Tuesday, March 20, 2012

[CPSI NewsWire: SouthGobi Increases Resources & Reserves at Projects, Narrows Losses on Higher Prices]

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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SGQ closed +3.59% to C$6.35, results released after HK close, 1878 closed -0.41% to HK$48.10

SouthGobi Resources Announces Increased NI 43-101 Compliant Resources Following Record Exploration in 2011, Including New Coking Coal Deposit

Updated NI 43-101 compliant coal Resources and Reserves for Ovoot Tolgoi Complex in Mongolia - Measured plus Indicated Resources increase by 14% to 302.3 million tonnes and Inferred Resources are 86 million tonnes, Proven and Probable Reserves increase by 65% to 175.7 million tonnes

Updated NI 43-101 compliant coal Resource for Soumber Deposit - Measured plus Indicated Resources increase by 124% to 137.3 million tonnes and Inferred Resources increase by 26% to 83 million tonnes

Inaugural NI 43-101 compliant coal Resource for Zag Suuj Deposit - Measured plus Indicated Resources of 17.0 million tonnes and Inferred Resources of 66 million tonnes

HONG KONG, CHINA--(Marketwire - March 19, 2012) - SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) announced today that new, independent estimates prepared by Minarco-MineConsult ("MMC"), have updated coal Resources and Proven and Probable Mineral Reserves contained at the Company's Ovoot Tolgoi Complex, (comprised of the Ovoot Tolgoi mine and the Ovoot Tolgoi Underground Deposit). Independent estimates for coal Resources have also been updated by MMC for the company's Soumber Deposit (comprised of the Central Soumber, East Soumber, Biluut, South Biluut and Jargalant Fields) and an inaugural estimate of coal Resources at the Zag Suuj Deposit has been completed.

Estimate of Reserves - Ovoot Tolgoi Complex, Mongolia

As a result of additional drilling, updating of the geologic model, improved pricing (primarily the result of beneficiation), the NI 43-101 compliant reserves at Ovoot Tolgoi increased approximately 65% to 175.7 million tonnes. The increased reserve base allows for an increased steady-state run-of-mine production rate of approximately nine million tonnes per annum which is expected to be achieved by 2015.

Table 4: Ovoot Tolgoi Open Pit Mineral Reserves as of December 11, 2010

Reserve Area

Reserves (million tonnes)




Sunrise Field




Sunset Field








Link to release


UPDATE 1-SouthGobi Resources loss narrows on higher coal prices

* Q4 loss/shr $0.14 vs loss/shr $0.16 yr ago

* Revenue up 23 pct

* Average realized selling price $55.51/tonne vs $31.56/tonne yr ago

March 19 (Reuters) - SouthGobi Resources Ltd (TSX:SGQ, HK:1878) posted a narrower fourth-quarter loss helped by a rise in average realized prices, and the Canadian coal miner forecast strong demand due to its mines' proximity to China.

SouthGobi -- whose Ovoot Tolgoi coal mine in Mongolia is about 40 kilometers from the world's largest coal consumer, China -- expects strong demand from the country to help buck the industry trend.

North American and Australian coking coal producers have mostly indicated that early 2012 will see lower prices and demand for seaborne coking coal.

SouthGobi sells metallurgical and thermal coal mainly to customers in China.

The Asian giant's thermal coal imports could soar to one billion tonnes in 2030 from just 175 million in 2011, research consultants Wood Mackenzie said.

The global outlook for coal is also bright. The U.S. Department of Energy expects demand to climb 50 percent by 2035.

For the October-December period, SouthGobi posted a net loss of $18.9 million, or 14 cents a share, compared with a loss of $28.7, or 16 cents a share, a year ago.

Revenue for the company, which also has two development projects -- the Soumber Deposit and the Ovoot Tolgoi Underground Deposit -- in Mongolia, rose 23 percent to $51.1 million.

The company sold 1.15 million tonnes of coal, down from 1.47 million tonnes of coal sold, a year ago.

However, average realized selling price was $55.51 per tonne in the quarter, up from an average realized selling price of $31.56 per tonne, a year ago.

Shares of the company were up 16 Canadian cents at C$6.29 on Monday on the Toronto Stock Exchange.

Link to article

Link to SGQ release



March 20 -- Guildford Coal Limited (ASX: GUF, “the Company”) is pleased to announce that it has raised $25 million (before costs) through a placement of ordinary  fully paid  shares to institutional and sophisticated investors (the “Placement”).

Under the Placement, approximately 35.7 million shares will be issued at a price of $0.70 representing a discount of 1.4% to the last closing share price. The Placement is consistent with the Company’s strategy of broadening and strengthening its institutional shareholder base and is within the Company’s 15% capacity in accordance with ASX Listing Rule 7.1.

Proceeds from the Placement will be used by the Company for the following:

·         Ongoing definition, upgrade and expansion of JORC coal resources in both Australia and Mongolia;

·         Scoping Studies and application for a second Mining License for the South Gobi Project in readiness for first coal production in 2012;

·         Completion of Pre-feasibility Studies and application for a Mining Licence on the White Mountain and Hughenden Coal Projects, including finalising infrastructure agreements;

·         Evaluation of recently identified non coal mineral occurrences on tenements in Mongolia;

·         Evaluation of potential synergistic and accretive acquisitions in both Australia and Mongolia; and

·         General working capital.

