that he's not the only investor in town.

Dazed and Confused

"You go out on the street any day at noon and you will see dazed and confused hedge-fund guys walking around, with a Mongolian as a guide, with dust all over their $1,000 shoes. And you know they are thinking, [how can I] invest in this country?"

Mongolia continues to court start-up money. When Prime Minister Batbold went to China in June, Mongolia's President Tsakhia Elbegdorj was in the U.S., visiting, among other places, the offices of Bloomberg Businessweek.

Elbegdorj, 48, is a former journalist and two-time prime minister. Like many of the parliamentarians making decisions about the country's future, he studied abroad. He has a master's degree in public administration from the John F. Kennedy School of Government at Harvard.

On his June 17 visit he noted that Mongolia is planning to issue dollar-denominated bonds "in the near future" to finance expansion of the mining industry and build roads and bridges. It has yet to do so.

Oyun is a technocrat in her own right. In 1992, as a student majoring in geology at Cambridge, she flew with a prospecting team organized by Rio Tinto deep into the Mongolian desert to examine the potential of Tavan Tolgoi, then an undeveloped mine. Oyun graduated from Cambridge in 1996 with a doctorate in earth sciences and joined Rio Tinto in Newbury, England, at the branch then responsible for new projects.

Stabbed to Death

In October 1998, one day after returning to England from a one-month trek in the Tianshan Mountains of Kyrgyzstan, Oyun received a call at two in the morning from a Mongolian colleague working in Rio's Ulaanbaatar office. Her brother Zorig, then infrastructure minister in the government, had been stabbed to death in his small apartment in the capital, just before an election that would have likely made him prime minister.

In an interview just before his death, Oyun recalls, "he said he was very worried that vested interests were taking precedence over the national interests of Mongolia."

Russian Mafia

According to Oyun, many Mongolians are convinced that her brother's unsolved murder was a politically motivated assassination, possibly involving Russian mafia interested in the country's then-largest coal mine, Erdenet.

Days after Zorig's murder, Oyun returned to Mongolia for his funeral.

"There was this outpouring of public grief that, even for me, was overwhelming to see," she remembers. She moved back to Mongolia to begin a political career, founding Civic Will, an opposition party.

Since 2009 the country has been governed by a "Grand Coalition" of the Mongolian People's Party and the Democratic Party. Civic Will's platform in large part centers on fighting corruption, especially the growing influence of money in Mongolian politics.

"I entered politics in 1998 because of my brother's murder," Oyun says. "I didn't join either party because I didn't find support from either of them for clean politics."

Oyun is fixated on transparent and clean governance, concerned that the new money will be siphoned off through corruption.

Corruption Concern

Transparency International, a corruption watchdog, last year rated Mongolia in the bottom third of 178 countries, putting it on par with Mali and Mozambique.

Of particular concern are the close links between government and large businesses. A "majority of the 76 MPs have significant commercial interests in a range of sectors," London-based risk consultants Exclusive Analysis said in a 2009 report on Mongolia.

"People are obsessed with money," said Tsetsgee Munkhbayar, 45, organizer of the protest in Sukhbataar Square. With a face brown from years in the sun, Munkhbayar usually dresses in traditional Mongolian garb: a deel, the long robe generally worn with a sash, and a rounded, pitched helmet-like hat.

"The traditional Mongolian perspective of loving nature and mother earth is being forgotten," he said. As a people we are at a dead-end. We must get ourselves away from the idea that economics is everything and that economics will save us."

Fire Nation

Munkhbayar heads a coalition of environmental and nationalist groups called Fire Nation, which organizes protests against the rush to develop the mineral economy. Self-trained in environmental legislation, he hands out copies of the national mining law to a visiting reporter. Frustrated by what he says is the mining industry's tendency to ignore land protections, Munkhbayar and others have taken to violent civil disobedience.

Last September, Munkhbayar was part of the group that fired bullets into mining equipment owned by Canadian and Chinese companies that he says were breaking the law. While he claims no employees were directly threatened, he says without remorse that the incident was intimidating as staff "ran or tried to get out of the way."

