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.
Ivanhoe, Rio Tinto Amend Terms For Financing Deal
MELBOURNE, May 23 (Dow Jones Newswires) – Ivanhoe Mines Ltd. (TSX:IVN, NYSE:IVN) and controlling shareholder Rio Tinto PLC (RIO) have tweaked the terms of a US$1.8 billion rights offering and financing package to help fund the development of the massive Oyu Tolgoi copper-gold mine in Mongolia to reflect the fall in mining sector share prices.
Shareholders in Ivanhoe will be offered additional shares in the Canadian company at a price that will be set in the final prospectus, rather than at US$8.34 a share as the companies had agreed last month, the two companies said in statements late Wednesday. Ivanhoe's shares have fallen sharply with those of other resources companies in recent weeks.
Rio will continue to provide a standby commitment for the full amount of the US$1.8 billion offering and will buy as many new shares in Ivanhoe as its 51% shareholding allows, but said it won't reinvest a cash fee for the commitment in Ivanhoe shares. The fee had been set at 4% of the rights offering's gross proceeds.
The Anglo-Australian company also will acquire any shares not bought in the offering, and has agreed to remove a "material change" clause regarding a fall in Ivanhoe's shares from the standby commitment in exchange for Ivanhoe lowering the exercise price for warrants held by Rio to US$10.84 a share from an earlier price of US$12.79 at any time over a three-year period.
"The amended terms address conditions of regulatory approval and more closely align the terms of the proposed Ivanhoe rights offering with current market conditions," both companies said.
Rio said that if it exercised the warrants in full, its stake in Ivanhoe would rise to 54.3%. It said that it currently has no intention of buying additional Ivanhoe shares outside the rights offering, although it has the right until Oct. 24 to buy shares under the financing right of first offer.
Rio and Ivanhoe last month signed a wide-ranging agreement to ensure funding for the Oyu Tolgoi project, including plans for US$1.8 billion in equity financing and a bridge-loan and support from Rio for US$3 billion-US$4 billion in project financing being negotiated with multinational lenders. The move allowed Rio to tighten its control over Ivanhoe, appointing senior managers and replacing founder Robert Friedland as chief executive.
Production at Oyu Tolgoi is set to begin later this year, ramping up to commercial production in the first half of 2013 in the first phase of the mine's development. Oyu Tolgoi is expected to be one of the world's largest mines, with output in the first 10 years projected to average 1.2 billion pounds of copper, 650,000 troy ounces of gold and more than 3 million ounces of silver a year.
Shares in mining companies have been hit hard this month as investor worries have built over the potential fallout from Greece's potential withdrawal from the single currency and China's appetite for resources as its booming economy cools. Ivanhoe's shares have fallen almost 30% on the Toronto Stock exchange since the companies last month said they had agreed their funding package, while Rio's shares have dropped roughly 15%.
Rio Tinto, Ivanhoe Mines alter $3.3 billion financing deal – The Canadian Press, May 23
Ivanhoe to proceed with $1.8 billion rights offering
May 23 (Reuters) - Ivanhoe Mines (IVN.TO) (IVN.N), an affiliate of mining giant Rio Tinto (RIO.L) (RIO.AX), said on Wednesday it intends to proceed with a rights offering open to all existing shareholders that would raise about $1.8 billion.
The offering, originally announced in mid-April, is part of a comprehensive financing plan to continue development of Ivanhoe's Oyu Tolgoi copper-gold project in Mongolia, the company said.
Anglo-Australian miner Rio Tinto earlier this year acquired a controlling interest in Vancouver-based Ivanhoe, whose main asset is the massive Oyu Tolgoi project.
Rio, which owns a 51 percent stake in Ivanhoe, said it plans to buy the maximum number of shares it is permitted to acquire under the terms of the rights offering. It has also agreed to provide a standby commitment for the full value of the rights offering, whereby it will acquire any Ivanhoe common shares not taken up by other shareholders in the offering.
This could allow Rio to boost its stake in Ivanhoe further as shareholders who do not participate in the rights offering will see their ownership interest in Ivanhoe reduced.
Ivanhoe and Rio backed away from the $8.34 a share subscription price for the offering they had announced earlier, saying that it will be priced in the final prospectus.
