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Friday, September 23, 2011

[CPSI NewsWire: OT Uncertainty Sends IVN to 52 Week Low]

CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, WA based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.

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See Mongolia related quotes at bottom of newsletter

 

Mongolia wants bigger stake in gold, copper mine

ULAN BATOR, Mongolia. September 22 (AP) — Mongolia’s government is demanding a bigger stake in the massive gold and copper mine it is developing in conjunction with mining companies Rio Tinto and Ivanhoe.

A statement released by the government this week says the Cabinet had asked the ministers of finance and minerals to re-negotiate an investment agreement signed in 2009 in an effort to increase Mongolia’s stake in the Oyu Tolgoi copper and gold mine.

Canada’s Ivanhoe Mines and Anglo-Australian miner Rio Tinto are jointly developing the $4.6 billion Oyu Tolgoi mine, but the project has met with resistance from the public and some lawmakers who say Mongolia’s stake in the project should be bigger.

Oyu Tolgoi is one of several big projects Mongolia has been debating as it strives to ensure local interests are protected while tapping foreign expertise needed to develop the resources.

Mongolia currently owns 34 percent of the Oyu Tolgoi joint venture company, but some lawmakers have demanded the stake be raised to at least 50 percent.

The company said in a statement that the current agreement is fair and there was no need to revise it.

“The investment agreement gives Mongolia the benefits of ownership, while not requiring the government from having to put up any money up front,” Oyu Tolgoi chief executive officer Cameron McRae said in a statement.

“It is a robust agreement enshrined in Mongolian law and was signed by all parties in good faith on the understanding it would not be changed,” he said.

The mine project, which is 50 percent complete, is expected to produce 1.2 billion pounds of copper and 650,000 ounces of gold per year in the first decade of operation beginning from 2013.

The project has also fueled discontent in the country. Protesters last year called for the cancellation of the mine investment citing uncertain tax rates.

In 2009, Mongolian lawmakers voted to phase out a windfall profits tax in 2011, removing the last obstacle to a deal with Rio Tinto and Ivanhoe Mines to develop the Oyu Tolgoi mine. The tax was enacted in 2006 at a time of surging metals prices, but miners said it made tax rates too uncertain and would discourage investment.

McRae called the investment agreement a “cornerstone agreement” whose stability was important to investor confidence in the country.

Earlier this month, Mongolia’s National Security Council rejected a plan for U.S. mining giant Peabody Energy, China’s Shenhua Group and a Russian-Mongolian consortium to jointly develop the keenly sought Tavan Tolgoi coking coal deposit in the Gobi Desert.

Mongolian officials said they would hold negotiations with the various companies involved to change the ownership.

Link to article

Link to Government press release (Mongolian)

Related: CABINET INTENDS TO CALL OYU TOLGOI INVESTORS TO TALKSMontsame, September 22

 

Shares of Ivanhoe Mines Fall Below Previous 52-Week Low

September 22 (FNNOnline) Shares of Ivanhoe Mines (NYSE:IVN) traded today at $15.13, breaking its 52-week low. So far today approximately 5.4 million shares have been exchanged, as compared to an average 30-day volume of 2.2 million shares.

Over the past year, Ivanhoe Mines has traded in a range of $15.13 to $30.03 and are now at $16.27. Over the past week, the 200-day moving average (MA) has gone down 0.5% while the 50-day MA has declined 1.8%.

Ivanhoe Mines (NYSE:IVN) has potential upside of 59.6% based on a current price of $16.25 and analysts' consensus price target of $25.94. Ivanhoe Mines shares should first meet resistance at the 50-day moving average (MA) of $22.50 and find additional resistance at the 200-day MA of $24.87.

Ivanhoe Mines Ltd. explores for and develops gold, copper, uranium, and coal. The Company operates in Mongolia, China, and Australia.

Link to article

 

Deutsche Bank Submits Initial Substantial Holder Notice (6.35%) to Hunnu Coal

September 22, Hunnu Coal Limited (ASX:HUN) --

Link to notice

 

Uranium Corp, NPCIL to bid for assets abroad (in Mongolia, …)

KOLKATA, September 22 (The Economic Times) -- Public sector units Uranium Corporation of India Ltd (UCIL) and Nuclear Power Corp of India Ltd (NPCIL) will jointly bid for overseas uranium reserves, potentially boosting its financial firepower in any bid battle for gaining control of these assets. 

The two companies are exploring initial bids for mines in Mongolia, Kazakhstan, Russia and South Africa. India, which needs more power to light homes and run factories, is focusing on cleaner sources of energy. Its nuclear plants produce about 3% of the total power generated in the country, which India aims to raise to 25% by 2050. 

"UCIL and NPCIL will jointly bid for assets. We are keen on securing uranium assets abroad, even as we develop new mines within the country," UCIL managing director Diwakar Acharya said, adding, "We would like to bring back the ore to the country," referring to assets in those countries. 

While NPCIL will be the majority partner in any such project, UCIL is likely to pick up strategic stake of about 26%. 

UCIL has expertise is hardrock mining while NPCIL operates atomic power stations. The two companies joining hands will enhance the financial muscle of any bid. 

The Department of Atomic Energy, the administrative agency for both companies is framing a policy to facilitate the venture. In the past, policy issues and slow decision-making have stymied efforts by some PSUs to acquire assets abroad. 

"As a mining company, we can contribute our expertise in hard-rock mining. We have some of the best mining experts and technologists working for us," Acharya said. 

Acharya said factors such as mineable reserves, logistics and the regulatory framework of the host country would also influence choice. 

"Globally, uranium prices crashed after the accident at the Fukushima reactor in Japan. A good reserve could be valued anywhere between $300 million and $500 million," an analyst said.