On June 3, Munkhbayar led a group of about 50 horsemen into the center of the city where they shot arrows at Government House. They were protesting the lack of official response to calls for a national referendum to elect a new government.

'Bribing Officials'

Munkhbayar does much of his work out of a small office in Ulaanbataar's Sukhbaatar district, where on a May visit two volunteers are tapping on ancient, generic computers. Camping gear, including traditional Mongolian wooden saddles, is piled against one wall. His wife and 8-year-old daughter, youngest of four children, watch a tiny television.

"International corporations are bribing our government officials so they can take over Mongolia," Munkhbayar said. "People should stop buying stocks from international mining companies that are involved in exploiting Mongolia. Instead of spending money to buy stocks they should use that money to help movements like ours."

With a national election looming next year, some financiers and politicians fear Parliament could take a few pages from Munkhbayar and vote in policies that might damp economic growth. It has happened before.

Since leaving the Soviet Union, Mongolia has zigzagged between privatization and nationalization. In the mid-1990s, Mongolian politicians, inspired by Newt Gingrich, even wrote a "Contract with Mongolia." Later, populist calls to nationalize industry coincided with the passage of the highest profits tax on gold and copper in the world. It was repealed two years ago.

Swing to Populism

As commodity prices rise, Mongolia may be swinging back toward the populists.

Despite passing a stringent fiscal stability law last year, requiring that the deficit not exceed 2 percent of the budget, the government plans to run up a deficit more than four times that amount this year. That may bring inflation into double digits and drive up the value of the tugrik, making non-mineral parts of the economy, such as Mongolia's cashmere industry, less competitive.

It could also bring on the so-called Dutch disease, says Rogier van den Brink, lead economist for Mongolia at the World Bank. That's when the discovery of natural resources leads to the decline of a country's manufacturing industries.

"It is always very tempting for government and politicians to say we are rich," says van den Brink. "The only problem is, it's still in the ground. So let's spend all this money in advance. That puts fuel on the fire of an already overheating economy."

Policy Extremes

It's true Mongolia has veered between policy extremes, concedes Oyun, now sitting in the second-floor office of the Zorig Foundation, in an old, high-ceilinged building next door to Mongolia's Foreign Ministry -- where Oyun served as minister from 2007 to 2008.

A large map of Mongolia covers much of one wall, next to an assortment of five photos of Zorig, including one of him perched on a supporter's shoulders addressing crowds during a 1990 protest. Student volunteers wander in to ask Oyun about her schedule for the next week.

"If we stick to the golden middle -- if we stick to the main international trends of doing business and having good governance -- not going to either the right or left extremes, then we don't have to be what economists call the darling of the ultraliberals in the West, but we don't have to introduce the highest windfall tax in the world either," she said.

"There is finally, after 20 years, a real opportunity for Mongolia to grow, and to create jobs and income for the population. I can't expect us politicians to be clever, but if we don't come up with stupid decisions, then we should be fine for at least the next few years," she said with a laugh.

"As Genghis Khan apparently said, it's easy to ride on a horse and conquer a country, but much more difficult to get down from the horse and run it."

Link to article


Mongolia: Ulaanbaatar Subjected to Moscow's Energy Arm Twisting

July 22 ( A shortage of Russian-supplied fuel is underscoring Mongolia's dependency on its giant neighbor. Some experts and officials in Ulaanbaatar are now sounding like European Union leaders in Brussels in publicly speaking out about a need to reduce their country's energy reliance on Russia.

The Mongolian shortage first hit in May after Moscow, citing domestic shortages, raised duties on fuel exports by over 40 percent. Because Mongolia sources over 90 percent of its fuel from Russia, some gas stations were forced to ration out fuel to customers. Prices almost doubled overnight. Many observers suspected the Kremlin was playing a game that it has carefully honed over the years – using energy policy and exports to coerce economic and political concessions from vulnerable, neighboring states.