"In keeping with international practice in rights offerings, each new common share of Ivanhoe Mines available for purchase by rights holders will be offered at a discount to the company's current market price," Ivanhoe said in a statement.
Shares of Ivanhoe have fallen more than 50 percent since January, when Rio won a ruling that struck down Ivanhoe's controversial "poison pill," a decision that allowed Rio to buy a majority interest in the company without having to fork out a huge premium to other shareholders.
Ivanhoe shares were down 3.3 percent at $8.82 in early trading on the New York Stock Exchange on Wednesday, while its Toronto-listed shares fell 3.2 percent to C$9.06.
Cameron McRae: By the end of the year Oyu Tolgoi will start its gold and copper export
May 22 (Mongolian Economy) Currently, 85 percent of construction work at Oyu Tolgoi has been finished, which means from 15th August 2012, ore will be explored from its gold and copper mines. Enrichment processes will continue until the end of the year, however. Thus, the very first gold and copper will be exported in December. Road constructions to Chinese border have begun. In a press statement yesterday, the CEO of Oyu Tolgoi LLC Cameron McRae said "After a half year, a thousand tonnes of ore will be explored a day".
The constructions at the underground mine has been started and by early 2017, ore will be explored from it. It is estimated to deliver 20 thousand tonnes of ore each day in its first year of commissioning. In the further years, the underground mine is expected to explore up to 95 tonnes of ore a day. That means it would make more profits than the open pit mine. Oyu Tolgoi would pay USD 700 million to the Mongolian government by the end of this year. Next year it is expected to pay USD 1 billion, in 2016 USD 2 billion and in 2021 a total of USD 15 billion as taxation.
McRae added "The Oyu tolgoi contract procedure lasted for about six years. As a result, Mongolian government has agreed to hold up to 36 percent of the company. During the agreement, it is decided that even though the government holds a great deal of Oyu Tolgoi it will not make any investments. It will not face any risks of debts. According to a study, the government will benefit from 55 percent of total profits. Thus, the contract has been both good and quality".
He also said "I, personally, wonder about two things. The one is the criticism from the public to its government team. Lately, there have been press releases which stated that because of the agreement Mongolia has amounted debts that would last 63 years. That is also surprising. If it was uncertain whether we would make profits or not, "Rio" wouldn't have signed the agreement in first place".
Aspire to Release Maiden Reserve, Requests Trading Halt
May 25 (Mogi) Aspire Mining Limited (ASX:AKM) requested it's trading be halted, pending "a proposed announcement of the Ovoot Coking Coal Project maiden reserves and updated resources."
Mongolian Resource Corporation share price doubles on investor presentations in Mongolia
May 24 (Proactive Iinvestors) Mongolian Resource Corporation (ASX: MUB) has attributed a doubling in the company's share price over the space of two weeks to two recent investor presentations in Mongolia.
Shares in Mongolian Resource closed at A$0.14 on Wednesday May 23, up from a closing price of A$0.07 on Wednesday May 9.
The jump has earned the company a speeding ticket from the ASX.
Mongolian Resource responded to the ASX to say that it had made two presentations of publically available material over the past two weeks, to an international resources conference and a Mongolian investment audience.
The company also had an information booth at the international conference.
Both presentations and the information booth were well received by investors and attracted potential investor interest.
While Mongolian Resource today announced a $1.8 million share placement to a single sophisticated investor, the company does not believe this was the reason for the price changes.
Details of the placement were finalised late on May 23, and the deal had been publically foreshadowed.
MRC WELCOMES AR MANAGEMENT (ANDREW ROBERTS FAMILY OFFICE) AS A SIGNFICANT SHAREHOLDER
May 24 -- Emerging Mongolian gold producer, Mongolian Resource Corporation (ASX: MUB) ("MRC or the Company") is pleased to welcome the Andrew Roberts Family Office ("ARM") as a substantial shareholder.
ARM has taken a placement in MRC (9.6%) by way of new shares issued as follows:
6,150,000 shares issued at 12 cents
7,080,000 shares issued at 15 cents
For a total of 13,230,000 shares for A$1.8 million to MRC.
Combined with the issue of the new shares, ARM has also taken a further 6,150,000 shares from another company associated with the Chairman of MRC Mr Jargalsaikhan. This share sale along with the issues of the new shares will bring ARM interest in MRC to 14.1% of the shares on issue.
