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.
Mongolian coal miner Ikh Gobi seeks pre-IPO investment
March 21 Reuters) - Privately owned Mongolian coal miner Ikh Gobi Energy LLC is seeking investment of $100-$200 million this year ahead of a planned Hong Kong initial public offering in 2013, its chief executive said on Wednesday.
"We started to look for investment just two months ago," CEO Enkhtsetseg Chuluunbat told Reuters on the sidelines of an industry conference in Hong Kong.
"We are open for discussion and it would be either debt or equity," she said, adding that the money would be used for the company's working capital.
IKH Gobi also planned to tap the Hong Kong IPO market to raise funds for development and would hire investment banks at the end of this year, Chuluunbat said.
The company's wholly owned Mandakh Nuur coking coal project, 165 km from the Mongolian-Chinese Hangi-Mandal border, will start production in late July or early August.
Its key market will be China, the world's largest coal consumer, where it will compete with SouthGobi Resources Ltd., whose Ovoot Tolgoi coal mine in Mongolia is about 40 kilometres from China.
SouthGobi's Hong Kong-listed shares have rebounded about 10 percent this year after losing more than half of their value in 2011 due to volatile financial markets.
"Many interested customers from China have approached us and they want to buy our coal," said Tuvshin Battsereg, manager at Ikh Gobi's foreign trade and investment department.
The project is expected to have a deposit of 100 million tonnes of coal. The company plans to produce 500,000 tonnes of coal this year, rising to 20 million tonnes a year in 2015.
Tavan Tolgoi IPO Timetable Pushed Back
HONG KONG, March 21 (WSJ)—The Mongolian government now aims to list shares in state-owned miner Erdenes-Tavan Tolgoi Co. late in the third quarter or early in the fourth quarter, pushing back the target for the anticipated US$3 billion listing from ahead of parliamentary elections in June, a senior official at the company said Wednesday.
Graeme Hancock, the chief operating officer at the company that controls the world's largest coking-coal deposit, said the initial public offering has been delayed because of weak sentiment surrounding new listings in London and the absence of a new Mongolian securities law that will create the necessary legal framework for the planned three-part listing.
"We hope it [the securities law] could be passed before the election", he said. But if that doesn't happen, the new parliament has to pass it after the June election and that may further delay the listing to beyond the early fourth quarter of this year, he said.
The plan is still to list Erdenes TT in Ulan Bator, as well as London, and Hong Kong, he said. In addition, the company is considering options to raise funds before the IPO, including possibly selling a stake in the company to strategic investors. It will likely make a decision on whether to do it in the next couple of months, he said, without elaborating.
His comments suggest another twist in the long-running effort to include Hong Kong in the IPO plan. In January, people familiar with the situation said the plan to simultaneously list in Hong Kong as well as in London and Ulan Bator could be shelved because the Hong Kong exchange was unlikely to make a special dispensation for a Mongolian incorporated company to list on the bourse.
Mongolian government officials have said they are still talking to the Hong Kong exchange to get special dispensation to list in the city. Hong Kong recognizes more than 20 jurisdictions in which companies seeking to list in the territory can be incorporated. Apart from Hong Kong, these include China, Italy and the U.K. The list excludes Mongolia. The Hong Kong exchange couldn't immediately be reached for comment.
The coking-coal deposit that Erdenes-Tavan Tolgoi controls is located in the South Gobi desert near China's northern border.
Mongolia's government plans to hold a 51% stake after the IPO. It intends to sell 19% to global investors, and will direct the remainder will to Mongolian citizens and companies. A 20% stake will be given to citizens for free and another 10% will be sold to local companies at a discount—a distribution of shares that could be problematic in a country where many people don't even have bank accounts, let alone brokerage accounts.
But a Mongolian official has said that citizens will be allowed to return shares to the state, which will then offer them to domestic companies. The cash raised through those sales will be returned to the citizens.
ERD closed +18.06% to 42.5c
Video: Erdene CEO Akerley on Mongolia's Mining Industry
March 22 (Bloomberg) -- Erdene Resource Development Corp. (TSX:ERD) Chief Executive Officer Peter Akerley talks about Mongolia's mining industry and the prospects for the country's economic growth. Akerley also discusses gold prices. He speaks with Susan Li on Bloomberg Television's "First Up."
