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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Golomt Bank ratings are one notch below Mongolia's sovereign rating of BB- by S&P
S&P Rates Golomt Bank's Senior Notes 'B+'
HONG KONG (Standard & Poor's) April 10, 2012--Standard & Poor's Ratings Services today assigned its 'B+' long-term issue rating to a proposed offshore issue of senior unsecured notes by Golomt Bank of Mongolia (B+/Positive/B). The rating on the notes is subject to our review of the final issuance documentation.
The U.S.-dollar-denominated notes will have a fixed-rate coupon. The notes will constitute direct, unconditional, unsubordinated, and unsecured obligations of Golomt Bank.
975 closed -3.43% to HK$6.76
MMC To Boost Average Revenue by Supplying 500,000 to 2,000,000 Tonnes of Middling per Annum
HONG KONG, April 10, 2012 /PRNewswire-Asia/ -- Mongolian Mining Corporation ("MMC", or together with its subsidiaries, the "Group"; HKEx: 975), is pleased to announce that Energy Resources LLC, an indirect wholly-owned subsidiary of the Group, entered into a long-term cooperation agreement with China Datang Overseas Investment Co., Ltd ("Datang") to supply middling for a period of 10 years commencing 9 April 2012.
Middling, the high calorific value thermal coal produced as a secondary product from the processing of coking coal, is suitable for coal-fired power plant boilers operations. Pursuant to the agreement, the quantity of middling to be supplied will be between 500,000 and 2,000,000 tonnes annually, depending on the availability of the product. The product price will be set based on market price, and will be subject to periodic review.
Dr. Battsengel Gotov, CEO of MMC, commented, "The cooperation agreement presents opportunities to boost our average revenue and operational efficiency, as well as to diversify our revenue sources. We are proud to work with Datang, the leading power generation enterprise in China, as one of our end-use customers, and look forward to the long-term mutual benefits from our collaborative relationship."
Datang is one of the leading state-owned power generation enterprises in China specialized mainly in power production and supply, power-related coal mine development and production as well as related professional technical services. Currently, Datang has carried out a wide range of businesses, including hydropower, coal-fired power, wind power, nuclear power, coal mining, mineral resources and international trade.
About Mongolian Mining Corporation (MMC)
Mongolian Mining Corporation (MMC, or together with its subsidiaries, the "Group"; HKEx: 975) is the largest producer and exporter of high-quality hard coking coal in Mongolia. It owns and operates an open-pit coking coal mine at the Ukhaa Khudag ("UHG") deposit located within the Tavan Tolgoi ("TT") coal formation, as well as the Baruun Naran ("BN") coking coal deposit, both located in South Gobi, Mongolia.
In June 2011, MMC's coal handling and preparation plant ("CHPP") at the UHG mine was successfully commissioned. The first of its kind in Mongolia, the new plant enables the Company to boost its competitiveness in the world market and solidifies MMC's position as the leading coking coal miner in Mongolia.
MMC was listed on the HKEx in October 2010, and was selected as a constituent stock of the FTSE Hong Kong Index in March 2012. To learn more about the Company, please visit MMC's website at: www.mmc.mn
Mongol Mining (975) inks power supply deal with major holder
April 5 (ET Net) Mongolian Mining Corporation (00975) said it entered into several connected transactions with controlling shareholder MCS Mining Group Limited.
MCS Mining Group agreed to provide Mongolian Mining engineering, procurement and construction management (EPCM) services for new school, kindergarten and dormitory complex in Tsogttsetsii soum of Umnugobi province, Mongolia as well as EPCM services for construction of mining equipment workshop II at the UHG mine. MCS Mining Group also agreed to supply 4,500 tonnes of bitumen for construction of the paved road between UHG and BN mines and power.
In addition, MCS Mining Group agreed to provide Mongolian Mining with services such as, high voltage 110/35/10kV main substation expansion.
The total consideration payable by Mongolian Mining will be about US$22 million. (HL)
Mongol Mining unaffected by major holder's reorganization
April 5 (ET Net) Mongolian Mining Corporation (00975) said was informed by its controlling shareholder, MCS Mining Group Limited, that as a result of the implementation of an internal reorganization by the MCS Group, MCS Mining Group Limited is now wholly-owned by MCS (Mongolia) Limited, which is in turn wholly-owned and controlled by the same ten ultimate individual beneficial owners through their respective corporate
holding vehicles.
In addition, MCS Mining Group Limited transferred 10% of the shares to these ten corporate vehicles held by these ten ultimate individual beneficial owners in the same proportion. The interest and control of the ultimate individual beneficial owners in Mongolian Mining remain unchanged. (HL)
DRG last traded at 48c
Draig Resources in pre open pending Mongolian coal exploration results
April 10 (Proactive Investors) Draig Resources (ASX: DRG) has been granted a trading halt by the ASX to allow the company time to finalise an announcement regarding drilling exploration results from the Teeg licence in Mongolia.
The company has been working towards defining a JORC Resource in the June quarter, focussed on a number of Jurassic coal bearing drill targets within the Teeg and Nariin Teeg coal licences in Mongolia's Ovorhangay province.
Targets identified at Teeg and Nariin Teeg are relatively shallow and, at Teeg, could potentially include two laterally continuous synclinal features.
Shares in Draig will remain in pre open until the earlier of the release of an announcement to the market or the commencement of normal trading on Thursday April 12.
HAR closed -2.08% to 47c, +64.91% YTD
Haranga Resources Company Presentation April 2012: "Mongolian Iron Ore and the Selenge Iron Ore Project"
April 10, Haranga Resources Limited (ASX:HAR) --
Notice of AGM – Haranga Resources, April 10
VOR closed +1.96% to 5.2c, GUF closed +1.47% to 69c,
Fostock: Mongolia Site Visit Commentary – best picks VOR (Cu), GUF (coal) and HAR (Fe)
April 10, Foster Stockbroking --
· Our analysts recently attended a site trip to Mongolia, travelling to the South Gobi and spending time in the country's thriving capital, Ulaan Baatar (UB).