Guildford Coal Chairman Mr Craig Ransley commented: “We are delighted to receive strong support from new institutional investors in Guildford Coal and feel it is a positive reflection on the Company’s growth prospects as it transitions from an explorer to a producer of coal in 2012. Funds raised from the Placement will continue the rapid progression of projects in both Australia and Mongolia, including the commencement of mining in the South Gobi Project in 2012.”

Foster Stockbroking Pty Ltd acted as Lead Manager to the Placement

Link to release


GoConnect: Update on announcement on First Mongolian Investment Holdings to ASX on 15 March 2012

March 19, GoConnect Limited (ASX:GCN) --

We refer to the announcement to the ASX on 15 March 2012 regarding the First Mongolian partnership with GoConnect in IPTV and WiFi media in Mongolia, and the proposed listing of First Mongolian on the ASX appointing Sino Investment Services Pty Ltd (SIS) as Lead Manager. 

The announcement refers to, amongst other information, a statement that "Based on the records of the Mineral Resource Authority of Mongolia, the tenement has a stated reserve of 4.37 million tonnes of contained manganese with  an average grade of 51%. The tenement has an additional 12 million tonnes of inferred resource of manganese."  

Even though the ASX release was based on the official records of the Mineral Resource Authority of Mongolia and the release was reviewed  by an independent Australian Competent Person with over 40 years experience in the Australian mining industry prior to release, since the records of the Mineral Resource Authority of Mongolia were not based on the JORC code as required by the ASX Listing Requirement for disclosure, we hereby retract the above statement at this time. 

However, we would like to advise that, based on signed official records of the Mineral Resource Authority of Mongolia, the manganese deposit, as referred to in the previous announcement, was delineated from surface outcrop down to 50 metres level, was discovered in 2001 followed by trenching test and shallow drilling. An independent Competent Person qualified under the JORC code will be appointed to evaluate the subject tenement and compile an independent valuation report which we expect will further substantiate the statement referred to above. 

Shareholders of GoConnect will be offered 10% of First Mongolian's issued capital upon listing in a pro-rata entitlement offer for nil consideration based on a minimum shareholding requirement of 250,000 shares in GoConnect held on books closing date to be advised, Since GoConnect has in excess of 1,600 shareholders, the entitlement offer is expected to attract more than 500 shareholders to First Mongolian. GoConnect shareholders who receive the shares in First Mongolian under the entitlement offer as described in the announcement may not be treated as holders of First Mongolian for the purposes of ASX spread requirement when First Mongolian applies for an ASX listing.

However, GoConnect shareholders who receive such shares under this entitlement offer will also each be provided with a right to acquire  a separate and additional $2,000 of shares in First Mongolian under a prospectus to be  prepared for the proposed listing which will assist First Mongolian to satisfy the ASX Listing Requirement for shareholder spread. The proposed listing will be subject to ASX approval and may also require shareholders' approval.

SIS as Lead Manager for the proposed listing, believes that if First Mongolian is successful in the proposed ASX listing, it will be amongst the first businesses from Mongolia to be listed on the ASX. (Mogi: !?!?!)

Link to release

Link to March 15 release


DRG closed -1.01% to 49c today

6.1M Draig 20c Options Expiring 30 April 2012

March 20, Draig Resources Limited (ASX:DRG) --

Link to release


Robe: Monthly Report

March 20, Robe Australia Limited (ASX:ROB) --

Link to report


IE closed +1.05% to C$0.96

Friedland could raise stake in Ivanhoe Energy to 17.95%under amended loan deal

CALGARY, March 19 (The Canadian Press) - Ivanhoe Energy Inc. (TSX:IE) announced Monday it has amended a loan agreement with executive co-chairman Robert Friedland that could raise his stake in the company to 17.95 per cent from 15.49 per cent.

The deal involving Ivanhoe Energy and Ivanhoe Capital Finance Ltd., which concluded last week, amended a December 2011 loan agreement. It gives Friedland the right to convert each 96 cents of outstanding principal into one common share.

Ivanhoe stock closed Friday at 95 cents on the Toronto Stock Exchange.

Ivanhoe Energy said the exercise of the conversion right could result in up to 10,484,375 common shares being issued to Ivanhoe Capital, which would represent 2.96 per cent of the company.

"The conversion right was granted as consideration for the subordination of an existing loan to a new third party facility and no new proceeds were received by Ivanhoe Energy," the company said in a release.

Ivanhoe Energy is an independent international heavy oil exploration and development company operations are in Canada, Ecuador, China and Mongolia, with business development opportunities worldwide.

Link to article

Link to IE release


Khan Investment Management Update (19/03/2012)

“Spring is coming. Soon it will be warm enough to snow again.” These were the words which greeted me upon my arrival into Chinggis Khan International Airport, Ulaanbaatar, earlier this month. The mercury was resting a touch above minus 31 degrees Celsius. 

February was an exciting month for Khan! The Kahn Mongolia Equity Fund (KMEF) had a positive net performance of just above 4% and Narantuguldur “Nick” Saijrakh, a founding director of Khan Investment Management, left his role at Asia Pacific Investment Partners and joined Khan full-time. Nick will now run our Ulaanbaatar representative office which we opened this month. 