In Mongolia's case, Russian pressure may be related to Tavan Tolgoi, the world's largest coking coal deposit. Ulaanbaatar is due to announce a tender winner this summer and the three short-listed bidders include Russian, Chinese and American companies. "There could not be a better time for Russia to halt oil exports and, in the meantime, for Mongolia to be reminded of its dependency on its northern neighbor," said a commentary on a local business website,

Because the shortage hit just as warmer days made outdoor work possible, mining operations and agriculture were immediately affected. In Ulaanbaatar, bus fares jumped by 33 percent and taxi drivers increased prices by roughly 20 percent. "I've lost more than half my passengers because more people seem to be taking buses now," said taxi driver Namjil Byambajav, commenting on the squeeze.

By late June, after hurried negotiations with neighboring China and fresh agreements with Russia, officials declared the situation under control. Beijing agreed to send 10,000 tons of fuel per month, while Russia's Rosneft promised another 50,000 tons per month.

Even so, not everyone is convinced the crisis has passed. Fuel prices are currently back to the same as before the crisis, but public transport fares remain inflated, as if anticipating another petrol price jump. The situation may not stabilize until September, when outdoor work slows and demand drops, says Gombo Erdenebayar, manager at New Star Energy, which runs a small chain of gas stations.

Erdenebayar believes the Mongolian government's rejection of a 2008 proposal from state-run Rosneft, Russia's largest oil company, to set up 100 gas stations in Mongolia could also have played a part in the Kremlin's tariff policy. He acknowledged that Russia did experience a domestic shortage. But he remains convinced that, since his country's fuel demand is relatively small, Russia's chief intent with the tariff hike was to bully Ulaanbaatar.

Insecurity over Russia's "arm twisting" and dominance in the sector is justified, says Luvsandendev Sumati, political analyst and director of Sant Maral Foundation, a polling agency. "Russia has a very clear geopolitical strategy here. They are not hiding their interest in local energy resources and they will do whatever they can to uphold their stronghold here," Sumati told

In a turn of events that also likely displeased Moscow, Ulaanbaatar recently announced plans to stockpile petrol reserves and develop its first modern domestic refining capacity, a move that would bolster its energy independence. Unrefined crude oil is among the country's top five exports – Mongolia exported roughly 2.2 million barrels in 2010, according to government figures. All of its production was extracted by Chinese companies and was exported to China. Some estimates say the country has up to 6 billion barrels of recoverable oil.

"Mongolia had small refineries between 1949 and 1969. For 20 years we could produce up to 30 percent of our domestic requirement. We have oil, so why not now?" said Nanzad Boldkhuu, deputy director of fuel policy at the Ministry of Mineral Resources and Energy.

But there has been little progress on reestablishing refining capabilities, despite international interest. "Over the years, 17 companies have been given the license to build the refineries, but there are still many issues to settle like environmental impact assessments. … There has been no conclusive resolution from the parliament yet," admitted Boldkhuu.

In October 2010 Marubeni, a Japanese firm, signed an agreement with a local company for a $600-million project to build a refinery in Darkhan, 200 kilometers north of Ulaanbaatar, to be ready by 2014. But little is known of the project's status. Marubeni refused repeated requests for comment.

Given the time required for the refining projects to kick off, for now the only option for Ulaanbaatar is to continue to broker deals with Moscow. "China will step in to help only if their investments here are affected. They barely have enough oil themselves. But to drive our cars, we'll still need Russia," said Erdenebayar from New Star Energy.

Link to article


Mongolia to import fighter jets from Russia

ULAN BATOR, July 22 (Xinhua) -- The Mongolian Defense Ministry will buy five Mikoyan MiG-29, fourth generation fighter jets, from Russia this year, local media said Friday.

Minister of Defense L. Bold also said Mongolia has plenty of good pilots who were trained in Russia.

To date, there is no MiG-29 in Mongolian Air Force. The media said from 1977 to 1984, Mongolia bought 44 MiG-21 aircraft from Russia, but only ten are now still in use.