· Mongolia is fast transforming from an undeveloped country of herders to one of significant foreign investment from miners due to the close proximity to nearby China and the massively underexplored and prospective mineral wealth – only ~15% of the country is reported to have been geologically mapped. As a result mining heavyweights such as RIO, BHP, Vale, Peabody, Xstrata, Banpu, Ivanhoe and most recently Chalco have all built a presence within the country as have trading houses Noble Group and Trafigura. It was no surprise to see UB thriving with westerners attempting to finance and acquire assets throughout the country.
· In our view, investing in Mongolian vehicles should be done on a case by case basis with a core focus on two key criteria:
1. Proximity to infrastructure or a ready-market (i.e. border crossing, UB); and
2. In country political capital.
· 
We observed a significant lack of infrastructure development throughout the country and lack of sealed roads/highways. The Trans Mongolian Railway (TRM) is the only notable existing infrastructure with nameplate capacity of 32Mtpa (practical capacity is understood to be ~24Mtpa due to lack of rail sidings, rolling stock and inefficient operations) with current utilisation understood to be ~15Mtpa. The TRM connects with the Trans-Siberian Railway on the Russian border through the Mongolian capital Ulaan Baatar and south to the Chinese border. We believe there will only be a handful of projects/companies which will succeed in emerging regions such as Mongolia and West Africa. These include those that are backed by majors with deep pockets and world class ore bodies (e.g. Simandou and RIO, Oyu Tolgoi and Ivanhoe/RIO) or those that have close proximity to existing infrastructure (e.g. Mayoko and African Iron/Exxaro, Selenge and Haranga).
· Strong relations with government and local provinces is also of strong importance to effectively negotiate key agreements such as mining licences, infrastructure access, etc.
· We remain bullish on the country and consider best exposure to be found in the following key stories:
- Voyager Resources (VOR.ASX; BUY PT $0.11/sh): Releasing some of the most exciting copper intersections at the flagship KM Project (e.g. 116m at 2.4% Cu from 30m and 50m at 3.5% Cu) in the South Gobi. Targeting a maiden JORC of ~30Mt at 1% Cu by mid year however the game-changer is hitting the porphyry at depth which will attract signficant corporate interest.
- Guildford Coal (GUF.ASX; BUY PT $2.20/sh): Provides near-term ~4Mt coal production 60km from China's border. GUF are close to finalising a detailed scoping study for the South Gobi Project, followed by production targeted for mid 2012. Management have highlighted negotiations with both mine-gate off-take partners and mining contractors are aligned with GUF's rapid development timetable for mid-year. GUF has already received the first of two mining licenses required for South Gobi's production target.
- Haranga Resources (HAR.ASX): Exploring for iron ore at the flagship Selenge Project, with drill results to date highlighting the potential for an operation utilising existing and nearby infrastructure (two rail spurs located within 40kms leading to the Trans Mongolian Railway) and a ready market south of the border into China. Following the maiden 2011 drilling program of >13,000m, HAR have released an initial JORC of 32.8Mt at 24.4% Fe at the Bayantsogt prospect and exploration target of 120Mt – 250Mt at the larger Dund Bulag prospect. The nearby Eruu Gol operation, currently producing 3Mtpa, provides proof of concept for HAR's Selenge and indicates the potential valuation upside; Eruu Gol is reportedly seeking to list on the HKSE in 2013 for a valuation of up to US$3b (China's sovereign wealth fund invested US$700m in 2009 for one third of the project).
· The management teams behind VOR and HAR in particular have had a strong presence in Mongolia for a number of years now, developing an impressive track record of acquisition, exploration and M&A through sound relationships in country. Both vehicles were originally established by Garrison Capital, the same group that founded and successfully sold Mongolian coal exploration company Hunnu Coal (HUN.ASX) to Thai major Banpu in late 2011 for almost $500m ($1.80/sh), having listed that company 18 months earlier at just $0.20/sh with a valuation of ~$30m. One of HAR's Non Executive Directors, Bat-Ochir Sukhbaatar, is the Prime Minister's brother, providing further political capital.
· Whilst a new mining code and transparent process is expected to be approved in the near term, at present a moratorium is in place in respect to the issuance of new exploration licences, meaning the only way for corporates to gain exposure to the prospectivity of the country is via M&A. We expect this to remain a key theme throughout 2012 following recent transactions including Hunnu Coal (Banpu) and South Gobi Resources (Chalco).
YAK closed +0.24% to C$4.21, MNGGF closed -0.85% to US$4.20 on Monday,
Mongolia Growth Group Exploring MSE Listing
April 10 (ForexPros) Last week we talked about investment opportunities in Mongolia. To follow up on that topic I recently did an interview with hedge fund manager Harris Kupperman.
He is the Chairman and Chief Executive Officer of the Mongolia Growth Group (ticker symbol YAK in Canada or MNGGF in the US), a real estate and financial services conglomerate focusing on operations in the rapidly growing economy of Mongolia.
Robert: Most funds and foreign companies in Mongolia are investing in mining and natural resources, but your fund focus on real estate and insurance. Is there any particular reason you chose this niche?
Harris: Mining is a tough business and most investors do not make money in that industry. There is a boom in Mongolia right now and real estate and insurance do well in an expanding economy. Those two sectors should offer the most leverage to the growth of the economy.
Robert: Your fund is traded on the Canadian National Stock Exchange and on the pink sheet in the US. Do you have any plans to list in other markets?
Harris: We are currently exploring having our company listed on the Mongolian Stock Exchange (MSE). Naturally, this is a detailed process and there are lots of considerations needed. A MSE listing would of course be a long term goal of ours.
Robert: The MSE has been one of the best performing stock markets in the world. It's up about 300% since 2010. However, I have heard about problems of liquidity and investors having difficulty of getting orders filled.
Harris: The MSE still has some problems with liquidity but volumes have been rising. The MSE is also based on outdated trading technology but it is in the process of being modernized.
Robert: There are currently a little over 300 companies traded on the MSE. Do you know about any new IPO's?
Harris: The economy here in Mongolia is booming and I know about at least four companies that plan on launching an IPO this year.