During February, the KMEF subscribed to its 3rd IPO and began building a position in an additional security. Several of our investments announced dividends. Since inception the KMEF has analysed and subscribed to 3 IPOs, rejected a 4th as well as a debt offer, and has acquired positions in 18 companies in total. We are also expecting to participate in several more identified IPOs over the coming months. 

The Khan Mongolia Equity Fund performance for February was + 4.03%.

The Net Asset Value as at 31 January 2012 was USD 96.54

The February Factsheet can be downloaded by registered users of the Khan Investment Management website –  

Whilst in Mongolia I attended the 3rd Mongolia Economic Forum (MEF), participated in the IPO Mongolia 2012 Conference and undertook 9 additional company visits and meetings in Ulaanbaatar with my colleagues. Through our continued on-the-ground research, Khan has gained greater appreciation and understanding of various development bank loan applications (IFC, EDB, EBRD & DBA), mining licence and rail alignment applications, project feasibility and environmental impact submissions to government, warehouse automation projects, export initiatives & manufacturing expansion plans, as well as significant private infrastructure development projects. Based on these recent company visits, the portfolio has been reviewed and realigned to reflect revised expectations and new investment opportunities. 

The clear consensus at MEF is that Mongolia continues to remain reliant upon foreign investment in order to achieve its development and growth ambitions. The Mongolian Stock Exchange, the London Stock Exchange, the Financial Regulatory Committee, Central Bank, the Government and State Property Commission continue to work together to reshape  Mongolia’s capital markets. The heavy burden of excessive bureaucratic regulation is slowly being lifted. Progress has been frustratingly slow, however expectations must be measured. 

In addition to my interview with Bernie Lo on CNBC last week, I recently spoke with Whitney Fitzsimmons on ABC’s Business Today program, outlining the many opportunities in Mongolia. 

Mr Ganhuyag Chuluun Hutagt, Vice Minister of Finance, made a poignant reference during the MEF. “Last week, a watch was sold in Ulaanbaatar, the value of which only a decade ago was enough to fund the state budget for over 12 months”. Mongolia is warming up. Soon it will be warm enough to snow again. One thing is for sure, it is going to get a lot warmer over the coming months! 

I look forward to updating you further of our developments next month. 

Best regards, 

Travis Hamilton

Managing Director

Link to Khan


Interview: Mining in Mongolia – Travis Hamilton, from Khan Investment Management, on the emerging business opportunities in Mongolia’s mining sector. ABC, March 15


Video: Mongolia-Australia links expand beyond mining

March 18 (Australia Network News) When it comes to mineral wealth, Mongolia is Asia's new frontier - and Australian firms have played a major role in developing its rich resources. Now the links are moving beyond mining, with an increasing number of Mongolians travelling to Australia to study, especially law. Bernadette Nunn reports.

Link to video


Prime Minister speaks about three key decisons made by government

March 19 (UB Post) Prime Minister of Mongolia S. Batbold made an announcement immediately following the Government meeting on March 16th. He emphasized the three important decisions that were made at the meeting. 

First, the Prime Minister announced that the Cooperative Government has reached one of its main objectives, which was to increase the salary, pensions, and benefits by two to three times the current level

He noted that the budget amendments, which were approved by the State Great Khural, have increased civil servants’ salaries by 80,000 MNT since February 1st and will further increase their salaries by 23% starting May 1st. This means that average salary was 300,000 MNT in 2008, 410,000 MNT in 2011 and by February 1st of 2012 630,000 MNT. 

As for pension, the Prime Minister says that pension issued from the Social Security fund has been increased by 35,000 MNT. A total of 318.2 thousand Mongolians receive pensions, and their average pension has now reached 162,000 MNT. It will also further increase on May 1st, and overall, the February 2012 pension level is twice as much as it was in 2008. 

He added that the minimum amount of pension to be set for any Mongolian has increased to 140,300 MNT, and the minimum for pensions that are set by percentage has been set at 105,200 MNT.

Social welfare benefits increased by 30% in February 2012 (a 70,000 MNT increase) and will be further increased by 48% on May 1st, reaching 103,600 MNT. This is a 2.5 increase since 2008. The Prime Minister said that the Ministry of Finance has been ordered to carry out these operations without increasing inflation. 

The next item the Prime Minister spoke about was the “Homes for 100,000 Households” program. 

He said that the second order of new apartments to be built in and around the city and in rural areas has been approved.

The first order was for 79,000 homes to be built, and it has now been increased by 44,700, reaching 124,000 total. This has enabled citizens to pick their homes. The second order of homes is mainly aimed at households with small or medium incomes, and nearly 50% of these homes are less than 55m2 in size. The Prime Minister noted that this program is part of the Government’s 2012 goal of supporting households. 

Final issue he addressed was the release of bonds from the Development Bank. The Development Bank opened its doors ten months ago and now it has released a 5 year long term bond worth of USD 580 million, successfully setting Mongolia’s standard rate of interest. 

The interest rate of the bonds released by the Development Bank is 5.75%. The Prime Minister said that this has been a successful move by the Development Bank, which has also been praised by various international banks and media agencies. 