Mongolia also wants to buy a military transport aircraft to deliver troops, weapons and other military equipment.

Link to article


India to push N-deals with South Korea, Mongolia

New Delhi, July 22 (IANS) India is set to pursue civil nuclear cooperation with South Korea and Mongolia when President Pratibha Patil goes on a week-long visit to these East Asian countries starting Sunday.

Patil's first stop of her two-nation tour sis Seoul, where she will meet President Lee Myung-bak and a host of senior South Korean leaders. Some economic and culture-related agreements are expected to be signed after the talks.

Patil goes to Mongolian capital Ulan Bator July 27. This will be the first visit by an Indian president in 23 years since Mongolia became a democratic country. A number of economic agreements are expected to be signed after delegation-level talks between the two sides.

From India's point of view, pushing nuclear negotiations with the uranium-rich Mongolia will be the top priority.

"There have been active consultations between the atomic establishments of the two sides," Gautam Bambawale, joint secretary in charge of East Asia in India's external affairs ministry, told reporters.

In September 2009, India had signed an agreement for peaceful uses of radioactive minerals and nuclear energy with Mongolia during the visit of Mongolian President Tsakhiagiin Elbegdorj.

Since the 46-nation Nuclear Suppliers Group (NSG) granted a waiver to New Delhi in September 2008 reopening doors of global commerce, India has sealed over half a dozen civil nuclear accords with various countries, including the US, France, Russia, Kazakhstan, Britain, Canada and Namibia.

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Move One Well Positioned to Assist Future Trade Between the US and Mongolia

As the Mongolian President's visit to Senate results in Mutual Cooperation Bill, Move One prepares for widening of trade.

July 22 (LogisticsWeek) As part of a historic visit to the US, President of Mongolia, Tsakhiagiin Elbegdorj, has met with the American Senate in Washington DC. In response to the official visit, senators, including John Kerry and John McCain, introduced and passed a motion expressing support for the developing trade partnership between Mongolia and the US.

The succinct bill, which was less than 335 words in length, passed unanimously on July 15 as part of the one-hundred and twelfth congress. The core of the bill said that it "Expresses the sense of the Senate to… cement the growing friendship between the governments and peoples of the United States and Mongolia; the continued commitment of the Mongolian people and the government of Mongolia to advancing democratic reforms and protecting investment deserves acknowledgment; and the US government should continue to promote economic, academic and cultural cooperation with Mongolia and support international financial assistance for Mongolia."

The full text is available at the Mongolian Embassy to America's homepage.

Move One Logistics is already at the forefront of this growing trading relationship, and is well positioned to serve the bilateral needs of both nations. The company is helping to shape the economic destiny of Mongolia by facilitating business with not only the US but companies from around the world.

Noah Glassco, Move One's Country Manager for Mongolia, commented on the future trade announcement, saying "It is reassuring to hear about the mutual efforts presented towards a successful cooperation in the bill and how the pace of investment in Mongolia's infrastructure is accelerating. As a leading logistics company in Central Asia, Move One is accustomed to operating in highly remote and extremely rugged conditions, and looks forward to helping international companies gain access to Mongolia's unique opportunities."

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GTSO Enters Into Negotiations for Multi-Million-Dollar Financing for Resource Development

Credit Line Could Prove Critical to Expansion of Mining Operations

SAN JOSE, Calif., Jul 22, 2011 (BUSINESS WIRE) -- Green Technology Solutions Inc. (otcqb:GTSO) announced today that the company has entered into negotiations with an international finance company for a multi-million-dollar line of credit to help fund the development of rare earth resources in Mongolia.

GTSO President and CEO John Shearer said Thursday that the financing would provide the fuel needed for the company and its joint venture partner, Rare Earth Exporters of Mongolia, to move beyond the exploration phase and begin rare earth development in the Asian nation.

"The line of financing that we're negotiating now would allow us to capitalize on all of the groundwork we've laid in Mongolia," Shearer said. "Once the credit is secured and the core sample analysis is complete, we'll be able to move on with the development process. It's a critical step forward for the company."