Link to article

 

German firms eye joint investing in commodity sources

* German firms study investment in foreign projects

* Aim is to ensure supplies

* Kazakhstan, Mongolia first focus

HAMBURG, Sept 21 (Reuters) - Germany's national industrial association BDI is studying a project in which German companies would invest jointly in foreign commodity projects to ensure raw materials supplies, it said on Wednesday.

It is examining whether joint investment in commodity supply projects by German companies is feasible, the BDI said.

In October 2010, Germany's government approved a new commodity supply strategy that included encouraging development of partnerships with producer countries at a time of rising global competition for raw materials.

"Ever more countries are undertaking targeted policies to secure their raw materials supplies," the BDI said. "It is clear that we cannot rely on the market alone."

Direct shareholdings by German companies could help secure essential raw materials at a time of intense competition for commodities, the BDI said.

At the German government's suggestion, the BDI said it is examining investment in Kazakhstan and Mongolia. German and Kazakhstan agreed a commodity partnership in May.

The European Union said on Sept. 16 it would decide in coming months whether to start stockpiling materials that are critical for its industrial and high-tech production.

Of particular concern to the EU are rare earths, commodities used in high-tech industries, global demand for which is expected to double by 2016. Their supply is currently dominated by China, which is restricting exports, citing resource depletion and environmental protection.

Meanwhile, a separate report from Germany's Manager Magazin on Wednesday said the BDI plan involved creation of purchase options for a range of commodities by German industry. The investment requirement over the coming five to ten years could reach 1 billion euros ($1.37 billion), it said.

At the centre of attention was coking coal for the metal industry, tungsten and rare earths largely required by the electronics industry, the magazine said.

German car giant Daimler (DAIGn.DE: Quote) and specialty chemicals group Evonik are interested in taking part and have already said they will make investments, the report said. But electronics giant Siemens(SIEGn.DE) has no interest, the report added.

The companies declined to comment to Reuters.

Link to article

 

Peabody Energy Senior Scientist Honored by Mongolia's Ministry of Nature, Environment and Tourism as 'Distinguished Environmentalist'

ST. LOUIS, Sept. 21, 2011 /PRNewswire/ -- Mongolia's Ministry of Nature, Environment and Tourism has honored Peabody Energy's Senior Manager of International Reclamation Vern Pfannenstiel as a 'Distinguished Environmentalist' for his leadership to establish best scientific practices in land restoration to protect Mongolia's environment.  

The award is a credit to Pfannenstiel's work directing Mongolia's first coal mine restoration project near the community of Bulgan, which included collaboration with joint venture partner Peabody-Winsway, based in Ulaanbaatar.  The Ereen Mine restoration project was designed in consultation with the Mongolian government, the Mongolian Agricultural University and the Mongolian Forage Seed Producers Association.  Many of the principles applied were pioneered at Peabody operations on indigenous lands in the United States where there are similar environmental conditions and cultural needs.  

"Peabody is a global leader advancing world-class mining and restoration practices founded on key principles of excellence in safety, operations, and environmental and social responsibility," said Peabody Chairman and Chief Executive Officer Gregory Boyce.  "We are proud of Vern's leadership in establishing practices that will create a lasting legacy for the Mongolian people."  

Project team members included 60 U.S. and Mongolian environmental scientists, engineers and technicians who restored an 18 hectare area to hardy, productive rangeland. Notably, a local workforce was recruited and trained to accomplish the job, completing more than 60,000 project hours without a safety incident.

The Ereen project also developed a new water source for livestock and a fresh drinking water source for area residents who previously had no nearby access to potable water, demonstrating the importance of sustainable practice.

One year following project completion, the former Ereen mine site is a productive pasture that ultimately will be used for traditional livestock grazing or hay production.  Seeding results exceeded the accepted criteria for excellent plant establishment, and the forage in the seeded areas is more than four times that of the adjacent native lands.

Peabody Energy is the world's largest private-sector coal company and a global leader in clean coal solutions. With 2010 sales of 246 million tons and nearly $7 billion in revenues, Peabody fuels 10 percent of U.S. power and 2 percent of worldwide electricity.

Link to release

Related: Mongolia's First Coal Mine Restoration ProjectPeabody Energy, June 16, 2011

 

Mongolia investment case – still intact?

September 22 (FT Tilt) The Mongolian government has dealt a fresh blow to the country’s increasingly fragile investment image.

On Wednesday, finance minister Sangajav Bayartsog officially confirmed the government will seek to increase its participation in one of the country’s flagship mineral deposits at the expense of Canada's Ivanhoe Mines, the majority shareholder in the project.

Minister Bayartsogt told local media that Mongolia wants to revise the investment terms for the Oyu Tolgoi mine, the biggest undeveloped copper and gold project in the world with reserves of 1.4bn tonnes. The mine is developed jointly by Ivanhoe and Rio Tinto (which owns 48.5 per cent in the Canadian company).

The government also instructed the head of the cabinet secretariat to send official notices informing the miners of Ulan Bator’s plans and inviting officials from the two companies to engage in formal talks.

Currently Ivanhoe owns 66 per cent of Oyu Tolgoi, and the government has a 34 per cent stake. As of Wednesday, Ulan Bator has made it clear its sights are set on a considerably larger equity holding. The Mongolian government also wants to increase the taxes paid by Ivanhoe.

Since late 2010 there have been increasingly loud calls within the Mongolian parliament to re-open the investment agreement for Oyu Tolgoi to amend the project's legal, tax, and regulatory framework.

Such protectionist voices have the potential to morph into an official policy stance, as Mariyam Zhumadil, Almaty-based analyst at Halyk Finance explained:

…the Minister's statement turns the long-rumored government plans to revise the Oyu Tolgoi investment agreement from populist remarks of select legislators into a probable government action. We believe that Mongolia will be not just seeking revisions of the project's tax regime, but will also aim at increasing the state's stake in Oyu Tolgoi from 34% to up to 50%.