There are countries that can be compared to Mongolia in terms of economic level and also first-time bond releases. Sri Lanka released international bonds for the first time in 2007 at 8.25%, Vietnam at 6.75%, and the Philippines at 8.75%. The Prime Minister believes that this move was greatly appreciated and expected by foreign investors in Mongolia. 

The release of bonds mean guaranteed funding for huge construction projects, such as railways, paved roads around the country, the Sainshand Industrial Complex, and the “Homes for 100,000 Households” program. 

Prime Minister S. Batbold said that funding distribution among the projects and concerned information will be released in detail following the Government meeting this week.

Link to article


124 thousand apartment available for apartment loan

March 19 ( The Government meeting which held on Friday (March 16, 2012) approved a list of apartment buildings which includes in 100 thousand apartment program. List hold 124 thousand apartment which available for citizens who want to buy with low- 0.6 percentage apartment loan. The government increased number of apartments by 44700. Those buildings included to the list half of them not finished yet remains will be built.

100 thousand apartment program will continue to 2016.

Link to article



Ulaanbaatar, Mongolia, March 19 /MONTSAME/ Mongolia and Russia are to discuss an implementation of the 2011-2015 program on the trade and economics development at the 2nd meeting of the economic development working group of the Mongolia-Russia intergovernmental commission on trade, economics, science and technical cooperation.

The meeting will run on March 20 in Mongolia's Ministry of Foreign Affairs (MFA) co-chaired by N.Enkhtaivan, a director of the Trade and Economic Cooperation Department of the MFA, and by Ye.N.Popov, a deputy director of the Asia-Africa Department of the Ministry of Economic Development of the Russian Federation (RF) and vice head of the Russia-Mongolia intergovernmental commission.

The program on the trade and economics deveopment for 2011-2015 was established in December of 2010 during a visit of Mongolia's Premier to Russia. By the document, it has been with aimed to realize big measures for widening of the economic cooperation. The sides consider that directions reflected in the program will become orientations in the collaboration between entities of the two countries.

Link to article


President warns Police Chief

March 20 ( President Tsakhia Elbegdorj met yesterday with general D.Sandag-Ochir, Chief of General Police Office. President introduce him letter received from Sukhbaatar District Court. General Judge of Sukhbaatar District Court S.Soyombo-Erdene explained what happen on March 14, during court hearing of senior police officials-Former Chief of General Police Office, major general, Ch.Amarbold, the Metropolitan Police Authority, Mr. O.Zorigt, the head of the Public Discipline Department, colonel Sh.Batsukh.

“Letter says defendants not respected court and tried to restrict judge’s therefore court decided to arrest. Also near the court building came many police guard. Why they came, who instructed them. Letter also said when judges asked police to implement court decision police not responded. Some judges have threaten by phone call. What is the reason police refused to implement court decision. I need clear answer” said Tsakhia Elbegdorj.

President also asked about health condition senior police officials who taken to hospital from court. “Doctors said they health condition is poor. But some source saw them sitting and talking to each other. Even some police officers have visited them, Is it true?” asked President.

President warned him might be he decide to remove his rank as general. “President decided to give rank to military and police officials. Also I have a right to remove if person who wearing not suite to them” said Tsakhia Elbegdorj.

President asked official letter from General Police Office what will do to correct police to be honour.  

Link to article


LEHMAN LEE & XU: CHINA & Mongolia Lawyers Covenants Not to Compete and Trade Secrets

March 16 (Beijing, China) presented by leading intellectual property professional Edward Lehman, Managing Director

LEHMAN, LEE & XU China and Mongolia as well as legal affairs correspondent China Central Television

This LEHMAN, LEE & XU seminar provides an overview and general principles of the law and legal theories related to protecting competitive business interests and confidential business information in greater China (mainland, Hong Kong, Taiwan, Macau and Mongolia) which is one of the fastest growing areas of intellectual property law outside of traditional patent, copyright and trademark concerns. Edward Lehman, who is a leading intellectual property lawyer resident in mainland China for the past 25 years  will instruct with case studies in each jurisdiction mainland China, Hong Kong, Taiwan, Macau and Mongolia about covenants not to compete, nonsolicitation agreements, confidentiality and non disclosure agreements, trade secret protection and misappropriation,  th chinese Uniform Trade Secrets Act (anti-unfair competition) and USA and China state trade secret statutes, the doctrine of inevitable disclosure, reverse engineering, developing a trade secret protection program, assignment of inventions, and associated  law claims often involved in trade secret and unfair competition lawsuits. Although the program primarily focuses upon the employment relationship, it also addresses independent contractors and business-to-business settings. In addition, this LEHMAN, LEE & XU conference explores litigation and client counseling strategies, with practical application of legal theories to typical situations often confronted in this rapidly developing area of law in mainland China, Hong Kong, Taiwan, Macau and Mongolia. Key Agenda Points

      Non solicitation Agreements in mainland China, Hong Kong, Taiwan, Macau and Mongolia

      Trade Secrets vs. General Confidential Information in mainland China, Hong Kong, Taiwan, Macau and Mongolia

      Litigation Issues  and strategies in mainland China, Hong Kong, Taiwan, Macau and Mongolia

Who Should Attend? This seminar is primarily designed for attorneys interested in intellectual property issues concerning mainland China, Hong Kong, Taiwan, Macau and Mongolia.  Other legal professionals may also benefit from attending the seminar at LEHMAN, LEE & XU in our Beijing office at the Ministry of Foreign Affairs Liangmaqiao Diplomatic Compound  Details April 3, 2012 | 8.30am will last 90 minutes including  Q&A for more information contact Claire Yao at

Link to release


Mongolia: Ringing the changes

March 19 (Oxford Business Group) Underlining the rapid evolution under way in Mongolia’s telecommunications sector, the state-run, land-line telecoms provider is cutting back while the main mobile players are introducing new features and announcing major international partnerships.