GTSO has agreements in place for the evaluation and development of mineral assets on more than 17,000 acres in Mongolia that the company believes hold the potential for commercial production of rare earth metals. Global demand for the critical materials has skyrocketed due to the rise of green technology applications including electric car batteries, photovoltaic solar panels and wind turbine generators even as the world's dominant producer, China, has increased restrictions on rare earth exports. Fears over supply shortages have sent prices soaring, creating the favorable market dynamics on which GTSO is working to capitalize.

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Construction companies found guilty of shoddy work

July 22 ( The State Specialized Inspecting Agency (SSIA) found 94 lapses when it checked the construction of 21 buildings in Ulaanbaatar. The lapses cover drawing, use of material and workmanship.

The construction organizations found wanting include Nomin Holding LLC, Eco Construction LLC, Fulian LLC, Orchlon Construction LLC, B and H LLC, Khishig Khangai LLC, Undur Buyant LLC and Urnu Urnukh LLC. The buildings include offices, service buildings and apartments.

The SSIA has ordered suspension of activity by the companies. 

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ACA believed to be probing charges against MP, head of Mongol Bank

July 22 ( Unconfirmed reports say the Anti-Corruption Authority is investigating MP Kh. Narankhuu on a charge of embezzling of billions of MNT from the Erdenet factory. It is also looking into charges that the President of the Mongol Bank, L.Purevdorj, misused Zoos Bank funds for his personal benefit. 

If any truth is found in the allegations the ACA will have to refer the cases to Parliament. It is believed that more MPs can be investigated as the Parliament election draws near. 

Link to article


South Korea still to name Executive Director of Development Bank

July 22 ( Yesterday's scheduled meeting of the Representative Managing Council of the Development Bank could not be held as South Korea has not yet named the Executive Director of the Bank. The last date for this was July 20.

The meeting was meant to discuss the sale of Government bonds worth MNT800 billion, some issues of internal administration, and ratification of the appointment of the Executive Director.

Link to article


Why Mongolia Matters

July 21 (Commentary Magazine, by Michael Rubin) As I mentioned yesterday, my wife and I spent our summer vacation this year in Mongolia, a trip I'd recommend to anyone. The Mongols are friendly, the air is clean, and there is much to see for anyone interested in history, religion, or nature. (The only thing Mongolia lacks is a good beach.) If ever there was a country that lost the lottery on neighbors, it was Mongolia, sandwiched between a sometimes hostile, bullying Russia and an even more bullying China. I am reminded of that apt headline in The Onion in the wake of Russia's invasion of Georgia: "U.S. Advises Allies not to Border Russia."

Indeed, while we were there, people were complaining about Russia playing hardball with fuel sales, sending the price of gasoline skyrocketing, and the price of food and all other goods along with it. While Mongolia has some gas deposits of its own (nothing compared to its coal resources), it has trouble developing it as neither China nor Russia wish Mongolia to be energy independent.

The Mongolian government is actively reaching out for friends who might respect its independence as both its neighbors play hardball. It has courted both Australia and South Korea. Alas, while Mongolians are friendly and pro-American, they recognize they cannot rely on the United States as a friend. President Obama does not treat allies well, and so many realists find it sophisticated to bash allies in order to cultivate enemies.

Such attitudes represent strategic blindness. In 1911, Mongolia declared itself independent from China, a move the Chinese did not recognize. Mongolia turned to the outside, including to the United States, for help. Despite all of Woodrow Wilson's talk of self-determination, he refused to provide much in the way of even moral support for Mongolia, and so the Chinese tried to reoccupy the country in 1919. With friendship spurned with the West, the Mongols turned to the only friend who would have them: Bolshevik Russia. Mongolia hence became only the second communist republic. It was, like the others, a brutal dictatorship and provided the Soviet Union with a forward airfield abandoned only in 1992.

What realists fail to realize when they make dispassionate cost and benefit calculations, is that there is an intrinsic benefit to friendship and alliance, but that such a benefit cannot be realized if the United States fails to embrace friendship for friendship's sake. What may appear inconvenient now may become a critical asset down the road, if only the American foreign policy elite would be farsighted.