ARM Principal, Mr Andrew Roberts commented "We are excited to be participating in the fast growing mining market of Mongolia via an investment in MRC that assists the Company to reach its gold production targets this year and to grow production into the future."
MRC Chairman Mr Naidensuren Jargalsaikhan welcomed the new substantial shareholder "The participation of a prestigious group such as AR Management, is a strong vote of confidence in the quality of MRC's projects and personnel.
The Board looks forward to building its partnership with ARM to execute its near term objectives of getting to gold production, establishing a JORC resource, and delivering cash flow to MUB shareholders. We also look forward to working with ARM to consider other Mongolian acquisition opportunities currently available to our Group."
About AR Management
ARM is a private investment group with a substantial investment portfolio comprising international and domestic equities, direct and indirect property and alternative assets including global hedge funds, venture capital and private equity investments across a broad spectrum of industries and likes to invest for a suitable period to enable companies they invest in to grow their business.
Prophecy Coal to sell 22,100 tonnes of coal to local DRI manufacturing plant
May 24 (Proactive Investors) Prophecy Coal Corp. (TSE:PCY) announced Thursday it will sell 22,100 tonnes of thermal coal from its Ulaan Ovoo mine in Mongolia to a local, direct reduced iron (DRI) manufacturing plant.
Prophecy said the undisclosed buyer has indicated that the initial purchase will meet shortfalls from other suppliers, and that it would eventually like to increase the supply from Prophecy to 300,000 tonnes on an annual basis.
Shares in the company rose 2.04 percent after the announcement, trading at 25 cents as of 11:00 am EDT.
The buyer currently purchases in excess of 850,000 tonnes of coal annually from various local suppliers, said Prophecy.
The pricing is competitive to offers received from Russia, the company noted, and sets a benchmark for the continuation of off-take discussions with other local industries in the growing Mongolian economy, for which the Mongolian government forecasts 19% GDP growth in 2013.
No other details of the agreement were disclosed.
"As we move past the mine establishment phase at Ulaan Ovoo, we anticipate steadily decreasing operating cost and increasing sales quantity and price," said Prophecy chairman and CEO John Lee.
"Our goal is to make Ulaan Ovoo operations cash flow positive in the near term without relying on Russian or Chinese export markets."
Prophecy said its "high quality thermal coal" (NAR 5100 kcal/kg) is ideal for DRI, which is also known as sponge iron.
DRI is produced from the direct reduction of iron ore in the form of lumps, pellets or fines by a reducing gas produced from burning coal, said the company, adding that the coal must be lumpy and of high calorific value.
Temperature, however, does not have to reach blast furnace levels, and therefore coking coal is not required.
Reducing gas from the coal requires a mixture of hydrogen (H2) and carbon monoxide (CO), which acts as a reducing agent.
Prophecy noted that this process of directly reducing the iron ore in solid form has been developed to overcome some of the high costs and difficulties of conventional blast furnaces.
DRI product is one of the chief raw materials in steel-making as it has higher qualities and advantages compared to scrap irons and pig irons, the company said. The products have been quoted in China at over US$300 a tonne.
Looking ahead, the company said it continues to make progress on opening the Zeltura border crossing - 10 kilometres from its Ulaan Ovoo mine - to facilitate coal export to Russia, which would then increase the total demand for Ulaan Ovoo coal past 1 million tonnes a year.
Prophecy is a Canadian listed company focused on developing energy projects in Mongolia.
With its Ulaan Ovoo mine now in production, Prophecy has proposed a 600 MW mine-mouth power plant adjacent to the Chandgana coal deposit, 14 kilometres away from the Ulaan Ovoo mine.
The plant has been permitted by the Mongolian government and negotiations on financing, power purchase agreements and construction management are underway.
Earlier this month, the company issued a statement clarifying previous disclosures related to a feasibility study of its Chandgana coal deposit, and also said it commissioned a preliminary economic assessment for Chandgana.
In January, the company issued a statement describing the feasibility study for the proposed mine-mouth power plant, and said that the report did not include an economic assessment of the Chandgana coal deposit under NI 43-101 compliant standards.
Given the report is linked to a specific coal deposit, a coal mine economic assessment under NI 43-101 is required before any disclosure can be made regarding the feasibility of a power plant project, as "economics of each is integral to the other", the company said.