Prophecy Coal Extends Warrant Expiry Dates
VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 21, 2012) - Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) announces that it will extend the expiry dates of certain outstanding warrants as detailed below. The subject warrants were originally issued during March, April and September, 2010 with original expiry dates of 18 months and 2 years. The new expiry dates will provide a one year extension. 223,650 of these warrants are held by insiders and will only be amended with the approval of the disinterested shareholders of Prophecy Coal which will be sought at the next shareholders meeting scheduled for summer, 2012. The amendment to the expiry dates of the warrants held by arm's length parties will become effective on April 5, 2012 and the warrants will continue to be exercisable at their original exercise prices.
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China, Mongolia expand currency swap deal
BEIJING, March 21 (Xinhua) -- The People's Bank of China (PBOC), the country's central bank, announced Wednesday that it has signed supplementary currency swap agreements with the Bank of Mongolia, doubling the scale of a 2011 bilateral swap deal.
The supplementary currency swap agreement allows the two central banks to swap 10 billion yuan/2 trillion togrog (about 1.6 billion U.S. dollars), compared to 5 billion yuan/1 trillion togrog agreed in 2011, the PBOC said in a statement on its website.
Both sides believe the extension will help maintain regional financial stability and facilitate bilateral trade and investment between China and Mongolia, according to the PBOC statement.
Since the onset of the global financial crisis in late 2008, China has signed currency swap agreements totaling 1.3 trillion yuan with 16 countries and regions, including the Republic of Korea, Hong Kong, Belarus and Argentina, to reduce the use of the U.S. dollar in bilateral trade settlement and investment.
FACTS: China's February coking coal imports rebound
March 21 (MetalBulletin) China's coking coal imports increased by more than one-third in February to 4.65 million tonnes, as the world's second-largest economy resumed activity after the Chinese New Year holidays.
Total imports were up 34.9% from 3.45 million tonnes in January, and up 134% year-on-year.
Mongolia exported a total of 1.74 million tonnes of coking coal to China in February, topping Australia's shipment of 1.34 million tonnes.
Top suppliers (million tonnes, month-on-month)
Mongolia 1.74 51%
Australia 1.34 12%
Canada 0.75 264%
Russia 0.39 38%
Indonesia 0.28 -18%
USA 0.09 -68%
Source: Chinese Customs
Coal prices set to retreat as supply surges
March 21 (Bloomberg) Contract prices for coal burned in power stations may drop 37 per cent by 2017 because of a rise in shipments from countries including Indonesia and Colombia, according to Australia's government forecaster.
Average contract prices for coking coal, used to make steel, are forecast to decline 23 per cent this year to $US221 a ton amid weaker import demand and an increase in output from Australia, the report said. Prices are projected to moderate by 2017 as exports from countries including Mongolia, Canada and Mozambique climb, according to the report.
Former Mongolian police officials arrested over shooting of protesters (in 2008)
ULAN BATOR, March 21 (Xinhua) -- Three former Mongolian top police officials have been arrested for investigation of allegedly ordering the shooting of protesters during post-election riots nearly four years ago, local media repored Wednesday.
The Sukhbaatar district court in Ulan Bator has ordered the police officers to be put into a detention center and stand trial soon for their alleged role in ordering the shooting to death of four protesters during riots in July 2008, in the wake of parliamentary elections in the country.
The reports said families and some police officers were protesting the detention of the three officials -- Ch. Amarbold, major general and former chief of the Mongolian police force, O. Zorigt, colonel and former chief of the Ulan Bator police force, and Sh. Batsukh, colonel and chief of the police patrol unit.
On July 1, 2008, thousands of people took to the streets in central Ulan Bator to protest alleged election fraud. The building housing the headquarters of the ruling Mongolian People's Party was burned down and vandalized.
After the riots, four protesters were found dead with bullet wounds and police were blamed for having used live ammunition to disperse the crowds.
The case has polarized the Mongolian society, with some people criticizing authorities for orchestrating the trial of the police officials who were only following orders from above.
Former Prime Minister Sanjaa Bayar has accused Tsakhia Elbegdorj, the then chairman of the opposition Democratic Party of Mongolia, of "instigating the riot and misleading the people."
The officials in detention denied they had ordered the shooting and insisted no live ammunition was given to the police during the crackdown.
700 voting machine will arrive end of March
March 21 (news.mn) Mongolians first time will use automatic voting machine. According to the General Election committee ordered 2500 voting machine for MNT 3.7 billion. General election committee expecting 700 machine end of this month.
"This is a first part of machine. Others will be arrived by May 10" said N.Luvsanjav, head General Election committee.
Before the voting day, which scheduled end of June, General election committee have to test machines. Voting machines purchased from USA.