And it is not only Oyu Tolgoi where Ulan Bator is looking at changing the rules.

Just last week Mongolia's national security council rejected a government proposal that would have seen China's Shenhua Group in partnership with Japan's Mitsui, a multinational consortium led by Russian Railways and US miner Peabody Energy, jointly develop the prized Tavan Tolgoi coal deposit. Having already participated in a tender process, the companies will now hold more talks with Mongolian officials.

Ulan Bator certainly has form in meddling with contracts, and it is hard to escape the thought that Mongolia, which is keen to tap foreign expertise to develop its vast resources, could be shooting itself in the foot by making such moves in relation to its two flagship deposits. Halyk’s Zhumadil said the approach of next year’s parliamentary election is the likely driver of the move towards protectionism.

Nevertheless, while the government’s recent actions will likely scare investors, the long-term investment case for Mongolia remains intact.

The country has a wealth of untapped mineral resources over which international banks and investors are salivating, and which should drive future economic growth. Mongolia’s Ministry of Mineral Resources and Energy predicts that capex in infrastructure and investment at Tavan Tolgoi and Oyu Tolgoi alone will keep real GDP growth above 7 per cent until 2012 (it was 8 per cent in 2010) and could push annual growth to more than 20 per cent in the medium term.

And let’s not forget the local equity market performance and the country's branding efforts.

A war on two fronts

Ivanhoe and Rio, the two miners developing Oyu Tolgoi, have been at loggerheads since mid-2010 when the Canadian firm adopted a shareholder rights plan, a ‘poison pill’, to protect against coercive takeovers (Rio had been creeping its way toward control of Ivanhoe).

And the Mongolian government’s plans to increase its holding in the mine has served to exacerbate the conflict further. On the same day Ulan Bator announced its intentions the chief executive of Rio’s copper unit told investors at a briefing with senior management that "talks were under way" with the government.

Ivanhoe founder and CEO Robert Friedland later said in a statement that Rio had provided “unauthorised and incomplete” information and said the Canadian company will provide further details in a future statement following communication with Rio. A Rio spokeperson declined to comment when approached by Bloomberg.

Link to article

 

CABINET BACKS CREDIT AGREEMENTS

September 22, Ulaanbaatar, Mongolia, /MONTSAME/ The cabinet meeting on Wednesday discussed and then backed in principle intergovernmental agreement on financial cooperation between Mongolia and Germany and an agreement to be established between Mongolia's government and the Reconstruction and Credit Bank of Germany.

In frames of the financial cooperation agreement, Mongolia will receive EUR 8.5 million for the “Energy benefits-2” project that will be implemented at the 4th thermal power station in the city.

Money of EUR 4.5 million will be given to Mongolia for the project on developing the local transportation infrastructure with an aim to support food supply of the UB city.

The project on energy aims to reduce a consumption of raw coal, used for producing energy and electricity, by introducing the latest technologies of Germany and the European Union.

In a scope of the project on improving food supply for UB, it has been planned to run 29.4 km paved-road from Jargalant village of the city's Songinokhairkhan district to Tov aimag's Batsumber soum.

The loans' interest is 0.75 per cent per year, the period of payback is 40 years. The period of the basic debt is ten years.

** ** **

The same day, the cabinet backed in principle an agreement on financial cooperation to be established between the governments of Mongolia and Austria. The matter on it will be accorded with related Standing committee of parliament. This agreement will be valid for two years, and a soft-loan of up to EUR 40 million will be given to Mongolia. 

Link to article

 

Think tank for landlocked nations ‘vitally important,’ Mongolian leader tells UN

21 September 2011 (UN News Centre) – Highlighting the special constraints faced by landlocked developing countries, the President of Mongolia today appealed to United Nations Member States to sign and ratify a multilateral agreement to set up an international think tank in his country’s capital to address the concerns of this vulnerable group.

The establishment of the think tank in Ulaanbaatar is “vitally important” to the world’s 31 landlocked developing countries (LLDCs), Elbegdorj Tsakhia said, addressing the high-level debate of the 66th session of the General Assembly.

The multilateral agreement for setting up the think tank is one of several treaties open for signature during the annual treaty event that coincides with the Assembly’s general debate. As of 19 August, one State had signed the agreement, which officially opened for signature on 1 November 2010.

Landlocked developing countries are generally among the poorest of the developing countries, with the weakest growth rates, and are typically heavily dependent on a limited number of commodities for their export earnings.

Mr. Tsakhia noted that remoteness from world markets and high transport costs are a major impediment to the development of LLDCs, and that establishing the think tank will “undoubtedly contribute to intensified cooperation” in the implementation of the Almaty Programme of Action.

Adopted at an international conference in 2003, the programme of action sets out specific measures regarding improved market access and trade facilitation to compensate LLDCs for their geographical handicaps.

The think tank will also contribute, said the President, to the efforts of LLDCs to achieve the Millennium Development Goals (MDGs) – the ambitious targets to slash poverty, hunger, preventable illness and a host of other socio-economic ills, all by 2015.

The distances involved in most cases of landlocked developing countries are excessive, according to the Office of the UN High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS).

Kazakhstan has the longest distance from the sea (3,750 kilometres), followed by Afghanistan, Chad, Niger, Zambia and Zimbabwe with distances from the nearest seacoast in excess of 2,000 kilometres.

Transit time for goods of LLDCs is extremely long because of their long distance, difficult terrain, road and railway conditions and inefficiency of transit transport.