In January, Mongolia Telecom Company (MTC) announced it would need to lay off 200 workers due to “an increase in cell-phone usage”. It also said that the country’s landline users – concentrated in the country’s capital, Ulaanbaatar – would face increased charges of MNT20 ($.02) rather than MNT15 ($.01) per minute.

The moves reflect the increase in the country’s mobile penetration rate to 100% in 2011 from just 30% in 2006. In the same period, mobile subscribers have risen from 721,000 to 2.75m and landline subscribers have fallen from 195,000 to 135,000. In 2010, the mobile segment brought in some 73% of the total income of the information and communications technology (ICT) sector, with MNT471bn ($354.67m) in revenues.

To highlight the impact of the recent expansion in the cell phone industry, MobiCom – Mongolia’s top mobile provider, with an estimated 1m subscribers – signed a long-term cooperation agreement with major Russian provider Rostelekom in December 2011.

Under the deal, MobiCom and Rostelekom will deploy a new cross-border optical link with a total capacity of 4×10 Gbps. Construction is expected to be completed by August 2012. The new link will enable interconnection between Mongolia and Russia, while also connecting Mongolia to Europe.

“The MobiCom corporation is positioning to integrate its operation with the global broadband internet access based in Europe in order to build an international call network system for the current and future needs of Mongolian customers. Another advantage regarding the cooperation deal with Rostelekom is new network capabilities,” D. Bolor, the former general director of MobiCom, told local media.

In another sign of the mobile-based telecoms sector’s growing maturity, MobiCom’s main rival Unitel, which has an estimated 400,000 subscribers, announced in late 2011 that it was launching its “GreenBerry” mobile mail service under a cooperation deal with US-based firm SEVEN Networks. The service will implement cloud computing technology, which provides software, data access and storage resources from remote servers.

To remain competitive, the country’s third main provider, Skytel, which currently has around 230,000 subscribers, held an Android operating system application development competition in November 2011. Several applications proved successful, underlining the potential for the smartphone segment. Approximately 25% of MobiCom’s subscribers are already using smart phones and tablets that utilise the iOS, Android and Windows operating systems, according to the firm.

“Traditional voice services are changing and margins are very low, so future revenues lie in mobile internet services, such as IPTV, high-speed mobile internet and voice over internet protocol,” said Bolor. “To support growth in 3G services, we have started importing new handsets, particularly smartphones that use the latest Android operating system.”

Officials from MTC say the state-run firm, which was partially privatised in 2007 with 40% sold to South Korea’s Korea Telecom, needs such innovative services to keep itself viable on the dynamic and competitive playing field, adding that it will need further government assistance.

According to O. Batchuluun, the president and CEO of MTC, “The government pledged to issue and grant us a 3G mobile licence, but unfortunately this has not yet been implemented. We and our partners are looking forward to finally receiving this licence because it will enable us to compete in the mobile sector and will serve as a boost towards [full] privatisation.”

Batchuluun added that while MTC’s revenues have dropped from 90% of the market to 8-9% in the past decade, it still employs more than five times the number of people than all the mobile operators combined.

In 2008, the Communications Regulatory Commission issued 3G mobile licences to the country’s four mobile operators, Mobicom, Skytel, Unitel and G-Mobile. Provision of 3G services began in 2009, and by late 2010 had been extended beyond Ulaanbaatar to Darkhan and Erdenet. Mongolia has around 17,900 km of fibre-optic cable, most of which is owned by the Information Communication Network Company, a state-owned enterprise.

However, in the world’s most sparsely populated country, coverage is inevitably an issue. With 51% of mobile phone users living and working in rural areas, it is expected that nomadic and semi-nomadic people will increasingly use either solar-powered solutions or 3G networks and newer technologies for communications and internet access.

As Mongolia’s telecoms market matures rapidly, care will need to be taken to ensure the long-awaited full privatisation of MTC goes smoothly. If it does, foreign investors will be more encouraged to participate in the sector’s growth.

Link to article


Mongolia Strikes a Balance between Development and Environmental Protection

March 16 (World Bank) --


·         As Mongolia is becoming the world’s fastest-growing economy, local and international efforts are also ramped up to ensure its environment won’t pay a heavy price.

·         The Bank and the Mongolian Government administered a 7-year trust fund by the Dutch Government to strengthen environmental management in Mongolia.

·         While this trust fund-supported program has just come to an end, efforts to fully develop a “green economy” in the country will continue.

G. Ulziibaya is a senior hydrologist at Oyu Tolgoi, a copper-and-gold mine that is expected to account for one-third of Mongolia’s GDP by 2020. Part of his work is to ensure that drilling for water at the mining sites goes deeper than 300 meters underground. “We also seal-off the deep aquifers from the shallow water sources located above, so that it won’t have side effects on underground water near the surface,” he says.