Robert: The Mongolian Currency was up almost 6% against the US dollar last year and I heard that you can get double digit interest rates on bank deposits.
Harris: You can get more than that. I currently get 18% interest on my money in addition to currency appreciation. The Mongolian tugrik is an attractive alternative to the depreciating US dollar and the Euro.
Robert: Can a non-Mongolian that is outside of Mongolia open a bank account?
Harris: I didn't have a problem opening an account. It was a simple process. I would recommend anyone interested in opening an account just to call the bank.
Robert: You had a nice presentation on your website where you compared Mongolia to where Kazakhstan was a few years ago. What kind of growth do you expect from Mongolia over the next couple of years, and do you expect that Mongolia will do as well as Kazakhstan has?
Harris: I certainly think so, that is the reason why we are here. The stock market in Kazakhstan was up 2600% between 2002 and 2008 and real estate and wages were up several times as well. I think Mongolia will eventually catch up to places like Qatar and Kuwait.
Robert: The mining sector has been the engine of growth but how is the rest of the economy performing?
Harris: The country is growing rapidly and the standard of living is increasing across the board. Mongolian's will need all kinds of services that previously haven't been available. I see opportunities all around me and this is a perfect place for an ambitious entrepreneur.
Robert: I have heard that Ulaanbaatar have become very crowded as more and more people move into the city. Is the city expanding outwards in capacity?
Harris: The city is located in a valley so the expansion is vertical. It will probably look something like Hong Kong and Singapore in the future or other similar cities with limited geography.
Robert: What type of government do they have in Mongolia?
Harris: Mongolia is a Democracy with an open and free media.
Robert: Is it easy to do business in Mongolia or are there a lot of bureaucracy and red tape?
Harris: Mongolia has an open free market and despite what you may hear in the media it is very easy to do business here. I wish that the US would adopt some of these practices. There is a little bit of bureaucracy left from the former soviet-rule but the government understands that growth will make the country successful.
Robert: The crisis of 2008 hit the whole world and Mongolia was no exception. Is the Mongolian economy more insulated than other countries or is it dependent on growth from the rest of the world?
Harris: If there is another economic crisis, commodity countries like Brazil and Australia are going to get hit pretty bad. Mongolia will be affected but I believe that it will hold up better than other countries. The rest of the world, China especially, needs what Mongolia produces. A crisis may slow them down but it will not hold back the long term growth trend that I see in Mongolia. I look at the Macro picture and I believe that Mongolia will be among the fastest growing countries in the next 10 to 20 years.
Robert: Do you see any niche opportunities developing?
Harris: There are plenty of business opportunities. MGG primarily focuses on real estate and insurance but there are lots of other opportunities for entrepreneurs and businessmen in Mongolia.
Robert: Thanks for taking the time to share your knowledge on Mongolia today.
The Mongolian growth Group was launched in 2010 and it is up over 400% since its inception. It is traded under symbol YAK in Canada, and MNGGF in the US.
STOCK EXCHANGE WEEKLY REVIEW
Ulaanbaatar, Mongolia, April 9 /MONTSAME/ Five stock trades were held at Mongolia's Stock Exchange on April 2-6. In overall, 3.1 million shares were sold of 64 joint-stock companies totaling MNT 1.4 billion.
Index TOP-20 was 20447.66 points decreasing 427.85 units or 2.0% against the week earlier. The total market capitalization was set at MNT one trillion 968.6 billion decreasing MNT 57.3 billion or 2.8%.
Shares of "Khodoo teever" /51.7%/, "Tegsh" /32.2%/, and "Niislel orgoo" /32.2%/ increased, but shares of "Monnoos" /15.0%/, "Khasu mandal" /13.8%/, and "Shine ovoo" /12.5%/ decreased. 24 stocks closed higher, 25 shares declined and 15 shares remained unchanged.
Shares of "Hermes center" /2.1 million units/, "Olloo" /300.5 thousand units/ and "Remikon" /196.5 thousand units/ were the most actively traded in terms of trading volume and in terms of trading value--"Khereglee impex" (MNT 487.3 million), "BDSec" (MNT 186.0 million), and "Hermes center" (181.0 million).
"MONSEC" LLC RECEIVES A LICENSE TO PROVIDE UNDERWRITING SERVICE
April 9 (MSE) In accordance with the resolutions No.75 passed by FRC on April 4, 2012, "Monsec" LLC has been granted permission to carry out underwriting services. Consequentially, now the number of MSE member underwriting companies is 24.
Coal gasification plant to be built from Mongolia and Germany's diplomatic partnership
April 9 (UB Post) This is an interview with Ts. Garamjav, the Deputy Minister of Mineral Resources and Energy (MMRE) about the new coal gasification plant to be built in Mongolia through partnership with Germany.
-It was decided that the coal gasification plant would be built in cooperation with Germany. What were the initial steps that had to be taken?
-Initial steps have been taken towards the construction of the gasification plant. Mongolian MCS and MAK Groups along with Tsetsens Mining and Energy have set the foundation to start a business partnership with the German conglomerate Siemens and ThyssenKrupp. Additionally, MCS Group and Petrovis LLC made a coal liquefaction equipment supply contract with Germany's Lurgi AG, based on the Fischer-Tropsch technology.
It is reasonable to understand that the most significant agreements and contracts on building a coal gasification plant in Mongolia have already been done. We have also talked about producing coking coal and building ferrous and non-ferrous metallurgy in Mongolia.
A lot of heat or thermal energy can be extracted from a coal coking plant, and we have also seized the opportunity and signed contracts with German parties on cooperating on generating electricity utilizing this method. Introducing the worldwide accepted, advanced technology of Germany to Mongolia is a big step for us. We have talked about and admired the high-end technologies of Germany for many years and we are now finally bringing them to Mongolia.
These national level business partnerships with Germany have mostly been initiated through the high-level diplomatic visits made by President Ts. Elbegdorj.
-When will the coal gasification plant be operational?
-The first coal gasification plants of Mongolia will be up and running in less than three years.