Link to article

Link to Pres. Elbegdorj’s speech

 

Statement by IMF Staff at the Conclusion of the Post-Program Monitoring Discussions with Mongolia

September 21 (IMF) An International Monetary Fund (IMF) mission visited Mongolia during September 14 – 20, 2011, to hold Post-Program Monitoring discussions. The team, led by Mr. Steven Barnett, Assistant Director of the IMF Office for Asia and the Pacific, met with the Mongolian authorities and others to discuss recent macroeconomic developments and policies.

At the conclusion of the visit, Mr. Barnett made the following statement:

The Mongolian economy has made a remarkable turnaround from the recent crisis. This success reflected the authorities’ commitment to pursue sound macroeconomic policies, a recovery in copper prices, and timely support from the international community. With coal output rapidly increasing and two massive mining projects in the pipeline, Mongolia has a bright economic future and an opportunity to spread prosperity to all of its citizens.

“Against this backdrop, we have decided to withdraw our resident representative at the end of the month. We would like to thank Mr. Ramlogan for his dedication and service over the past few years. Our decision reflects the Mongolian economy’s speedy recovery from the recent crisis, rapidly rising income per capita, and our own budget constraints. We place great value on our relationship with the Mongolia and are fully committed to maintaining our close cooperation. Toward that end, we will maintain a local office that will be managed from our regional office in Tokyo. The director of this office, Mr. Ishii, joined our mission last week to reinforce our ongoing commitment to Mongolia.

“As for the current mission, we have had in-depth discussions with the authorities on the economic outlook and policy challenges. We believe that Mongolia has a bright economic future as it continues to develop its vast mineral resources. In the near term, however, we see substantial risks to the economic outlook. First, the economy is overheating. Inflation is already high and likely to rise further, which is exacting an especially heavy burden on the poor, and eroding the ability of Mongolia’s private sector to operate effectively. Rather than contending with these pressures, macroeconomic policies have returned to the boom-bust approach that culminated in the last crisis in 2009. Second, this heightened domestic risks of macroeconomic instability come at a time when the global economic outlook is worsening. Should international commodity prices fall sharply Mongolia’s exports and budget revenues would both be hit hard. The policies to address both high and rising inflation and to lessen vulnerabilities are clear: restrain fiscal spending and tighten monetary policy.

The 2011 budget already included a sharp increase in spending of around 30 percent. This is a key factor behind the current overheating. Now the government has proposed a further increase in spending of 6½ percent of GDP just in the fourth quarter of this year. Such an increased would be highly risky and ill-advised. GDP growth in the second quarter already exceeded 17 percent and imports of consumer goods have risen by more than 80 percent. Further fiscal spending would only add to fuel to this overheating economy at a time when it least needs it.

“Similarly, in the 2012 budget, spending should be kept at or below the level that parliament already approved in the medium-term budget framework. Within that budget envelope the government should introduce a targeted system of social transfers.

“Finally, the newly created development bank is of significant concern. The development bank should not be used as a means to circumvent the fiscal stability law or as a vehicle for off-budget government spending. Doing so will add to fiscal risks, reduce fiscal transparency, and undermine the credibility of the landmark fiscal stability law passed last year.

The recent tightening of monetary policy is welcome, but more needs to be done. The central bank should use a variety of tools. The policy interest rate should be further increased. For much of the year it has remained below the pace of increase of underlying inflation, allowing for a very rapid pace of credit growth (now reaching nearly 50 percent in real terms). Interest rate hikes alone, however, will not be sufficient. In addition, a range of macro-prudential measures should be implemented to help slow the pace of credit growth. These include measures to increase capital adequacy requirements, start to require provisions on new lending, raise reserve requirements, and tighten liquidity ratios. At this stage in the business cycle it is especially important to proactively manage risks and strictly enforce prudential regulations in order to prevent the buildup of future credit quality problems in the banking system (as become painfully evident in 2009).”

Link to IMF statement

 

Mongolia to send 850 peacekeepers to South Sudan

ULAN BATOR, Sept. 21 (Xinhua) -- The Mongolian government would send 850 soldiers to South Sudan as peacekeepers, Mongolian Defense Minister Luvsanvandan Bold said Wednesday.

"Sending soldiers to South Sudan, which is a newly independent country with civil war, is a matter of honor," the minister said.

Mongolia had been engaged in U.N. peacekeeping missions since 2002 and was now seeking a bigger role in U.N. peacekeeping missions around the world, he said, adding a total of 5671 Mongolian soldiers had served in peacekeeping missions worldwide.

The skills and capacity of Mongolian troops had improved rapidly, he said.

In the past, Mongolian peacekeepers had served in conflict zones such as Iraq, Sierra Leone, Chad, Sudan, Kosova and Afghanistan, according to the defense minister.

"The responsibilities of Mongolian soldiers are also increasing. Previously, our soldiers were guarding military bases. Now they are guarding airports," he said.

In the past few years, Mongolian armed forces increased international relations and military cooperation by signing agreements with some 20 countries, Bold said, citing two military peacekeeping exercises with Chinese soldiers as an example.

Significant progress had been made in renovating military equipment. Mongolia had purchased 100 million U.S. dollars worth of military hardware from Russia in the past three years, Bold said.

The country is upgrading its military rehabilitation center, with the assistance of China and cooperating with U.S., Germany, South Korea and Turkey, he said.

Link to article

 

New “Sorry Everybody” campaign: Apologize on Obama’s behalf to the President of Mongolia

September 21 (PAJAMASMEDIA) Remember the “Sorry Everybody” campaign during the Bush era in which Americans were encouraged to apologize to the world for having such an idiot president?

Well, time for an update. As we noted yesterday, Obama embarrassed himself — and, by extension, the rest of the nation — by holding up his hand and blocking the face of Mongolian president Tsakhia Elbegdorj during a photo shoot at the UN:

So far, the White House has not yet issued a formal apology to Mr. Elbegdorj. So let’s take the matter into our own hands and apologize ourselves!