He is making this effort so that the mining business, which is springing up at a remarkable speed in Mongolia, won’t take away water from neighboring communities or animals and herders residing in the region.

Like Ulziibaya, Mongolians today recognize the need to balance development with environmental protection, as the vast reserve of sought-after minerals is driving the country’s economic growth at 20% a year.

“We inherited from our ancestors the traditional customs, nomadic culture and religion. They have taught us to respect and love Mother Nature,” says Ch. Jargalsaikhan, Vice Minister of Ministry of Nature, Environment and Tourism (MNET). “As mining is recognized as the key sector of Mongolia’s development agenda, environmental issues are becoming increasingly broader while economic development and living standards are improving.”

To address environmental issues, the World Bank, together with the Government of Mongolia, began to administer the Netherlands-Mongolia Trust Fund for Environmental Reform (NEMO) in 2005 with funding provided by the Dutch Government. The overarching objective of the funds was to strengthen environment and natural resources management in Mongolia.


The trust fund-supported activities, implemented in two phases, drew to a close in February, 2012. The 1st phase, which ran from 2005-2006, obtained impressive results, including:

·         The establishment of sound baselines of knowledge for environmental and natural resource management that can be used as benchmarks for measuring progress (or regress).

·         Wide media coverage of the program that increased the visibility of environmental affairs in the country. 

·         Enlarging the pool of environmental practitioners

·         Helping the MNET begin to prioritize responses among the many environmental problems the country faces.

The 2nd phase (2007-2011) continued to advance the environmental agenda in Mongolia. Its major outcomes include:

·         Searchable, web-accessible databases on environment and natural resources management, available in both Mongolian and English;

·         An increase in the coverage of NEMO-related issues in the media;

·         Continuation of a small grants program for environmental activities at the national and local levels; and

·         A strategy and action plan covering priorities from 2012 to 2021.


Among the many activities implemented since 2005, the Small Grants Program (SGP) gets very positive reviews with government officials and local communities.

Local groups, such as NGOs (non-governmental organizations), student clubs and herder communities, competed for small grants by submitting innovative environmental proposals. Since 2006, nearly 2,500 proposals were received, of which 220 were given grants.

One of the proposals targeted waste paper management in Kharkhorin soum (city) of Uvurkhangai aimag (province). Recycling is not yet common in Mongolia. So the SGP provided funding for them to begin elevating awareness and changing perceptions about the need to recycle. 

In 2010 alone, more than 30 tons of waste paper were collected and sent to a recycling plant to be processed into toilet paper. A class on recycling will even be incorporated in the local secondary schools’ curriculum. 

"Now, people see that collecting and processing waste is more profitable than just throwing it away, both in economic and environmental terms,” says Susanne Roelofs, the NEMO program facilitator.

Another highlight is the Wildlife Picture Index (WPI) that has been used to monitor Mongolia’s biodiversity. WPI is a method that collects images using remote "camera traps," which automatically photograph anything that lopes, waddles, or slinks past. Then, photos of animals collected this way are run through a statistical analysis to produce metrics for diversity and distribution for a broad range of wildlife.

"We considered it beneficial to implement a multi-year WPI-based project in Mongolia, as the country’s biodiversity is under stress and on the decline,” says Jim Reichert, a Senior Infrastructure Specialist at the World Bank.

Illegal hunting and wildlife trade have put animals throughout Mongolia at risk. According to the Mongolian Red List of Mammals, 79% of Mongolian ungulate species (hoofed mammals, like camels and donkeys) is regionally threatened, and 12% of Mongolian carnivores and 12% of rodents are also threatened.

Using the Wildlife Picture Index to identify areas where species are declining most rapidly, conservationists were able to determine where to focus their efforts to help stem the tide of biodiversity loss over vast landscapes of Mongolia.

Looking Ahead

With the support of NEMO, the MNET took the lead in developing Mongolia’s “Environmental Master Plan – 2021”, in consultations with its staff across the country and environmental NGOs. This document covers the sector’s reform strategy and policy. A plan with actions to implement the strategy will also be presented to the Cabinet and approved by Parliament.

Talking about next steps, Ch. Jargalsaikhan says that “the systems for public participatory and monitoring management should be improved, so that the economic profits generated from natural resources can be used, in turn, for nature and environmental protection.”

What’s more, there is an imminent need to implement fully the concept of a “Green Economy”, he adds, “although the Dutch Government’s generous funding has come to a close, environmental reform in Mongolia has no end.”

Video: Mongolia: Wildlife Picture Index Helps Conserve Biodiversity - In Mongolia, illegal hunting and wildlife trade have put various animal species at risk. A new method helps stem the tide of biodiversity loss in the country. March 16

Link to article


UB Post: Mining vs. Tourism

March 19 (UB Post) While the Mongolian mining sector is growing at a furious pace, its relationship between the country`s tourism sector is becoming more questionable. Some consider the mining industry an opportunity for Mongolia to grow its economy; some consider it as an advisory to the competitiveness of the tourism industry.