As such, until an NI 43-101 economic assessment is prepared for the Chandgana coal deposit, "no meaningful feasibility study can be prepared in connection with the power plant," Prophecy said in May.
To address this, the coal producer retained John T. Boyd Co. to prepare a NI 43-101 compliant preliminary economic assessment for the Chandgana deposit.
The Ulaan Ovoo deposit hosts a measured resource of 174 million tonnes and has an indicated resource of 34 million tonnes, of which 20.7 million tonnes are classified as a reserve.
Meanwhile, the Chandgana coal property consists of three licenses: Chandgana Tal, which has a measured resource of 141 million tonnes and includes two licenses, and Khavtgai Uul – which contains one license and is located in the southwestern end of the basin – has a measured resource of 509 million tonnes and a 539 million tonne indicated resource.
In the past, the company said it has grouped its estimated coal resources on many occasions for the two Mongolian properties, contrary to NI 43-101.
These resources are only some 14 kilometres apart, and are close to important infrastructure - such as towns, roads, and electric transmission lines. They are linked by paved highway to Mongolia's capital, Ulaanbaatar, and the Trans-Mongolian Railroad.
Nova Resources: Commencement of Trucking Operations
May 24, Nova Resources Limited (NOVA:LN) --
Nova is pleased to announce that Nova Trans LLC shall commence trucking operations on 5 June 2012.
Nova Trans LLC has initially purchased 16 vehicles, each comprising a truck and two trailers and will commence its trucking operations with these vehicles pursuant to the coal transportation services contract with Transgobi LLC. It expects that the fleet of vehicles will be increased over time. Nova will make announcements in relation to this as and when appropriate.
Nova is also pleased to announce that the construction of the temporary workers camp has been completed.
MSE Daily Update: ₮1 Billion Sharyn Gol Shares Exchanged on Thursday, Rising 0.7%
24 May 2012 (BDSec) – On the Mongolian Stock Exchange (MSE), decliners outnumbered advancers by a ratio of 5 to 3. The MSE Top 20 index came 0.74% down to 20,021.70 points at the day's close while BDS index declined 0.52% to finish at 4,431.64 points.
BDS index declined 0.52% to finish at 4,431.64 points. Sharyn Gol was MSE's most actively traded stock, with more than 102 thousand shares traded at a value of over one billion tugrigs.
Top decliners of today's bourse were Olloo (-8.33%), Aduunchuluun (-5.71%), Khukh Gan (-5.00%) and Baganuur (-2.38%). Today's biggest advancer was Zoos Goyol (+8.01%) followed by Ulaanbaatar Hotel (+6.06%), Telecom Mongolia (+4.19%), Hotel Mongolia (+4.10) and Makh Impex (+3.03%).
Local News in Brief
Ivanhoe Mines announced Wednesday that the company intends to launch a rights offering in which all existing shareholders, subject to applicable law, may participate on an equal and proportional basis in purchasing additional common shares. The offering is expected to raise up to approximately US$1.8 billion in gross proceeds.
Sharyn Gol JSC receives permission to open new pit on May 14 from MRAM's Mineral Council
"ШАРЫН ГОЛ" ХК УУРХАЙН ШИНЭ АМ НЭЭХ ЗӨВШӨӨРЛӨӨ ЗАСГИЙН ГАЗРААС АВЛАА
5-р сарын 24 (МХБ) "Шарын гол" ХК нь (SHG: MSE) уурхайн шинэ ам нээх техник эдийн засгийн үндэслэлийг Засгийн газрын хэрэгжүүлэгч агентлаг Ашигт Малтмалын Газрын Эрдэс Баялгийн Зөвлөлөөр 5 сарын 14-ний өдөр оруулж батлуулсан тухай мэдэгджээ.
Компанийн олборлолтыг нэмэгдүүлэх, үйл ажиллагааны шинэ шатанд гарахад чухал ач холбогдолтой үйл явдал боллоо гэж компани үзэж байна.
Өнгөрсөн жил тус компани тоног төхөөрөмжөө шинэчлэх, шинэ уурхайн ам нээх зэрэг зорилгоор Монголын Хөрөнгийн Бирж дээрээс 18.3 тэрбум төгрөгийн хөрөнгийг амжилттай босгосон билээ.