This page allows you to send emails directly to the Mongolian President:

Since Obama won’t apologize for his gaffe, we must apologize for him.

Please use the form to write a respectful letter of apology to President Elbegdorj, explaining why you think Obama felt it necessary to insult the leader of a sovereign nation.

…And of course, feel free to re-post your apology letter here (just like in the original “Sorry Everybody” campaign)!

Link to article

 

Mongolia resource sales hit headwind

September 23 (Asia Times) ULAN BATOR - As Mongolia is cashing in on its enormous resource wealth, tensions are building between the Mongolian government and foreign investors. Strain is also growing in Mongolian society in general, as citizens push their government to closely regulate foreign businesses and more widely distribute revenue from resource deals. 

The Mongolian government is moving forward on a number of projects to turn its minerals into money. None of its endeavors are bigger than the privatization of Erdenes Tavan Tolgoi, the state-owned firm that controls one of the world's largest deposits of coal, which is expected to raise US$300 billion. Tavan Tolgoi's initial public offering has been delayed until at least the first quarter of 2012 and will likely be made on three different exchanges: Ulan Bator, London and Hong Kong. Mongolia seems to be looking to put its eggs in a number of baskets. 

The first proposals for the development rights to Tavan Tolgoi, submitted by consortiums from China, Russia, and the United States, were rejected by Mongolia's National Security Council. 

Thailand's biggest coal producer, Banpu, hasn't been deterred by the challenges of working in Mongolia. It recently committed to buying all remaining shares of Hunnu Coal, of which it currently owns 12%. In order for Banpu to gain full control of Hunnu, the bid must be approved by Mongolia's regulatory council. Hunnu has 11 coking and thermal coal projects in Mongolia, which will be fully controlled by Banpu if the acquisition is approved. 

How to split the spoils of Mongolia's extractive industries is a sore point between foreign firms and the Mongolian administration, and there are signs that the Mongolian government might be getting more selective about what terms it is willing to accept. A group of 20 members of Mongolia's parliament are petitioning for changes to an agreement with Australian firm Rio Tinto over the Oyu Tolgoi mine. The members of parliament hope to get the Mongolian government a larger share of the revenue from Oyu Tolgoi

The toughening government stance is believed to be inspired by displeasure among the public who see their country's resources being carted off without tangible improvements to their quality of life. 

Relations between the government and foreign investors could worsen significantly if a ban on mining in Mongolia's river and forest areas, which is set to expire at the end of 2011, is extended in October when the Mongolian parliament convenes for its autumn session. The ban went into effect in 2009 and interrupted the workings of firms whose licenses were suspended. Intended to protect forests, rivers and lakes from harmful mining projects, the deal has been roundly criticized by investors who called it unfair and claimed it cast unhelpful doubt on their ability to do business in the country. 

The Mongolian government appears to be making an earnest effort to help citizens who aren't directly benefiting from the current influx of revenue. Resource-rich countries have always grappled with the question of how to build a broadly successful society from a source of wealth that doesn't employ many people and is controlled by a small group. In Mongolia, the extent of inequality and challenges of distribution are severe. 

In an attempt to boost domestic, non-mining businesses the Mongolian government has raised 108 billion tughrik (US$85.5 million) in bonds as part of a 300 billion tughrik bond issue. The bond sale began on August 9. The bonds are being sold on the Mongolian Stock Exchange. 

The 300 billion tughrik will be distributed as assistance to small and medium-sized enterprises, producers of wool and cashmere products, and herders who provide unrefined camel and sheep wool to domestic factories. 

In July, government revenues were $199.8 million more than had been projected. While the coffers are swelling, many Mongolians are living in poverty. Mongolian officials have allotted a portion of the country's new riches to programs intended to address poverty and unemployment. Many of Mongolia's poor live off government benefits and are driven to alcoholism by boredom and purposelessness. 

From July's budget surplus, $74.4 million will be used for initiatives to boost employment and health programs. About $2 million will be used to develop small communities in the hinterland and therefore discourage rural to urban migration. 

The Mongolian government is sponsoring job fairs in the capital and has declared 2011 the "year of employment". The recent Job Fair 2011 targeted a certain kind of job seeker: well-educated, fluent in English, and recently returned from studying abroad. Few Mongolians fit this description. 

Mongolian officials are in the midst of a difficult balancing act. They are trying to maintain good relations with its foreign business community while assisting citizens and protecting the country's environment as they seek to profit from it. With business and government digging in their heels as a series of high-profile agreement are pending and citizens discontent apparently on the rise, it remains to be seen if they can make everyone happy. 

Link to article

 

MONGOLIA WANTS TO OPEN ITS EMBASSY IN ITALY

September 22, Ulaanbaatar, Mongolia, /MONTSAME/ The cabinet considered Wednesday a draft parliamentary resolution on opening Mongolia's Embassy in Rome, Italy.

It will be submitted to the State Great Khural.

As the cabinet considers, that opening of the Embassy in Italy, a member of the European Union and of the "G-8", would bring great advantages such as boosting the cooperation in trade, economics and other spheres, increasing Mongolia's real participation in activities of Rome-based international organizations, protecting interests of the Mongolians in Italy.

Link to article

 

Notes From an Expedition: A New Mongolia Rises on the Steppes

TSOGTTSETSII, SOUTH GOBI, Mongolia. September 21 (World Policy Blog) —Rising here, on the eastern fringe of the Gobi—at more than 500,000 square miles the world’s third largest non-polar desert—is the face of the New Mongolia. Tsogttsetsii is a gold rush town. Well, to be perfectly accurate, it’s a coal rush town—coking coal to be exact. More of it, at least five billion tons, lie in the adjacent Tavan Tolgoi deposit than in any other spot on the planet. So rich, so thick this resource, it can just be scraped off the ground by giant earth-movers that are already busily at work.