Link to article


The All-Important Mongolian Question

July 21 (The American Conservative) --

What realists fail to realize when they make dispassionate cost and benefit calculations, is that there is an intrinsic benefit to friendship and alliance, but that such a benefit cannot be realized if the United States fails to embrace friendship for friendship's sake. What may appear inconvenient now may become a critical asset down the road, if only the American foreign policy elite would be farsighted. ~Michael Rubin

The friendship and alliance to which Rubin refers in this case is the one with…Mongolia. Rubin writes:

The Mongolian government is actively reaching out for friends who might respect its independence as both its neighbors play hardball. It has courted both Australia and South Korea. Alas, while Mongolians are friendly and pro-American, they recognize they cannot rely on the United States as a friend.

What is it that they are relying on these "friends" to do? Rubin says that it is "strategic blindness" to neglect Mongolia, but at no point does he explain how greater American friendliness would change the reality that Mongolia is a poor country dependent on its larger neighbors for energy. Neither does he explain why the U.S. should increase ties with a landlocked state wedged in between two of the world's major powers, or how Mongolia would ever be a "critical asset" for the United States. If the advantages of a closer relationship are unclear, the downside is obvious. It would revive Russian fears of U.S. encroachment into Russia's "near abroad" and alarm China at the same time. In addition to creating a new irritant in the relationship with both governments, it could stoke tensions between Mongolia and its neighbors. That would hardly serve the interests of Mongolia, and it isn't clear that it would help the U.S. in any concrete way.

Rubin is also mistaken if he thinks that the U.S. has stopped paying attention to Mongolia. J. Berkshire Miller described the state of U.S.-Mongolian relations earlier this year:

Either way, Mongolia has been developing increasingly close security ties with the United States. Through the International Security Assistance Force (ISAF) in Afghanistan, Mongolia contributed about 150 soldiers from the elite Mongolian Expeditionary Task Force (METF)—a sizeable number considering the country's population—to help train the Afghan National Army in mobile field artillery techniques.

While nearly two-thirds of the METF in Afghanistan have now returned home, such moves have bolstered the broader relationship with both NATO and the United States. This deployment has also built on the US goodwill Mongolia secured through its troop contributions to the Iraq War, which prompted visits by then US Defense Secretary Donald Rumsfeld and then President George W. Bush—the first sitting US president to visit the nation.

And the Obama administration has indicated that it intends to build on this progress. Last August, the Mongolian Armed Forces (MAF) and the US Pacific Command conducted its annual joint-training exercise, 'Khaan Quest,' which was first undertaken in 2004 and is aimed at further enhancing the MAF's expertise in peacekeeping and counterterrorism. Khaan Quest continues to attract observer and participating nations from across the globe, with South Korea, Thailand, Canada, India, Japan, and Fiji all in attendance recently.

This has not gone unnoticed by China, and intensifying military cooperation with Mongolia in the future could come to be seen as unacceptable. This 2009 analysis by Wang Peiran explains:

If the American military presence in Mongolia becomes too influential, from China's point of view, it essentially means being encircled by the United States. Although Beijing has not directly publicized its stance on military cooperation between Mongolia and the United States, Russia and other countries, there still exists a relatively clear "red line", namely that the current composition of Northeast Asian security cannot be dismantled, and even more, the situation cannot take a turn in a direction that is detrimental to China.

Mongolia seems to be sensitive to Beijing's concerns, and as a result, after the US president visited Mongolia, the Mongolian president immediately paid a visit to China. During the trip, a joint communiqué was released stating that both sides agreed not to enter into any military or political alliances directed at the other. The two nations' cooperation and exchange on security and defense are also progressing step by step. Since 2004, China and Mongolia have conducted three consultations on security and defense. These exchanges have been helpful in increasing understanding between the two sides, raising the level of trust and at the same time strengthening China's influence in Mongolia.