ABOUT IMPLEMENTATION OF ACTIVITY PROGRAM OF CABINET
Ulaanbaatar, Mongolia, March 21 /MONTSAME/ Implementation of the governmental activity program for 2008-2012 was done at 82 per cent by 2011, and it might reach 87 per cent by beginning of this year. It was reported on Wednesday by Ch.Khurelbaatar, a head of the Cabinet Secretariat of Government at a cabinet meeting.
According to a report of him, it is considered that the cabinet has overcome successfully the financial and economic difficulties of 2010, and could strengthen the economic, investment and financial basis for realizing targeted goals. Also, the cabinet has managed to improve the economic capacity by ensuring the macro economic growth and supporting the infrastructure, the great construction, small- and middle-sized productions and agriculture.
Based on these achievements, the cabinet has reached some successes on increasing job places, reducing the unemployment rate, augmenting real income of citizens, improving the social welfare and backing the disabled, youths, elders and children.
Ch.Khurelbaatar has underlined that the cabinet made last year foundation stones of the biggest works, and also the cabinet needs to implement goals of increasing volume of the industrial and service sectors at the Gross Domestic Product's size, erecting complexes of small- and middle-sized productions and technologies, implementing projects on processing oil and making liquid fuel by coal in order to provide the country with fuel.
The cabinet has decided to submit to parliament implementation of the program, reflecting proposals from ministers.
WORKING GROUPS SET UP TO DISTRIBUTE ID CARDS
Ulaanbaatar, Mongolia, March 21 /MONTSAME/ In accordance with the cabinet decision, a working group has been set up to organize nationwide a distribution of new ID cards and to provide this work with a unified management. This group is chaired by Ts.Nyamdorj, the Minister of Justice and Internal Affairs.
Sub-working groups of aimags, soums, bagas, the city, its districts and khoroos will be headed by their governors. The ID cards will be distributed through 496 points. Printing machines and facilities are ready, the ID cards' samples will be imported from Finland. As expected, people will receive the new ID cards from April 6 to June 11, prior to the parliamentary election.
The Minister Ts.Nyamdorj and leaders of the sub-working groups have been also obliged to report to the cabinet on a process of the work.
FINANCIAL SOURCE TO BE CREATED FOR SAFETY STOCK OF COAL
Ulaanbaatar, Mongolia, March 21 /MONTSAME/ A financial source for a coal safety stock will be created with aims to ensure reliable activities of fuel and energy factories and to not increase debts and receivable.
The cabinet has allowed D.Khayankhyarvaa, the Minister of Finance, to grant a loan of MNT 7 billion 305 million and 800 thousand for creating the financial source.
An order has been given to D.Zorigt, the Minister of Mineral Resources and Energy, to put control over the loan's consumption and to repay the loan in the fund this year. It is calculated that finance for the coal stock must ensure a coal reserve of at least 20 days, and the loan should be spent for not making debts and receivable among power stations and coal mines, for improving the economic and financial capacities.
It is expected that mines can repair their mining facilities, vehicles and machines in due times thanks to the loan.
Cabinet Proposes 1% Income Tax on Businesses with Revenues Lower than ₮50 Million
Ulaanbaatar, Mongolia, March 21 /MONTSAME/ At its regular meeting on Wednesday, the cabinet got familiarized with implementation of works reflected in the 1st phase of the National Strategy of Supporting Private Sector Development.
Then, S.Batbold PM obliged the ministers and the National Development and Innovation Committee (NDIC) to intensify the works. The strategy's first phase has 36 works, and 51 per cent of the 12 works for 2011 have been realized so far.
In the last three years, the government has worked out several draft amendments to the laws on taxes together with the private sector and NGOs. The next regular cabinet meeting will discuss draft amendments to the laws on income tax of enterprise, on value-added tax and on income tax of individual.
As the draft amendment to the law on the income tax for enterprise says, a businessman or an enterprise shall pay one per cent tax if their income will be less than MNT 50 million a year, and, if the income is 50 million or more, this enterprise/businessman shall be registered as a tax payer.
By amending these drafts, the cabinet is to start a financial reform for entities and business people nationwide.
Mongolia's Growing Aussie Demographic
Given its booming mining industry, global resources industries and Australian law firms are setting up shop in Mongolia
March 16 (Energy Digital) It's a long way from Sydney's golden beaches, where you can surf all year round, to Ulaanbaatar in Mongolia, where the average annual temperature is 0°C, but this hasn't deterred Australia's largest law firm from planting its flag there.