The coking plant is due to be in operation very soon. Technical and economic assessments on the coking plant have already been completed; specialists from both countries are conducting research on the plant. They are currently choosing and buying machinery and equipment. A major problem we are facing in constructing and operating the plant is the infrastructure of Mongolia. We have discussed the issue during our visit to Germany. We hope that this problem will be fixed soon.
-Where will the coal refining plants will be built?
-We see the Sainshand Industrial Complex as a possibility.
-How will Germany work with Mongolia on constructing the Mining Academy?
-There are not many engineers today that can work with Siemens technology. Most Mongolian engineers are accustomed to Russian technology. If they learn to work with Siemens, it will greatly speed up our mining sector. This is the aim of the new Mining Academy. We are partnering up with Germany on all levels of study – research, workshops and advanced training. Once the Academy is established, many German teachers, engineers, and professionals in mining will arrive in Mongolia.
Oil exploration companies and oilfield list in Mongolia
April 9 (Business-Mongolia.com) Companies with product share agreement with the Petroleum Authority of Mongolia:
1. PetroChina Daqing Tamsag, Chinese invested company operating in three oilfields: Toson Uul – XIX, Tamsag – XXI, Buir – XXII
2. Dongshen Gazryn Tos (Oil in Mongolian), Chinese invested company conducting exploration in two oilfields: Tsagaan els – XIII and some parts of Zuunbayan XIV or contracted field with No 1997
3. Sheyman Resources Mongolia, Canadian invested company conducting exploration in oilfield: Nyalga – XVI (Mogi: wholly owned by Ivanhoe Energy)
4. China Golden Sea Petroleum, Chinese invested company conducting exploration in oilfield: Tariach – XV
5. Petro Matad, registered at Cayman Island conducting exploration in oilfield: Matad – XX (Mogi: actually registered at Isle of Man)
6. DWM Petroleum AG, Swiss invested company conducting exploration in oilfield: Tsagaan Els – XIII and Zuunbayan – XIV (Mogi: majority owned by Manas Petroleum with Shunkhlai Group as local partner and minority holder)
7. Zong Hen Yu Tang, Chinese invested company conducting exploration in oilfield: Galba – XI
8. NPI, conducting exploration in oilfield: Khukh Nuur XXVIII
9. Central Asian Petroleum Corp. Limited, company conducting exploration in oilfield: Bogd – IV, Ongi – V (Mogi: wholly owned by Petro Matad)
10. MCS Holding, Mongolian company conducting exploration in oilfield: Borzon – VII
11. Sansar Geology Khaiguul LLC, Mongolian company conducting exploration in oilfield: Tukhum – X Khoid and Tsaidam – XXVI
12. Magnai Trade, Mongolian company conducting exploration in oilfield: Bayantumen – XVII
Depending from the daily output, the Government product share will be in between 42.5 – 65% on average.
Mongol Bank: Wrong speculation led to increase in value of MNT
April 9 (Business-Mongolia.com, source: unspecified) J.Bataa, Head of the Financing Market Department of the Currency and Economics Office of the Mongol Bank talks about the factors of increased value of MNT.
Q: Value of MNT against USD has been increasing in the last few days. Can you explain the reasons?
J.Bataa: Value of MNT against USD has increased by 6.5 percent if compared to beginning of the year and by 1.2 percent in the last five days. Trade turnover deficit has reached 409.4 million USD since the beginning of this year because import has doubled against export. The foreign currency inflow is less than the outflow and the netflow is negative or minus as a result of increase in import. These are the reasons for weakening value of MNT in the short run.
Value of MNT has been increasing for the last days because of wrong speculation. This can be explained by number of factors.
First of all, people expects that value of MNT will go up because of wool and cashmere export is increased in Spring. It is still believed that wool and cashmere export will affect the value of MNT but in fact it has little effect in comparison to mining export.
Secondly, the Development Bank of Mongolia has released bonds worth USD 580 million in foreign markets and Mongolian Mining Corporation has successfully released bonds worth USD 600 million. This information to the public also provided expectancy that the value of MNT would go up. Foreign currency reserves of Mongol Bank will be increased by the above releasing of bonds and thus decrease the value of MNT. In addition, the money raised by the Development bank will be used for epic projects including Railways project, Roads project, 5th thermal power station and Sainshand project. This means the money will be outflown from the country as raw materials, techniques and technologies will be imported for these large projects.
At last, number of commercial banks are discussing to release bonds at foreign markets. This also provided the some idea that the value of MNT would go up.
POPULATION WILL REACH THREE MILLION BY 2017
Ulaanbaatar, Mongolia, April 10 /MONTSAME/ The National Statistical Committee (NSC) (Mogi: NSO) reports that the population of Mongolia is expected to reach three million by 2017 and 3.9 million by 2040.
This forecast has been made by the NSC from 1963 and is used for the socio-economic plans. The forecast reflects the growth of number of the people by putting forward multiple-path hypothesis based on the country's birth and mortality rates and migration tendency.
According to the forecast, the median age of the Mongolians will become older from the year 2040, reaching 34.5 and 33.3 years in the two versions.
Salaries increased but 2012 suggest not so quick rise
PricewaterhouseCoopers launches the 2012 Paywell Survey
April 6 (PwC) PricewaterhouseCoopers (PwC) launched its unique survey of compensations and benefits across all sectors, the Paywell Survey 2012, yesterday at the Eclipse Restaurant in the Independence Palace. The event was attended by the CEOs, CFOs and HR officers of Mongolia's leading organisations. Carolyn Clarke, Managing Partner, gave unique insights into the current compensation and benefit levels paid to staff in Mongolia across all industry and functional sectors and at all levels with specific examples of data from the survey. In addition, to coincide with the Paywell survey, PwC also gave insight into the first survey of Mongolian CEOs, conducted as part of PwC's global survey of CEOs.
The Paywell survey analyses compensation policies of 29 companies operating in Mongolia during 2011 and 2012 to provide statistics on salary amounts in a range of positions and general policies on compensation and benefits in 2011.