"Шарын Гол" ХК-ийн тухай:
"Шарын гол" ХК (SHG: MO) нь Монгол улсын хойд хэсэгт үйл ажиллагаа явуулдаг нүүрс олборлогч компани юм. Одоогоор "Шарын гол" нүүрсний ордыг 100% эзэмшин үйл ажиллагаагаа явуулж байна.
Тус компани нь 2003 онд хувьчлагдаж Монголын Хөрөнгийн Бирж дээр бүртгэгдсэнээр хувьцаат компани болсон. Компани 45 гаруй жил "Шарын гол"-ын уурхайгаас нүүрс олборлон, дотоодын болон эскпортын хэрэглэгчдийг дулааны ба хагас коксжуулсан (утаагүй түлш) нүүрсээр хангаж байна.
Компани Монгол улсын гол төмөр зам болох Орос, Хятадыг холбосон Транс-Монголиа төмөр замтай шууд холбогдсон салаа төмөр замтай бөгөөд энэ нь тус компанийн хувьд томоохон давуу тал болж байгаа юм.
Khan Investment Management Update (23/05/2012)
May 23 (Khan Investment Management) ---
If March performance was marred by volatility, April proved that volatility has no bounds and that cheap can become even cheaper. Prices fell towards the end of the month as news of UK and Spanish recessions spread and increasing fears about Europe's burgeoning debt crisis and the stability of the EU dragged global equity and commodity indexes lower. Short term share price performance is being held hostage to the marginal global investor's view of the cycle and appetite for risk. Whilst the Spanakopita may be hitting the fan in Europe, China is not broken. Commodity consumption will grow again in 2012, but from the perspective of the marginal investor, growth rates are easing.
Continued strength in the mining sector, rapidly expanding resource exports and rising Government spending all helped to grow Mongolia's GDP 16.7% yoy in Q1, 2012. In nominal terms, GDP growth rate stood at 30.2% yoy. Economic growth in the first quarter of the year is traditionally somewhat slow as activity in many sectors is subdued due to climate. In 2011, the economy expanded 9.8% in Q1, and accelerated to 17.3% yoy by the year end. We expect this trend to continue, particularly after the appointment of a new Government for a 4 year term following June elections. Regardless of the election outcome, we believe the Government will be quick to hasten growth and development in line with the previous policies set by the former coalition.
9 stocks within the portfolio fell double digit figures into negative territory. The worst performing stock (although only just) was Ivanhoe Mines Ltd (IVN:US) which fell almost 23%. Winsway Coking Coal Holdings (1733:HK) was the best performer, recovering 16% from its March nosedive.
We exited one position in full during the month, based on independent research that the company was not meeting export obligations. Many stocks within the portfolio continue to test new 52 week lows. We continue to average down and accumulate more of our high conviction positions in light of current price weakness, which we believe is driven by increasing global market correlation and marginal investor fears, and is not based on company analysis. We believe that certain stocks are trading at deep discounts to even modest estimates of value and are likely to bounce hardest on the return of rational markets.
The KMEF recently subscribed to its fourth IPO, and expects to review additional opportunities in the new issue space over the coming months – several of which are expected to provide diversification into new sectors and industries for the portfolio.
The Khan Mongolia Equity Fund performance for April was -8.37%.
The Net Asset Value as at 30 April 2012 was USD 83.59. The April Factsheet can be downloaded by registered users of the Khan Investment Management website – www.Khan-Management.com
The Mongolian Parliament recently approved a law that regulates foreign direct investment into a number of key sectors of strategic importance. The regime is not dissimilar to those enacted in other resource rich jurisdictions such as Australia and Canada, and is viewed as a positive step towards protecting sovereignty of key national interests. We also view this as a potential positive with regards to growing the bourse and expanding local ownership of Mongolian assets.
A prominent local securities dealer in Ulaanbaatar recently had their broking and dealer licences revoked by authorities due to investigations regarding stock price manipulations on the Mongolian Stock Exchange (MSE). We view this outcome positively and a further indicator that the Financial Regulatory Commission of Mongolia is committed to improving transparency and governance on the MSE.
KMEF believes that European debt crisis fears leading to irrational market correlation, combined with further pre-election uncertainty is driving current market volatility and has erroneously depressed equity prices in the short term. We foresee buying opportunities to increase our exposure to certain positions at attractive entry points over the coming weeks and maintain a strong positive view over the medium and longer term.