We’re barely 125 miles from Mongolia’s frontier with China—the prime market for the bonanza of coal fueling the development of this tiny village. But the community has none of the sense of the desert or China, or the Mongolian steppes for that matter, where nomads still shelter in gers—flat round felt tents—as they tend their herds of sheep, cattle, goats (cashmere), or giant two-humped Bactrian camels. Instead, we have here the beginnings of what the Mongolian government, if not all the locals, hope will be the shape of this nation in the coming years.

A half mile from the mine entrance a modern apartment building is rising from the flat, sandy soil. Already half is completed and on the ground floor, more than 100 young students—from kindergarten through fifth grade—have been happily installed for the first week of school in ultra-modern classrooms reciting their ABCs. Indeed, one class of first-graders leaps to their feet to serenade, proudly, visitors from America with the A-B-C song, winding up resoundingly, “I can sing my A-B-Cs… lots of fun for you and me.” These are the children of the mine workers, some from the community of Tsogttsetsii, others from far away, attracted by the modern housing and good pay, not to mention the sparkling dormitories that house single miners on the complex itself.

Narantuya (Mongolians often use simply one name) has arrived from Ulaanbaatar to make sure the school is well launched. Her regular job is international program director of the Orchlon School in the nation’s capital, an elite private institution that boasts close ties with Cambridge University in England and delights in the success of its students who sit for the British A-level college entry exams. Narantuya is proud of the fact that she learned her English in Mongolia. It is indeed quite impeccable, which she is delighted to show off as we tour the classrooms, even the new computer lab with three rows of Mongolian-made Mogul computers. (Mogul’s website boasts that its “national brand computers of world class quality are sold at competitive prices and should contribute to import substitution efforts.”)

The mine has been producing, in a desultory fashion, since the Soviet Union controlled the Mongolian Peoples’ Republic, the first of the satellites the Bolsheviks claimed in 1921 as part of their expanding empire. It remains perhaps one of the world’s most inhospitable environments to year-round mining. Two mining engineers from South Africa and Australia, relaxing at the comfortable miners’ cafĂ© in the dormitory complex point out that winter temperatures plunge routinely to 40 degrees Fahrenheit below zero and have been clocked in as low as 94 below. So it was only after the Mongolian government, and its Energy Resources Corp., took over operations three years ago did the mine and this community suddenly spring to life. Two Mongolian engineers shrug that they simply never turn off the engines of their mining equipment, so it can’t freeze in the winter.

“In the Soviet period there was no real sense of how much resources were here,” Narantuya explains over a first-rate hot lunch of steak, rice, soup, and salad in the company commissary. “There was no real realization of the potential yield of these mines. Now we are going to have a lot of money to invest and will do it better. It benefits us, a policy to speed up development. We need good hospitals, schools, social services. It will all come if we do it properly.”

She is especially bitter about the massive Oyu Tolgoi copper and gold mine being developed east of here by Ivanhoe Mines, a Canadian-Australian joint venture with the Mongolian government which, she says, has done nothing, at least so far, for Mongolia or those who are working the mine project.

Not everyone, of course, has managed to cash in on this project. A half block from the governor’s residence, on a parched stretch of earth just shy of the rutted dirt track that still links Tsogttsetsii with the outside world, Ottoo sits in a Toyota land cruiser with her five-year-old son Ganerden and nine-month-old Badraagui. In front of the car is a pile of skins—horse hide, goatskins, and sheepskins. When she has collected 1,000 of them, she’ll haul them up to Ulaanbaatar where she can sell them for a profit of $11 or more apiece. Agents, who scour herders and trappers out in the far countryside bring them to her—the second step in a multi-stage chain that is a living for thousands like Ottoo, who was laid off a decade ago as an elementary school teacher and sees no way back.

“The mine hasn’t changed my situation,” she says. “But since there is mining, many people come to Tavan Tolgoi, and bring animals they’ve killed, so I’m happy about that.”

Indeed, there is considerable fallout from the mining boom that is sweeping Mongolia. Just off the road back west to the ger camp where we spend the nights, a lone drilling rig is clanking on the pancake flat plain of the Gobi desert. The Gobi itself is a strange structure—towering sand dunes soaring as high as 2,500 feet alternating with vast stretches of flat steppes, believed to conceal a host of minerals, even oil. At the same time, it is expanding at an alarming rate, especially on its southern stretches into northern China—some 1,400 square miles of new desert being created each year in the process of desertification yielding massive and debilitating sand storms in the process.

The two Mongolians manning the rig out on the steppes are the only living creatures—man or beast—in sight, stretching off to the far horizon where the land meets the crystal blue sky. They aren’t drilling for water, as we’d first thought. Nor for oil. They are drilling for coal, or any other ore that might accompany it—copper, iron, even gold, which is scattered across virtually this entire, impossibly rich nation of largely impoverished people. On the ground lie long, apparently rather unpromising, core samples from his borings down to 1,200 feet. He’ll spend another day or so here, then move on. It’s a lottery and the winners stand to win very big. Find a promising site, file for mineral rights, and you can still strike it rich here.

“One in 4,000 shot,” smiles an aging American geologist-wildcatter from northeastern Colorado with a swooping handle-bar mustache who’s having breakfast in Ulaanbaatar’s Ramada hotel a couple of days later. “And there are thousands of us out there. Still, I’ll take those odds.” They can be shortened, he says, with the right partners—especially individuals with access to the vast trove of geological surveys, seismic and core sampling done over the course of decades by the Soviets who mapped every corner of this country. The documents languish in government offices, open to those with the right kind of access.