The findings indicate that increases in salaries vary significantly for different categories of staff - whilst for sales staff salaries have grown by up to 20%, increases for operational and administration staff were only about 15%. Operational staff also experienced higher increases at over 16% dependent on their level. The survey of CEOs supports this finding and suggests the range of increases is explained by the growing demand for specialized personnel in the local market. However, CEOs suggest that in the next year salary levels may not increase quite so quickly.
Along with the salary increase, companies are focusing more widely on their compensation and benefits system. In particular, policies on providing performance bonuses are developing. More than half of the survey participants provide some form of performance bonus to their employees, mostly paid on an annual basis. The average payout during 2011 was approximately 18% of the gross annual salary.
For more information contact PwC Paywell survey team at paywell.mongolia@mn.pwc.com
Mining Mongolia 90 Conference, May 9-10
Dear honored Miners and Dear Ladies and Gentlemen!
I would like to sincerely congratulate all generations of Miners, their families and all Mongolian people personally and on behalf of the colleagues of Ministry of Mineral resources and Energy on the 90th anniversary of mining sector development in Mongolia.
Production range of mining sector and mining sector contribution to Mongolian society and economy are well-known to all Mongolian people. It is the result of all miners' great labor.
I wish all miners and their family-members success, happiness and healthy life.
I hope that while you are visiting our web site, you can read detailed information about 90 year history of Mongolian mining sector development, therefore you can write your own view to exchange your opinion with us and as well as you will cooperate with us.
D.Zorigt, the minister of Mineral resources and Energy
---
I would like to give warm greetings cordially to all generations of miners who have been working and devoting their all capacities to create and develop Mongolian mining sector.
As of 2011, Mining sector has produced 20.2% of Gross Domestic Product (GDP), 69.6% of total industrial product and 89.2% of export product. As a result, the sector is taking the first place in Mongolian economy. Production range of mining sector and mining sector contribution to Mongolian society and economy are well-recognized to all Mongolian people. This is favor of all our miners' great labor.
For being large amount investment attractive sector, the sector became a leader to make world's up-to-date machines and technologies its own. Therefore the following objectives are being set in front of the Mining sector.
To increase economic yield of new deposits
To produce goods included value added cost
At last, I would like to congratulate on the 90th anniversary of mining sector development which is the oldest sector of Mongolian heavy industry, and also I wish all our miners work success, health and well-being.
M.Ariunbayar, deputizing for chief of Mineral resources authority
Mongolia-Lithuania business meeting to be held
April 10 (news.mn) A Mongolia-Lithuania business meeting will run on April 16 in the National Chamber of Commerce and Industry.
The meeting will take place before an official visit of a delegation--Ms. Asta Skaisgiryte Liauskiene, Vice-Minister of Foreign Affairs, and Mr. Daumantas Lapinskas, the Vice Minister of Economy of Lithuania on April 16-17 to Mongolia.
Present at the above meeting will be business delegates from Lithuania on higher education, banking and financing, food, agricultural equipment, environment, medical facilities and quality management.
Meat Export is a Good Opportunity for Mongolians
April 9 (news.mn) The Mongolian Chamber of Trade and Industry organized a discussion on meat export last Friday, April 6, 2012 in Ulaanbaatar. Representatives 27 local companies attended.
A meat is one of the 10 export goods Mongolia can offer. According to the census from December last year Mongolia has around 40 million livestock.
"Mongolia have a good opportunity to export meat and get a enough profit said Stefan Kreppel, an advisor of International Marketing and Brend organization who participated discussion. "Mongolian meat is ecologically clean and tasty. Mongolia should focus on meat export. Also Mongolia can export dried meat for regions in conflict." said Stefan Kreppel.
But Mongolia couldn't regulate local meat demand. A meat price reached MNT8000 at market in Ulaanbaatar. "Before 1990 Mongolia has meat distribution system. We have to re-arrange this system. Right now private traders went to countryside and buying meat from herders directly by low price. And they re-selling by high price in Ulaanbaatar" said D.Galbadrakh, Director of "Mongol Food" company.
According to him herders also not interested to sell meat because last four years the government distributing to every citizen MNT21000 and also allowance for students. "5-6 years ago herders sold meat to pay they own expenditure and children's study" said D.Galbadrakh.
CPI +2.2% MoM, +7.6% YTD, +15.3% YoY; Q1 budget surplus of ₮182.8B
NSO: Social and economic situation of Mongolia (As of the first quarter of 2012)
April 10 (NSO) --
I.Social indicators
In the first quarter of 2012, 17661 mothers delivered 17737 children (live births) increased by 1835 mothers or 11.6 percent, and 1856 children or 11.7 percent, compared to same period of the previous year.
In the first quarter of 2012, at national level infant mortality increased by 9 or 3.2 percent to 294, and child mortality aged 1-5 decreased by 2 or 3.3 percent to 59.
The number of unemployed reached 50.1 thousand at the end of March 2012, reflecting an increase of 9.3 thous.persons or 22.8 percent compared to same period of the previous year.
In the first quarter of 2012, 487.5 thous.persons were registered as insurer, of which 306.7 thousand or 62.9 percent were those from the establishments, and 180.8 thousand or 37.1 percent from the government budgetary organization. Compared to same period of the previous year, the number of insurers increased by 63.3 thousand or 14.9 percent, of which the increased by 54.3 thousand or 21.5 percent from establishments, and increased by 9.0 thousand or 5.2 percent from government budgetary organization...
In the first quarter of 2012, social welfare pensions and benefits allocated to 53.7 thous.persons, showing an increase of 2.5 thous.persons or 4.8 percent, total amount of the allocated fund increased by 390.7 mln.tog or 4.7 percent compared to same period of the previous year.
Of 180.6 bln.tog distributed by the Human Development Fund to 2.6 mln.people (with double counting) in the first quarter of 2012, 2.5 mln.people or 98.9 percent were those receiving the cash benefit of 21.0 thous.tog, 2.9 thous.people or 0.2 percent those receiving 70.0 thous.tog, and 137.8 thous.people or 0.9 percent those receiving 10.0 thous.tog.