Creating New Realities

A large flow of money from the mining sector has heightened the budget expenditure. The cash distribution to every citizen, and more for students and pensioners, as well as pay raises caused inflation to increase. However, tour prices equal the cost of 15-17 products and services. Therefore, inflation is in turn recouped through higher tour prices. 
Human resources is a constant challenge for tour operators. The high salaries of mining companies hañó lured away many of the tourism industry`s best drivers and guides, and those with the best language skills. The tourism sector, after losing its human resources, has had no other option but to train recent graduates who are likely to defect to the mineral sector after improving their communications and language skills, as tour operators cannot offer such high salaries in order to retain top talent.
Due to inflation and human resource drains, Mongolian tour prices likely to get more expensive, thus reducing the attractiveness of the country as an international travel location. 
The destruction inflicted to nature has become the most worrying trend. This has particularly been the case in the Gobi region, where some mining companies destroy historic and cultural heritage sites.

“Mongolia is considered to be a mining country. However tourists will not come to Mongolia to see mines,” pointed out Z.Demidbal, General Director of DMD.

Opening New Market

As the saying goes, “The coin has two sides.” The mining boom also has created new advantage for the tourism industry. 
“Few leisure tourists, mostly backpackers came to see Mongolia before. Today, thanks to the rapid economic growth, the number of business travelers is likely to increase,” says E.Tuul, CEO of Nature Tour. 
As international awareness of Mongolia has expanded, the number of visitors attending conferences such as Discover Mongolia, Coal Mongolia, and the Mongolia Economic Forum has increased. Aviation, food services, and accommodation providers have benefited from this new trend, but other parts of the tourism sector, particularly environmental and heritage tourism is lagging behind. 
“For Mongolian tour operators there is a lack of initiative in finding out where international events will take place, and then proposing tour programs to business travelers,” says N.Erdenebat, Vice President of the Mongolian Tourism Association.
The Mongolian tourism sector must target this new market, as business travelers could hand over a lot of money. The opening of the Ramada, planning to set up operations from global giants such as Hilton, and Radisson Blue, indicate that international hotel chains are already aware of this soon to happen increase in business travelers. 
Even though there are five star hotels, there are limited products and services offered. It is certain that business travelers will not want to travel on unpaved dusty roads and use wooden toilets. In order to attract wealthy tourists, Mongolia needs to develop its tourism infrastructure.

Seeking Investments

In 2008 the Government announced that the tourism sector would constitute a priority in the economy and highlighted the development of tourism infrastructure through several large scale projects, such as Kharkhorin 13th Century Complex, which will include a museum, monastery (as it is the home to Erdene Zuu, Mongolia`s oldest Buddhist monastery), an ancient architectural buildings, sculptures, and exhibits. 
We can see wonderful ideas such as the construction of the Khoridol Saridag holiday complex near the banks of Khuvsgul Lake, the construction of large scale paleontological museum near the Bayanzag (Flaming Cliffs), which is laden with dinosaur fossils. There is also a project to build the largest ger-carriage museum in Khentii aimag to show off the power of Genghis Khan`s army of warriors. 
However, we need an investment in order to implement these large-scale projects, now appearing only on paper. 
“In such an uncertain situation, it`s difficult to attract an investment,” says D.Gantumur, chairman of the Sustainable Tourism Development Center. “If one would decide to invest in a tourism project, where is the guarantee that there won`t be mineral deposit discovered and the mining company won’t destroy that area?”
Today Mongolia relies heavily on mining. Minerals represent 90% of the country’s exports and the mining industry alone is swallowing more than 85% of foreign direct investments, while the tourism sector does not absorb a single percent of it. On the other hand, tourism can support the non-mining sector, highlighting the Government’s aim to diversify its economy.

Looking for Solutions

We should keep in mind that mineral resources will be exhausted one day. In this sense, the tourism sector is the opposite of the mining one. In order to develop the sector that gains money by demonstrating the nature beauty, the country`s heritage, and culture (not by destroying them), we need to inject a considerable amount of investment into the tourism sector. 

The Government should have a forward thinking policy and support the tourism industry. On the other hand, business owners in the tourism industry should not rely on the Government but recognize the need to adapt, as the mining boom is creating a new status quo. 

“We should not stay inactive, but rather search for solutions” pointed out Erdenebat.

In order to mitigate the difficulties, tourism companies need to step up activities. 

“We need to cooperate, as a result we can earn many benefits, such as savings on human resources, discounts in advertisements, exchanging new service practices, and getting rid of the price strain” he said. 
Although in recent years the quantity of private tourism companies has increased tremendously, they remain small. Due to their low capacity they turned into small self-catering entities, and cannot accumulate capital to invest into their field. 

“Thus, only by joining forces can difficulties be overcome,” said Erdenebat.

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Miner & Supplier 2012: Lack of information causes confusion and difficulty for supply companies

March 19 (UB Post) The NGO Mineral Resources and Mining Exchange, in cooperation with the National Development and Innovation Committee organized the second Miner & Supplier Conference and Exhibition on March 15th and 16th. 

Over 200 delegates from the mining industry took part in the conference to discuss Mongolia’s current situation on the supply flow of mining provisions and more importantly, the latest environmentally friendly mining methods, technology, and equipment. 

The Mongolian mining industry has been progressively growing over the past few years, with the major contributors being the Oyu Tolgoi and Tavan Tolgoi projects and the Erdenet Mining Corporation, in addition to various other mining projects operating in Mongolia. 