Which leaves the ultimate question of who does get rich in the end. Vice President Biden came through here two weeks ago, quietly lobbying for America’s Peabody Coal, anxious to win a stake in the rich, still undeveloped western sectors of the Tolgut Tolgoi. It seemed like a deal had been done, until last Friday when Mongolia’s National Security Council vetoed the bid and sent all the parties back to the drawing board.

Mongolia, it seems, is determined not to get taken for a ride. 

Link to blog

 

<Mogi & Friends Fund A/C>

+4.6%

Mogi & Friends Fund is a tiny fund of A$23K I created in late September with a few friends to put my own (and a few friends’) money where my mouth (just mine) is.

Mogi

 

Table: Mongolia Related Stocks (Source: Bloomberg)

 

Name

Symbol

Cur-

rency

Price

Change

+-%

Open

High

Low

Volume

Time

Indices

S&P/ASX 200

AS51:IND

3,964.90

-106.9

-2.63%

4,044.60

4,071.80

3,953.60

-

22-Sep

Nikkei 225

NKY:IND

17,911.95

-912.221

-4.85%

18,296.80

18,296.80

17,859.31

-

22-Sep

Hong Kong Hang Seng Index

HSI:IND

8,560.26

-180.9

-2.07%

8,643.02

8,643.02

8,545.46

-

22-Sep

FTSE 100 Index

UKX:IND

5,041.61

-246.8

-4.67%

5,288.41

5,288.41

5,013.55

-

22-Sep

S&P/TSX Composite Index

SPTSX:IND

11,562.51

-392.5

-3.28%

11,653.06

11,944.22

11,420.35

-

22-Sep

S&P 500

SPX:IND

1,129.56

-37.2

-3.19%

1,164.55

1,164.55

1,114.22

-

22-Sep

ASX

Aspire Mining Ltd.

AKM:AU

A$

0.5

-0.025

-4.76%

0.5

0.5

0.48

1,524,684

22-Sep

Blina Minerals NL

BDI:AU

A$

0.011

0

0.00%

0.011

0.011

0.011

3,346,019

22-Sep

C@ Ltd.

CEO:AU

A$

0.063

-0.008

-11.27%

0.069

0.069

0.063

5,714,076

22-Sep

General Mining Corp. Ltd.

GMM:AU

A$

0.15

0.01

7.14%

0.14

0.15

0.14

136,355

22-Sep

Guildford Coal Ltd.

GUF:AU

A$

1.03

-0.08

-7.21%

1.06

1.065

1.015

338,658

22-Sep

Haranga Resources Ltd.

HAR:AU

A$

0.245

0

0.00%

0.25

0.255

0.245

372,198

22-Sep

Hunnu Coal Ltd.

HUN:AU

A$

1.69

-0.01

-0.59%

1.695

1.7

1.68

3,268,907

22-Sep

Mongolian Resource Corp. Ltd.

MUB:AU

A$

0.24

-0.04

-14.29%

0.24

0.24

0.24

20,000

22-Sep

TVN Corp. Ltd.

TVN:AU

A$

0.051

-0.003

-5.56%

0.053

0.053

0.049

5,706,595

22-Sep

Voyager Resources Ltd.

VOR:AU

A$

0.084

-0.005

-5.62%

0.086

0.089

0.082

10,810,976

22-Sep

Xanadu Mines Ltd.