In the first quarter of 2012, the number of infectious disease cases was 10996 persons, increase by 1137 cases or 11.5 percent compared to same period of the previous year. The increase in the number of infectious disease cases was mainly due to the increases of 1467 persons or 5.0 times in mumps, 156 persons or 16.0 percent in syphilis, although there was decreases of 422 persons or 13.0 percent in viral hepatitis and 143 persons or 14.1 percent in varicella.
At national level, 5788 crimes were registered in the first quarter of 2012, reflecting an increase of 697 crimes or 13.7 percent compared to same period of the previous year. The increase in the number of crimes was mainly due to the increases in crime against the right of ownership (547), crime against the rules of safety of traffic and use of motor vehicles (74), crime against human life and health (or physical well-being) (73), crimes against environmental protection rules (57) compared to same period of the previous year.
In the first quarter of 2012, occurred crimes caused 1909 injuries and 354 deaths. The number of injuries up by 35 persons or 1.9 percent and the number of deaths up by 8 persons or 2.3 percent compared to same period of the previous year.
II.Macroeconomic indicators
The national consumer price index in March 2012, increased by 2.2 percent compared to the previous month, 7.6 percent compared to the beginning of the year, and 15.3 percent compared to same period of the previous year. The increase in national index compared to the previous month was mainly due to 6.7 percent increase in food and non-alcoholic beverages.
According to the report of the Bank of Mongolia, money supply (broad money or M2) at the end of March 2012, reached to 6114.8 bln.tog, decreased by of 122.8 bln.tog or 2.0 percent compared to the previous month, and increased by 1159.7 bln.tog or 23.4 percent compared to same period of the previous year.
At the end of March 2012, currency issued in circulation reached 648.5 bln.tog, decreased by 25.3 bln.tog or 3.8 percent compared to the previous month, and increased by 117.3 bln.tog or 22.1 percent compared to same period of the previous year.
Loans outstanding at the end of March 2012, amounted to 5781.5 bln.tog, up by 75.3 bln.tog or 1.3 percent compared to the previous month, and up by 2050.7 bln.tog or 55.0 percent compared to same period of the previous year.
Principals in arrears at the end of March 2012 reached 61.4 bln.tog, increased by 0.2 bln.tog or 0.3 percent compared to the previous month, decreased by 19.1 bln.tog or 23.7 percent compared to same period of the previous year.
At the end of March 2012, the non-performing loans over the bank system reached 320.2 bln.tog, showing decreases of 3.1 bln.tog or 1.0 percent compared to the previous month, of 51.9 bln.tog or 13.9 percent compared to same period of the previous year.
In March 2012, there were 21 trading days and 4.5 mln.shares valued at 3.0 bln.tog were traded. In the first quarter of 2012, total equilibrated revenue and grants of the General Government Budget amounted to 1048.8 bln.tog and total expenditure and net lending amounted to 1104.8 bln.tog, representing deficit of 56.0 bln.tog in the equilibrated balance of General Government Budget.
Current revenue of the General Government Budget amounted to 1045.3 bln.tog and current expenditure reached 862.5 bln.tog. Thus, the budget equilibrated current balance was in surplus of 182.8 bln.tog.
Compared to same period of the previous year, tax revenue increased by 136.7 bln.tog or 17.1 percent. The increase was mainly due to the increases of 79.0 bln.tog or 30.3 percent in taxes on goods and services, 36.7 bln.tog or 38.1 percent in social security contribution, 14.3 bln.tog or 6.9 percent in Income tax and 10.4 bln.tog or 17.0 percent in taxes on foreign trade although there was decreases of 4.7 bln.tog or 2.7 percent in other taxes.
Compared to same period of the previous year, non-tax revenue increased by 5.8 bln.tog or 5.7 percent. The increase was mainly due to the increases of 7.6 bln.tog or 2.3 times in revenues from others, 4.3 bln.tog or 61.2 percent in revenues from oil petroleum, 2.4 bln.tog or 30.2 percent in revenues from interest and 1.4 bln.tog or 16.2 percent in navigation fee although there was decreases of 5.3 bln.tog or 9.1 percent in revenues from budget entities and 4.8 bln.tog or 32.1 percent in revenues from dividends.
In the first quarter of 2012, total expenditure and net lending of the General Government Budget increased by 283.3 bln.tog or 34.5 percent to 1104.8 bln.tog compared to same period of the previous year. This was mainly due to increases of 144.3 bln.tog or 3.0 times in capital expenditure, 77.5 bln.tog or 25.1 percent in expenditure of goods and services, 37.9 bln.tog or 9.1 percent in subsidies and transfers, 16.4 bln.tog or 3.0 times in lending minus repayments and 7.4 bln.tog or 55.3 percent in interest payments.
In the first quarter of 2012, spending of 217.8 bln.tog on capital expenditure increased by 144.3 bln.tog or 3.0 times compared to same period of the previous year. This was mainly due to increases of 135.9 bln.tog or 2.9 times in capital expenditure of domestic sources and 8.4 bln.tog or 5.0 times in foreign financed capital expenditure, compared to same period of the previous year.
In the first quarter of 2012, Mongolia traded with 113 countries from all over the world and total external trade turnover reached 2341.7 mln.US dollars, of which exports made up 883.8 mln.US dollars and imports made up 1457.9 mln.US dollars.
External trade balance showed a deficit of 164.7 mln.US dollars in March 2012, while it was in deficit of 145.9 mln.US dollars in March 2011. Compared to same period of the previous year, deficit increased by 18.8 mln.US dollars or 12.9 percent.
Total external trade turnover increased by 511.7 mln.US dollars or 28.0 percent, of which imports up by 370.1 mln.US dollars or 34.0 percent, and exports up by 141.7 mln.US dollars or 19.1 percent, compared to same period of the previous year.
Mineral products, natural or cultured stones, precious metal, jewelry, coins, raw & processed hides, skins, fur & articles, animal origin products, textile articles and auto & air transport vehicles & their spare parts thereof accounted for 98.0 percent of the total export value amount.