Interestingly, 26 years ago this month a Swedish rock bank rose to number 1 position in the charts in over 25 countries… Europe – "The Final Countdown"... fitting for this week's EU summit?
I look forward to updating you further of our developments next month.
KHAN INVESTMENT MANAGEMENT LIMITED
EPCRC: MONTHLY MACROECONOMIC OVERVIEW
MAIN INDICATORS: GDP, STATE BUDGET, FOREIGN TRADE, EXCHANGE RATE, INFLATION
The quarterly economic growth reached 16.7%
GDP reached MNT 2.3 trillion at current price and MNT 980 billion at 2005 price in the first quarter of 2012, up by 30% at current price and 16.7% at 2005 price compared to same period of the previous year.
A growth of 16.7% is higher by 1.7 times than first quarter of the previous year.
Increase in expenditure of state budget was mainly due to growth of subsidies and transfers
In the first 4 months of 2012, total equilibrated revenue of state budget increased by 22.3% and expenditure increased by 31.7% compared to same period of the previous year, representing a deficit of MNT 48 billion.
The expansion of revenue was mainly due to 42% increase in VAT, 56% increase in social insurance premium income, 34% increase in corporation income tax and 60% increase in personal income tax. The growth in spending supported by 16% increase in subsidies and transfers and 28% increase in wages and salaries.
Imports of fuel increased by 2 times, while exports of coal increased by 50%
Total turnover of foreign trade reached USD 3.4 billion, showing increases of 23% compared to same period of the previous year. It depends on 11% increase in exports and 31% increase in imports. Foreign trade balance showed a deficit of USD 0.8 billion.
Exports supported by shipments of mineral products, specially coal. Increase in imports was mainly due to imports of fuel and cars. Copper concentrate exports and heavy machines imports decreased.
MNT exchange rate is appreciating against the USD
MNT exchange rate appreciated against the USD by 1.5% compared to previous month and 4.4% compared to beginning of the current year. However MNT depreciated by 7.6% against USD compared to same period of the previous year.
Total amount of foreign currency reserves increased by 1.7% compared to previous month and 24.4% compared to same period of previous year.
Decrease in price of USD by MNT depends on large supply of USD and wool season.
Inflation is increasing ...
Inflation rate is increasing still more and reached 16% nationwide.
The increase in average rates of prices was mainly due to 26.5% increase in food price, 20.4% increase in restaurants and hotels.
Increase of inflation supported by supply problems, especially meat supply problems.
FINANCIAL SECTOR: MONEY SUPPLY, DEPOSITS, LOANS
Money supply reached MNT 6.4 trillion
Money supply or M2 increased by 18.9% compared to same period of the previous year and 4.1% compared to previous month. The currency issued in circulation increased by
12.8% in last one year and it reaches 11.1% of total money supply.
Expansion of the money supply was mainly due to increase of current accounts and deposits by MNT.
Deposits in MNT rise faster than foreign currency deposits
Total amount of deposits increased by 23.5% compared to same period of the previous year and 6.3% compared to previous month.
Deposits in MNT which hold 75% of total deposits increased by 26.1% compared to same period of the previous year, while deposits in foreign currency increased by 16.3%.
96% of total deposits belong to individuals.
Loans outstanding is increasing and share of nonperforming loans is decreasing
Loans outstanding increased by 2.7% compared to previous month and 49% compared to same period of the previous year. Share of non-performing loans decreased and reached 5.3% of total amount of loans.
Yearly average interest rates of loans increased by 2% for MNT and decreased by 0.5% for foreign currency compared to previous month.
> Bank of Mongolia decided to increase the policy rate by 0.5% to 13.25% and the required reserve rate by one percent to 12 percent.
> Parliament of Mongolia resolved to distribute additional 536 shares to every citizen, register and allocate people who want to receive the amount as cash of MNT 1 million, and allocate MNT 1 million cash to elder and disabled citizens in three parts: in April, May and June.
> NSO and World Bank announced that poverty rate in Mongolia stands at 29.8% which is 9.4% points less than in 2010 according to their joint estimation.
> ADB "Asian Development Outlook 2012" report published. It forecasts the Mongolian economy to expand 15% in 2012 and accelerate further to 17.5% in 2013.