XAM:AU

A$

0.465

-0.025

-5.10%

0.48

0.48

0.465

319,193

22-Sep

HKEx

Solartech International Hldgs Ltd

1166:HK

HKD

0.218

-0.001

-0.46%

0.21

0.229

0.21

21,569,200

22-Sep

Winsway Coking Coal Holding Ltd

1733:HK

HKD

1.68

-0.17

-9.19%

1.79

1.82

1.67

8,033,000

22-Sep

SouthGobi Resources Ltd

1878:HK

HKD

63

-7.85

-11.08%

63.6

66

62.45

253,800

22-Sep

China Gold Int. Resources Corp Ltd

2099:HK

HKD

27.45

-1.7

-5.83%

28.55

28.55

26.85

239,600

22-Sep

CNNC International Ltd

2302:HK

HKD

2.28

-0.21

-8.43%

2.25

2.29

2.15

324,000

22-Sep

Mongolia Energy Corp Ltd

276:HK

HKD

0.52

-0.07

-11.86%

0.58

0.58

0.52

18,410,500

22-Sep

Zijin Mining Group Co Ltd

2899:HK

HKD

2.7

-0.34

-11.18%

2.98

2.98

2.7

54,896,176

22-Sep

Mongolia Investment Group Ltd

402:HK

HKD

0.052

-0.001

-1.89%

0.053

0.054

0.05

7,240,000

22-Sep

North Asia Resources Holdings Ltd

61:HK

HKD

0.495

0.02

4.21%

0.5

0.5

0.495

25,000

22-Sep

Bestway International Holdings Ltd

718:HK

HKD

0.043

-0.005

-10.42%

0.045

0.046

0.043

320,000

22-Sep

Asia Coal Ltd

835:HK

HKD

0.095

-0.015

-13.64%

0.09

0.099

0.09

920,000

22-Sep

Mongolian Mining Corp

975:HK

HKD

7.73

-0.31

-3.86%

7.89

7.98

7.73

2,008,553

22-Sep

SGX

LionGold Corp Ltd

LIGO:SP

SGD

0.875

0.01

1.16%

0.87

0.875

0.865

9,761,000

22-Sep

LSE

Central Asia Metals PLC

CAML:LN

GBp

73

-1

-1.35%

72

73

71

22,696

22-Sep

Petro Matad Ltd

MATD:LN

GBp

38

1.5

4.11%

35.5

41

34

427,546

22-Sep

Metal-Tech Ltd

MTT:LN

GBp

9.75

0

0.00%

9.75

9.75

9.75

0

22-Sep

Origo Partners PLC

OPP:LN

GBp

35.875

-0.25

-0.69%

36.125

36.125

35.875

10,135

22-Sep

North

America

Aberdeen International Inc

AAB:CN

CAD

0.71

0.01

1.43%

0.71

0.71

0.68

176,170

22-Sep

Blue Zen Memorial Parks Inc

BZM:CN

CAD

0.285

0

0.00%

0.25

0.285

0.25

5,000

20-Sep

Centerra Gold Inc

CG:CN

CAD

22.89

-0.18

-0.78%

21.81

23.12

21.81

589,860

22-Sep

China Gold Int. Resources Corp Ltd

CGG:CN

CAD

3.27

-0.26

-7.37%

3.31

3.5

3.12

629,277

22-Sep

Denison Mines Corp

DML:CN

CAD

1.27

-0.09

-6.62%

1.3

1.32

1.27

2,060,957

22-Sep

Denison Mines Corp

DNN:US

$

1.24

-0.12

-8.82%

1.25

1.3

1.23

2,376,608

22-Sep

East Asia Minerals Corp

EAS:TN

CAD

0.74

-0.04

-5.13%

0.75

0.74

0.71

27,400

22-Sep

Entree Gold Inc

EGI:US

$

1.91

-0.19

-9.05%

1.92

1.93

1.85

127,540

22-Sep

Erdene Resource Development Corp

ERD:CN

CAD

0.475

-0.095

-16.67%

0.57

0.57

0.445

278,770

22-Sep

Entree Gold Inc

ETG:CN

CAD

1.94

-0.16

-7.62%

1.91

1.98

1.91

67,215

22-Sep

Fortress Minerals Corp

FST:TN

CAD

5.21

0

0.00%

0

8-Jun

Garrison International Ltd

GAU:TN

CAD

0.04

0

0.00%

0.04

0.04

0.04

0

19-Sep

Gulfside Minerals Ltd

GMG:TN

CAD

0.1

0

0.00%

0.1

0.1

0.1

0

21-Sep

Green Technology Solutions Inc

GTSO:US

$

0.1

0

0.00%

0.105

0.105

0.08

232,873

22-Sep

Ivanhoe Energy Inc

IE:CN

CAD

1.12

-0.08

-6.67%

1.18

1.22

1.12

658,901

22-Sep

Ivanhoe Energy Inc

IVAN:US

$

1.12

-0.08

-6.67%

1.2

1.2

1.1

1,158,787

22-Sep

Ivanhoe Mines Ltd/CA

IVN:CN

CAD

16.6

-0.37

-2.18%

16.8

17.08

15.59

3,439,286

22-Sep

Ivanhoe Mines Ltd/CA

IVN:US

$

16.14

-0.7

-4.16%

15.8

16.63

15.13

6,695,346

22-Sep

Kincora Copper Ltd

KCC:TN

CAD

0.405

0

0.00%

0.405

0.405

0.405

0

21-Sep

Khan Resources Inc

KRI:CN

CAD

0.255

-0.01

-3.77%

0.255

0.255

0.255

87,100

22-Sep

Long Harbour Exploration Corp

LHC:TN

CAD

0.35

0

0.00%

0

10-Mar

Lucky Strike Resources Ltd

LKY:TN

CAD

0.64

-0.09

-12.33%

0.71

0.71

0.62

5,000

22-Sep

Meritus Minerals Ltd

MER:TN

CAD

0.04

-0.015

-27.27%

0.045

0.045

0.04

68,000

22-Sep

Manas Petroleum Corp

MNAP:US

$

0.205

-0.01

-4.65%

0.211

0.211

0.2

343,800

22-Sep

Blue Wolf Mongolia Holdings Corp

MNGL:US

$

9.58

0

0.00%

9.65

9.65

9.58

0

13-Sep

Blue Wolf Mongolia Holdings Corp

MNGLU:US

$

10.25

-0.15

-1.44%

10.25

10.25

10.25

2,000

22-Sep

Manas Petroleum Corp

MNP:TN

CAD

0.43

0

0.00%

0

10-May

Prophecy Coal Corp

PCY:TN

CAD

0.56

-0.06

-9.68%

0.55

0.6

0.55

168,590

22-Sep

Puget Ventures Inc

PVS:TN

CAD

0.36

0

0.00%

0

6-Aug

SouthGobi Resources Ltd

SGQ:CN

CAD

7.51

-0.54

-6.71%

8.06

8.06

7.26

173,870

22-Sep

Solomon Resources Ltd

SRB:TN

CAD

0.115

0

0.00%

0.11

0.12

0.11

8,000

22-Sep

Wedge Energy International Inc

WEG:CN

CAD

0.015

0

0.00%

0

3-Aug

Mongolia Growth Group Ltd

YAK:CN

CAD

4.59

-0.01

-0.22%

4.63

4.65

4.5

27,663

22-Sep

 

---

"Mogi" Munkhdul Badral

Senior Client Manager / Executive Director

CPS International LLC

Telephone/Fax: +976-11-321326

Mobile: +976-99996779

Email: mogi@cpsinternational.mn

P Please consider the environment before printing a copy of this email.

 

Central Tower · 12th Floor · Left Wing · 2 Sukhbaatar Square

Sukhbaatar District 8 · Ulaanbaatar 14200 · Mongolia

 

CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSL License Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.

 

Disclosure/Disclaimer

CPS Securities, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions mentioned in correspondence from CPS International.

CPS International advise this email contains general information only and does not include advice. In preparing this communication, CPS International did not take into account the investment objectives, financial situation and particular needs of any person. As with any speculative mining company there are significant risks.

 

 

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