III. Economic sector indicators
In the first quarter of 2012, at national level natural losses of adult animals down by 134.9 thous.heads or 52.3 percent to 123.0 thous.heads compared to same period of the previous year. Out of the losses of adult animals, 5.9 thousand were horses, 11.8 thousand were cows, 0.2 thousand were camels, 45.5 thousand were sheeps and 59.6 thousand were goats.
In the first quarter of 2012, the total industrial output increased by 37.7 bln.tog or 8.9 percent to 460.6 bln.tog (at 2005 constant prices) compared to same period of the previous year. The increase in the industrial output was mainly due to 2.4-65.2 percent, increases in mining and quarrying products such as copper, with concentrate, molybdenum, with concentrate, coal, zincum concentrate and crude oil and 3.8 percent to 8.0 times increases in industrial main products of manufacturing sector such as spirit, alcoholic beverage, bakery products, milk, sawn wood, metal steel, carpet, bread, beer, soft drinks, small intestine, metal sleeper, plastering mortar, briquette, electric wire and articles of iron concrete.
In the first quarter of 2012, 4945.6 thous.t freight and 914.9 thous.passengers (double counting) were carried by railway transport. Compared to same period of the previous year, the number of carried freight rose by 919.8 thous.t or 22.8 percent and the number of carried passengers rose by 61.2 thous.persons or 7.2 percent. Due to the increase in carried freight and passengers, revenue from railway transport increased by 26.0 bln.tog or 35.1 percent to 100.3 bln.tog in the first quarter of 2012, compared to same period of the previous year.
In the first quarter of 2012, 876.9 t freight and 147.1 thous.passengers (double counting) were carried by air transport. Compared to same period of the previous year, the number of carried freight increased by 472.7 t or 2.2 times, the number of carried passengers rose by 46.4 thous.persons or 46.0 percent. Due to the increase in carried freight and passengers, revenue from air transport increased by 7.4 bln.tog or 28.2 percent to 33.6 bln.tog in the first quarter of 2012, compared to same period of the previous year.
According to the report of the Institute of Meteorology and Hydrology, maximum precipitation was registered in Bogd soum (13.8 mm) of Uvurkhangai aimag in March 2012. In March 2012, Sukhbaatar and Baruunkharaa soums of Selenge aimag had the highest air temperature (20°C), while Tsetsen-Uul soums of Zavkhan aimag had the lowest air temperature (-42°C). Wind speed reached 28 m/sec in Shinejinst soum of Bayankhongor aimag.
Daily average concentration of nitrogen dioxide exceeded 31 times around the 13th micro district of Ulaanbaatar city, 16 times around Kharkhorin market, 6 times around the 1st micro district, 1 time around the 32nd Toirog and the Offitseruudiin ordon respectively, daily average concentration of sulphur dioxide exceeded 29 times around the West crossroad, 26 times around the 13th micro district, 25 times around the 32nd Toirog, 23 times around the 1st micro district and the Kharkhorin market respectively, 12 times around the Misheel-Expo center and 9 times around the Offitseruudiin ordon, particulate matter less than 10 micrograms exceeded 31 times around the Kharkhorin market, 30 times around the 13th micro district, 29 times around the West crossroad, and 25 times around the 32nd Toirog, particulate matter less than 2.5 micrograms exceeded 26 times around the West crossroad, carbon dioxide exceeded 1 time around the Misheel-Expo center from the maximum allowable concentration of air quality standard in March 2012.
In the first quarter of 2012, 1014 disasters and accidents occurred. As a result, 40 people died, 0.7 thous.livestock and domestic animals had lost. By the types of disasters, 946 fires on possessions, 9 accidents related to artisanal mining and rock falls and incidences of chemical substance usage respectively, 5 cases of domestic animal madness disease, 4 river and lake accidents occurred in the first quarter of 2012. In the first quarter of 2012, estimated damage caused by the disasters and accidents amounted to 2.7 bln.tog.
Best Economic Journalist Awards
April 10 (Mongolian Economy) Uurchlugch club of the Press Association has organized "The Best Economic Journalist" award ceremony for the second time. Over thirty journalists, who have presented their best articles on mining, infrastructure, financial markets under the main topic "Economic sustainable development", competed at the ceremony. The participants were divided into two categories; television-radio and newspaper-website-magazine, and were ranked in four places. The event was supported by the World Bank, Oyu Tolgoi, "Business Plus Initiative" project of International organization USAID.
Our journalist B. Bayartogtokh, with his "A man with iron gets rich" article, was ranked at fourth place and received a special price. As a professional Mongolian-English economy, financial and business magazine, Mongolian Economy has actively participated at the event. Our journalist B. Bayartogtokh has presented many facts related iron ore, which are currently attracting national and international interests. We wish our journalists the best of success.
The winning and other articles in the category newspaper-website-magazine are listed below:
· Journalist Ch. Dashdeleg: First place by article "Economic growth and ecological catastrophe"
· Journalist G. Batzorig of mining.mn: Second place by article "Without infrastructure dreams of Mongolians won't come true"
· Journalist T. Enkhbat of businessnews.mn: Third place by article "Let's use cross-border flowing water for Gobi construction"
In the television-radio category:
· Journalist R. Gandiimaa of the National Broadcasting System: First place by "Taxing innovation, taxi prices and Dutch disease"
· Journalist B. Narangoo of NBS television: Second place by "Issues on fuel and its resolution"
· Journalist Ts. Soyolmaa of Shuud television: Third place by "ErdenesTavantolgoi"
· Journalist S. Bold-Erdene of Khugjil studio of the "Mongolian mining journal": Special award by "Europe, American debt Mongolia"
Food for thought for any future Mongolian ETFs, e.g. the proposed a year ago but still not launched Market Vectors Mongolia ETF, thanks for the link Jon
Futures Asia: My Thoughts On Market Vectors Vietnam ETF
April 9 (Futures Asia, Seeking Alpha) The Market Vectors Vietnam ETF (VNM) says this as its mission:
The Market Vectors® Vietnam ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Vietnam Index (MVVNMTR), a rules-based, modified capitalization-weighted, float-adjusted index intended to give investors exposure to Vietnam.
So, what does this mean?