"Mongolia was the logical next step for us," says John Weber, Minter Ellison's chief executive partner. "It's an increasingly strategic market with a substantial resource-based economy and it is attracting the attention of the global resources industry, including Australian companies. Many of these are our clients."
Minter Ellison, which has close to 1,200 lawyers in offices in Hong Kong, mainland China and the UK, as well as throughout Australia and New Zealand, is one handful of law firms that has recognised the up-side of being on the ground to offer international-standard legal services in this emerging market.
Hogan Lovells and US-based Anderson & Anderson LLP have dedicated offices in Ulaanbaatar. Fellow Aussie law firm Allens Arthur Robinson is also there with a fly-in, fly-out service, and DLA Piper and Gibson Dunn have entered into formal associations with local Mongolian law firms.
Elisabeth Ellis, one of the Minter Ellison's senior partners, has relocated from Hong Kong to the new Ulaanbaatar office as the full-time resident partner and will be backed up by a team of Mongolian lawyers.
"I've been coming here on and off for the past 18 months preparing for the opening of the office, and what struck me is the enormous momentum of this country," Ellis said. "Mongolia is where Western Australia was 20-30 years ago. It's almost virgin territory – a rapidly emerging economy in the grip of a massive resources boom and with the eyes of global energy and resources players firmly fixed here."
According to Ellis, the country's rich coal, iron-ore, copper, gold, oil and gas, and uranium reserves are largely untapped. Mining giants Rio Tinto, Ivanhoe Mines and Vale already have a strong presence – Rio Tinto and Ivanhoe are investing billions of U.S. dollars to develop the Oyu Tolgoi copper and gold deposit – while several ASX-listed companies, such as Xanadu Mines and Guildford Coal, have assets in the landlocked country. Mining service companies are there. Others are circling.
The associated infrastructure required to support the mining projects – power, water, rail and roads – also needs to be developed and is increasingly a focus. "Intermediaries, such as the World Bank, are on the ground and have funding available. I've seen huge interest from Australian energy and resources, construction, property and financial services companies in the potential of this market," Ellis commented.
Ellis, who was born in Australia but spent the past 15 or so years working in Asia, has moved the whole family to Ulaanbaatar – three young children and her husband, an IT specialist. Helping them to settle in, no doubt, will be the large Australian expatriate community.
There are currently 171 Australian-invested companies in the country; 35 of those are on the ground. Austrade, the Australian Government's trade and investment development agency, established a permanent presence in Ulaanbaatar in September 2011. And there are an estimated 300 Australians in the country on work permits.
"Given Australia's mining expertise, it is no surprise that ties between Australia and Mongolia are strong," Ellis said. "An active program of student scholarships and exchanges between the two countries also means there is a significant number of younger Mongolians who have studied in Australia."
With Minter Ellison's strong experience in mining, capital markets, M&A and major projects, Ellis sees advising Australian and other foreign companies on doing business in Mongolia as her primary focus.
"Essentially we'll be working with foreign investors in Mongolia's mining and infrastructure sector, with construction contractors and mining service providers who are already here or coming to Mongolia, and with Mongolian companies on transactions involving overseas elements, such as capital raising. It's what we do best and where we can add real value for clients."
Asked what her family thinks about the move to Mongolia, Ellis said the children are bemused by the fact that it is quicker to make ice cubes on the balcony than in the freezer.
"They're looking forward to learning to ski and, once it warms up a little, learning to ride horses and go camping. And me? I'm looking forward to summer. It's -36°C here today, but I'm told that in summer the days are balmy, with temperatures in the 30s and glorious clear, blue skies. It will be like being back in Australia."
Minter Ellison is ranked in Energy and Natural Resources by leading global legal publishers Chambers and Partners, which independently ranks the top law firms and lawyers around the world.
Reign Check: Abundant Rainfall May Have Spurred Expansion of Genghis Khan's Empire
It is generally thought that changing precipitation patterns impacted the rise of the Mongols and their domination of the Eurasian continent in the 13th century--but was it rain or drought?
March 21 (Scientific American) The Mongol hordes led by Genghis Khan carved out the largest contiguous land empire history has ever witnessed, reaching at its apex from Asia's Pacific coast to eastern Europe and down into Persia and southeastern Asia. Although conventional wisdom suggests drought may have pushed them across the steppe to conquer more bountiful lands, ancient, long-dead trees discovered in a forbidding lava field in Mongolia give evidence that unprecedented rains might actually have helped fuel their expansion.
"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
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