GDP growth reached 16.7% in the first quarter of 2012 and it is higher by 1.7 times than same period of the previous year. It shows that economic growth will be high in this year.
Expansion of the budget is continuing and increase in revenue was mainly due to increases in tax revenue and growth in spending supported by an increase in subsidies and transfers, wages and salaries. While budget expands, there are also a deficit of foreign trade and high inflation rate. It shows that economy is overheating.
Tendency of appreciation of MNT exchange rate against USD is due to wool season and intervention of Bank of Mongolia. The BoM decided to increase the policy rate again to try to limit inflation increases supported by supply problems, especially meat supply problem. Inflation reached 16% nationwide and policy rate increased by 0,5% to 13,25%. But it leads the way to high interest rate of loans. Changes in policy rate affect commercial banks' interest rate of loans after 2-3 quarters and BoM explains that it is needed to tighten the monetary policy and weaken inflationary pressures.
However budget expansion and allocation of cash lead to high inflation also. The Parliament of Mongolia decided to allocate MNT 1 million cash to elder and disabled citizens in the second quarter and it amounts MNT 334 billion which is equal to 50% of currency in circulation.
САР ТУТМЫН МАКРО ЭДИЙН ЗАСГИЙН ТОЙМ, 2012 оны IV сар - Эдийн Засгийн Бодлого, Өрсөлдөх Чадварын Судалгааны Төв
Names of official MPP and DP parliamentary candidates announced
МАН, АН-ы нэр дэвшигчид тодорлоо
5-р сарын 25 (mminfo.mn via Gogo News) --
МАН-ын жагсаалтад орох 28
МАН-ын Удирдах зөвлөл намын жагсаалтад орох 28 хүний нэрийг тодруулсан байна.
1. С.Батболд, МАН-ын дарга
2. У.Хүрэлсүх, МАН-ын ерөнхий нарийн бичгийн дарга
3. Д.Дэмбэрэл, УИХ-ын дарга
4. Ө.Энхтүвшин, МАН-ын УИХ дахь бүлгийн дарга
5. Д.Лүндээжанцан, УИХ-ын гишүүн
6. Ц.Нямдорж, Хууль зүй, дотоод хэргийн сайд
7. Н.Энхболд, УИХ-ын дэд дарга
8. Я.Содбаатар, МАН-ын нарийн бичгийн дарга
9. Ж.Энхбаяр, Батлан хамгаалахын сайд
10. Д.Сарангэрэл, намын нарийн бичгийн дарга
11. Л.Оюун-Эрдэнэ, НАМЗХ-ын дарга
12. Ц.Гарамжав, ЭБЭХ-ний дэд сайд
13. Ж.Сүхбаатар, УИХ-ын гишүүн
14. Б.Ундармаа, БСШУ-ы дэд сайд
15. Э.Мөнх-Очир, УИХ-ын гишүүн
16. Д.Долгор, Ерөнхий сайдын зөвлөх
17. Ж.Цолмон, ЭМ-ийн дэд сайд
18. Б.Батцэцэг, "Мөнхийн үсэг" группын захирал
19. Х.Баделхан, УИХ-ын гишүүн
20. В.Удвал, ХЗДХ-ийн дэд сайд
21. Д.Энхжаргал, Монголбанкны Лондон дахь Төлөөлөгчийн газрын захирал
22. Ж.Сауле, ХХААХҮ-ийн дэд сайд
23. Г.Мөнхцэцэг, МЗЭ-ийн гүйцэтгэх захирал
24. Д.Энхчимэг, "Петровис" компанийн захирал
25. Ш.Раднаасэд, МАН-ын генсекийн зөвлөх
26. Ц.Цэнгэл, УИХ-ын гишүүн