As Vietnam does not have a well known index of the market, Market Vectors has used an index created by a consulting firm called 4asset and licensed to Van Eck Global, which owns Market Vectors. It is only in Nov 2011 that Market Vectors took over the management of this set of indexes from 4asset.
From the prospectus, this index seems to be very narrow in my mind. Companies are included in the index only if they fulfill the following criteria:
1. Generate at least 50% of their revenues from Vietnam, expected to generate at least 50% of their revenues from Vietnam, or demonstrate a strong market position in Vietnam;
2. Market capitalization of $150 million and above and if market capitalization falls below $75 billion, it will be removed from the index;
3. Average 3 month daily turnover of $1 million;
4. Only shares that trade on recognized exchanges will qualify;
After investing in the Vietnamese market for some time, I believe that while there are quite a few companies that have a capitalization of $150 million and above (point 2), it is still considered restrictive, because after the prolonged depression in the stock market currently, many large companies' capitalization have fallen below this threshold even though their scale of business would easily exceed any company listed in the US, Singapore or any other exchanges with market cap of $150 million.
However, the most problematic I believe is the restriction on trading liquidity of the company concerned (point 3). Very few companies have a daily liquidity of $1 million and above.
Not surprisingly, there are only 31 companies that fit the criteria set by 4asset as described in the prospectus. As a result of this, I believe that the Market Vectors Vietnam ETF fund will have a very difficult job … How do you match (let alone outperform) an index with only 31 securities? In fact, the ETF fund IS the index. Adding frictional costs like buy and sell, commissions and rebalancing; Not least the fact that their AUM is large compared to the total market cap of these 31 companies, it almost guarantees the ETF will underperform the index despite the best efforts of its managers.
I can also think of other problems:
Due to their restrictive criteria of only 31 stocks, it is plainly no secret which stocks this ETF is currently buying/selling. Local market players (brokerage houses, hedge funds or even retail investors) are likely to know this information way before the fund makes its move. As a result, it is pretty easy to front run the ETF and I bet this is a big problem for them.
…
Promises Best Left Broken
April 9 (Terrence Edwards, Editor-in-Chief BCM NewsWire) Government has committed itself to fairly distributing the wealth from Mongolia's booming mineral sector to the people, but its plans so far have not come together as it would have liked. Now government is left with the task of finding some way to continue its monthly allowance payments during this recently commenced spring session of Parliamen, while many argue that its attempts thus far have been shallow short-term resolutions rather than long-term resolves to poverty and poor standards of living.
Parliament members were falling over themselves in 2008 trying to top their competitors' promises for election into office. While state Parliament positions are by appointment proportionate to the number of votes a party received, local elections have citizens directly elect their public officials. Meanwhile sitting members in state Parliament interested in extending their time in office must make sure they still have a seat left for them after the elections.
The 2008 elections had party members promising increasingly more money in the form of cash handouts to citizens until the Mongolian People's Party topped off at MNT 1 million a head. Government was slow to make those payments as it had not actually developed a plan to finance that sum for the 2.8 million citizens living in Mongolia. Eventually the delay led to protests following the 2009-2010 so-called zud, an extremely harsh winter with excessive snowfall that usually results in large-scale animal deaths.
Eventually the Human Development Fund was set up with the intention of directing the wealth from the country's mineral economy to diversifying the economy and improving the lives of people. So far, however, the fund has chiefly been a reserve for the MNT 21,000 monthly allowances set up to make good on those election promises until meeting the MNT 1 million mark.
Half way into each month long lines form in front of commercial banks so people can collect their MNT 21,000 allowance, but last month people were turned away. Bank officials said they had not yet received the payments from the government, spreading distress to the populace.
"It is true that this month's allowance is postponed," O. Khuyagtsogt, budget officer at the Finance of Ministry, told local newspaper Undesnii Shuudan. "The reason is related to an inability to gather the funds in time." He added that this month's payments would be made in the middle of the month, just as they had before.
Most analysis shows that the cash handouts have been largely detrimental to the economy by exacerbating inflation pressures already present in Mongolia due to too-fast growth and volatility to the tugrug. In February inflation was up 12.5 percent compared to a year before, according to the National Statistical Office (NSO). And meat prices are reaching record highs, with mutton costing MNT 8,500 a kilogram after never before surpassing MNT 5,000 per kilogram, reported local financial magazine Mongolian Economy.
Since the implementation of the allowance system, politicians have continually criticized the practice of cash handouts. Rather than point to rising inflationary trends, however, they would rather talk about how handouts make people lazy, as if any one person could actually live on MNT 21,000 over the course of a month. Indeed, however, employment statistics have shown a drop since their installation with a 51.6 percent increase in the number of registered unemployed in February compared to the year before, according to the NSO.
Some reports have spread news that the HDF's fund are running short, leaving the finance ministry scrambling to find the money. The finance minister, D. Khayankhyarvaa, had previously announced that funding was adequate to run until July, but the delay last month had some wondering if that was true. The 2012 budget allotted MNT 800 billion to the fund, of which MNT 700 billion was directed towards the MNT 21,000 allowances. Up until now, government had used funds from a pre-payment from the investors of the Oyu Tolgoi copper and gold project. Parliament had expected at least half of the residual MNT 800 billion to come from an advance payment from investors of the Tavan Tolgoi's western tsankhi project as well, but delays in their selection has made it impossible.
The turn of events make further payments down the road, such as the MNT 1 million to elderly and disabled people, looking unlikely as well. The government has since decided to distribute an additional MNT 1 million worth of stock in Erdenes-Tavan Tolgoi as an option in place of cash handouts as well.
Although it is encouraging to see the government going to such pains to fairly distribute this wealth among the populace, the rash, half-thought-out methods they have used so far are troubling. Hopefully they can learn from their mistakes and instead use collected taxes from mining companies for infrastructure projects and propping up industries that would create new jobs, as the International Monetary Fund has recommended. On the other hand, it would be quite distressing if the government suddenly lost interest in the matter all together after elections this June.
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"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
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Email: mogi@cpsinternational.mn
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CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSLicense Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
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