If Mongolia isn't going to enter into any alliances aimed at China, which is what any alliance with the U.S. would be whether we admit it publicly or not, that would seem to render the issue moot. It is not the business of the U.S. to be more pro-Mongolian than the Mongolian government.

Link to article


Leave Genghis Khan Out Of It

July 21 (The American Conservative) Jonathan Tobin agrees with Rubin on the importance of Mongolia, but worries about the Mongolian enthusiasm for Genghis Khan:

While we can sympathize with Mongolia's troubles in the last century, any country that accords Genghis Khan–one of history's great mass-murdering conquerors–the status of founding father, undermines its stance as a lonely democracy fighting for independence against authoritarian bullies.

Seriously? Yes, Genghis Khan was a brutal conqueror and empire-builder, and contemporary Mongolian attitudes towards him rely on greatly minimizing all of the destruction that went into building the beginning of the Mongol world empire, but it is really quite silly to hold this against them. Nations that have regained real political independence only in very recent times are understandably going to look back to moments in the past when their nation was independent, influential and powerful, and they are going to celebrate the famous leaders in their national history. Genghis Khan was undeniably the founder of the most organized political structure in Mongolian history up to that point, and it was because of his wars and the wars of his successors that the Mongols briefly dominated much of Eurasia. Good luck cultivating friendship with Mongolia by disparaging their most famous leader. By the same token, the enduring popular admiration for Stalin in the "fledgling democracy" of Georgia ought to discredit its stance as well.

One important difference between Georgia and Mongolia is that Mongolia has done a reasonably good job of building a functioning democratic state, and Georgia has stagnated as a semi-authoritarian or "hybrid" state. Freedom House rates Mongolia as free with civil liberties and political rights scores that are better than Georgia's. According to Freedom House, Georgia is "not an electoral democracy" by their standards, and rates as only partly free. The Economist Intelligent Unit's Democracy Index ranks Mongolia 64th in the world and considers it a "flawed democracy." By comparison, the EIU report counts Georgia as a "hybrid" regime and ranks it 103rd between Bhutan and Pakistan. Mongolia matched or outperformed Georgia in every category that the EIU uses. That doesn't mean that the U.S. should repeat its Georgian mistake in Mongolia, but it should tell us that the admiration Mongols have for Genghis Khan has no relevance for how Mongolia governs itself today.

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Looking for real adventure – the 2011 Mongol Rally starts today

July 23 (The Examiner) If your idea of adventure is flying first class, followed by five nights in a spa resort, you're in the wrong story – move on. However, if driving 10,000 miles, through Mongolia's toughest terrains, with no support team and no sag wagon sounds like fun…read on.

Each year, The Adventurists put on Mongol Rally, an automobile rally that's truly pushing the limits for reasonableness.  The course is any route you want to take that gets you from London to Ulaanbaatar, the capital of Mongolia . Each team's vehicle is limited to a 1.2 liter maximum engine size. (Think Honda Jazz, Hyundai i10, Volkswagen Polo or something equally inept at climbing mountains and crossing deserts.)

There are no routes suggested. Just get there however you can. There are no prearranged border crossings, visa applications or interpreters provided. Just deal with it when you get there. There are no prescribed pit stops for maintenance or parts. Who knows, your car could be towed across the finish line by a yak.

But it's all for a good cause. In order to compete, each team agrees to raise at least £1,000 for charity, and some are doing much better than that. Half of the money can go to whatever charity the individual team wishes to support, but the other half of all the entrants' monies goes to Christina Noble Children's Foundation in Mongolia. The foundation supports Blue Skies Ger Village, a home for Mongolia's orphaned or abandoned children. In addition, vehicles are auctioned off at the end of the adventure and those proceeds are donated as well.

Stay tune for updates as the 300+ cars push off from England on their 10,000 mile trek around 1/3 of the world. Some won't last the first week, but hopefully a good number will cross the finish line  in Mongolia sometime in August.  The first finish line party is scheduled for August 20th.

For more information about the rally and its contestants:





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