Mineral exports make up over 30% of Mongolia’s GDP and nearly 90% of the overall export income of Mongolia. Parallel with the growing mining community, companies that supply mining equipments and tools have also been expanding.

According to participating supply companies, although Mongolia’s current objective from the Government is to support domestic companies, create a friendly and suitable environment for small and medium enterprises, what is happening today is usually the opposite. 

The President of the Government Implementing Agency for Small and Medium Enterprises, Ts. Nyam-Ochir said, “Although it can be said that Mongolia’s mining sector is at a moderately high level of development right now, it can also be said that the procedure to supply them with required goods is only at the initial stage. There is a need for mining companies to include provincial SMEs for their provisional services. For companies with foreign investments, it is advised to create 5 – 10 year agreements with domestic suppliers which will supply specific goods requested by the company.”

He also said that supply companies do not have adequate information on mining companies, which makes it hard for them to provide mining supplies. 

“Due to lack of information being released by mining companies, suppliers cannot supply and provide goods at their full potential. There is almost no information regarding which products are needed, and when they are needed. Additionally, sometimes suppliers are not able to provide orders from large mining companies; which is a sign that suppliers will have to upgrade and improve their technology.” 

He added the Government should further assist supply companies by granting loans for new supply companies. 

Over 30 supply companies have introduced themselves through open exhibitions; illustrating today’s required standards for mining equipment and tools and some of them even showing a comprehensive study of previous equipment and mining technology demands in Mongolia.

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Meat prices reflect high demand and low supply

March 19 (UB Post) The price of meat reached 9500 MNT at Narantuul Market on March 15th. Since the Lunar Year Holiday the price of meat has steadily increased and peaked at 10,000 MNT before dropping slightly. 
The number of livestock is nearing 50 million and people continue to wonder why the price of meat keeps increasing.

At Narantuul Market lean beef is 9000 to 9500 MNT per kg. Bone-in beef is 7800 MNT per kg, Lean lamb 7800 MNT per kg, lean goat is 6500 MNT per kg, and bone-in goat is 5500 MNT per kg.

At Talst Shopping Center the price of beef is 9000 MNT per kg, lamb is 6600 MNT per kg, and horse meat is 5700 to 6000 MNT per kg. 

At Khuchit Shonkhor Market prices were relatively low compared to the other markets. At retail lean beef is 7800 MNT per kg, and bone-in beef is 7000 MNT per kg. Lean lamb is 6500 to 7300 MNT per kg and bone-in is 6000 MNT per kg.

The wholesale price of lamb is 5500 to 6100 MNT per kg and wholesale beef is 6800 to 7300 MNT per kg.

Tradesmen T.Ganbaatar spoke about the price fluctuations:

-How are sales going?

-It has been good. I bought 187 whole muttons at wholesale, I was here for a whole day, but I sold only seven whole muttons. We might face a loss.

-Why is that?

-I bought the whole mutton for 5500 MNT, but now I am selling them for the same price. They should have sold for 5800 MNT, but I don’t think that the meat price will increase in the near future. 

-We heard that there are a number of Chinese citizens buying wholesale meat. What do you know about this, and is this leading to meat scarcity?

-Chinese people always purchase meat at wholesale. I sell to them too. They buy hundreds of tons of meat.

-Do they import it to China?

-I have heard that they do. Even if they buy hundreds of tons of meat when they come, they come back again to buy that amount of meat a few days later. 

While interviewing T.Ganbaatar a black jeep approached and a man lowered the window asking, “Who are you giving a interview to?” 

“It is okay and she is my acquaintance,” he responded before adding, “Now please ask someone else. I am busy right now. My boss is looking”.

The decision to stop meat exports from the Government has started affecting meat prices and some citizens are selling back meat they purchased for a profit.

The Chairman of Mongolian Meat Association M.Lkhachinbal has given different point of view compared to the citizens regarding this issue.

-Due to an increase in meat prices there is increased pressure on the lives of the citizens. Isn’t it time to take actions to combat this issue?

-On March 15th price of meat has decrease 100 to 300 MNT per kg. Meat prices doubled in 2011 in herder’s campsites. Herders are increasing the price of their livestock and it is not wrong.

-They are purchasing their flour and bread at a high price, why is it wrong for them to sell their livestock at a high price?

If people of Mongolia want to be supplied with meat in the future, they should not judge or complain about increasing meat prices.

-Then is it right for meat price to increase?

-I think meat price will not decrease. It is normal for the marker price to be 7000 MNT. The price is 5000 to 5500 MNT in herder’s campsites.

-If the price keeps increasing, it might be difficult for Mongolians to afford meat?

-It might be, but we cannot urge herders and traders to reduce their prices. It is not up to us to tell them to sell their meat at a certain price, it should be regulated by tax policy from State.

-The lamb price per kg was 3500 MNT last year.

-Meat supply is low and demand is high right now. That’s why the meat prices are increasing. Herders are willing to breed more livestock when the weather conditions are good. 

-It has been said that the Chinese over purchase of meat is leading meat shortfall. Is there any way to regulate this. 

-People are saying Chinese people are overbuying meat and smuggling it. As it is an open market, we cannot forbid Chinese people from buying meat. They are buying it with their money like we do. So there is no way to ban them from buying meat from Mongolia.

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