27. Я.Төмөрбаатар, МАН-ын генсекийн ахлах зөвлөх
28. Д.Дондог, УИХ-ын гишүүн
МАН-аас 26 тойрогт нэр дэвших 48 нэр дэвшигчид
1. Архангай Ж.Мөнхбат, Ё.Баатарбилэг
2. Баян-Өлгий Х.Жекей, А.Тлейхан
3. Баянхонгор Г.Занданшатар, М.Билэгт
4. Булган Ё.Отгонбаяр
5. Говьсүмбэр, Дорноговь Ц.Анандбазар
6. Говь-Алтай Ц.Дашдорж
7. Дорнод Н.Номтойбаяр, Д.Одбаяр
8. Дундговь Б.Амарсанаа
9. Өвөрхангай С.Чинзориг, Н.Төмөрхүү
10. Өмнөговь Х.Бадамсүрэн
11. Сэлэнгэ Ж.Эрдэнэбат, С.Гэрэлмаа
12. Сүхбаатар Р.Буд
13. Увс аймагт Ч.Хүрэлбаатар, Б.Чойжилсүрэн
14. Орхон О.Содбилэг, Д.Дамба-Очир
15. Дарханд Д.Хаянхярваа, Ж.Сүхбаатар
16. Хэнтийд Б.Бат-Эрдэнэ, Н.Ганбямба
17. Төв аймаг М.Энхболд, Су.Батболд
18. Хөвсгөл Л.Энх-Амгалан, Л.Мөнхбаатар
19. Завхан Д.Оюунхорол, Ш.Сайхансамбуу
20. Ховд С.Бямбацогт,
21. Сонгинохайрхан Д.Сумъяабазар, Ц.Түмэнгэрэл
22. Баянгол Ц.Мөнх-Оргил, Л.Амгалан
23. Баянзүрх Д.Арвин, Б.Батзориг, Х.Мөнхбаатар
24. Хан-Уул Ц.Батбаяр, Б.Лхагважав
25. Чингэлтэй Д.Очирбат, Д.Зоригт
26. Сүхбаатар Ч.Ганхуяг, Ц.Цогзолмаа
АН-ын нэрээр жагсах 28 нэр дэвшигч
26 тойрогт хүч үзэх 48 нэр дэвшигч
1. Архангай Н.Батбаяр, Г.Болор
2. Баян-Өлгий Ч.Куланда, А.Бакей
3. Баянхонгор Х.Баттулга, Д.Ганбат
4. Булган Д.Түмэнжаргал
5. Говьсүмбэр, Дорноговь Я.Батсуурь
6. Говь-Алтай Б.Ариунсан
7. Дорнод П.Алтангэрэл, Б.Мөнхцэцэг
8. Дундговь Б.Наранхүү
9. Өвөрхангай Г.Батхүү, Д.Зоригт
10. Өмнөговь Д.Бат-Эрдэнэ
11. Сэлэнгэ С.Баярцогт, Д.Цогт-Очир
12. Сүхбаатар М.Зоригт
13. Увс аймаг Д.Нямхүү, Мэндсайхан
14. Орхон Х.Золжаргал, Г.Одхүү
15. Дарханд Н.Гантулга, Б.Мөнхтуяа
16. Хэнтийд Б.Гарамгайбаатар, Б.Хүдэрбаатар
17. Төв аймаг Го.Баярсайхан, Д.Доржпүрэв.
18. Хөвсгөл Ц.Сэдванчиг Л.Гүндалай
19. Завхан Я.Санжмятав, Б.Шинэбаатар
20. Ховд Д.Кёкүшюзан Батбаяр, Д.Пүрэвдорж
21. Сонгинохайрхан Да.Ганболд, Л.Эрхэмбаяр,С.Эрдэнэчимэг
22. Баянгол С.Эрдэнэ, С.Одонтуяа
23. Баянзүрх И.Нарантуяа, Ж.Батзандан, Д.Ганхуяг
24. Хан-Уул Лу.Болд, Ц.Оюунгэрэл
25. Чингэлтэй Г.Баярсайхан, Б.Батбаатар
26. Сүхбаатар Р.Амаржаргал, Л.Гантөмөр
CABLE TV BROADCASTING UNION AGAINST THE REGULATION ON BROADCASTING ELECTION CAMPAIGN ADS
May 23 (InfoMongolia.com) On May 23, the directors of television channels, such as "Shonkhor", "NBS", "Parliament Channel" and "Shuud" who are representing 14 cable televisions, have expressed their opposition against the regulation released by the Communications Regulatory Committee of Mongolia.
This regulation forbids election campaign ads to be broadcasted through cable television channels, but permits for the rest of broadcasters to do so. The owners of the above cable channels explained that this regulation violates a number of legislations such as Law on press freedom and the Law on monopoly.
This regulation was originally intended for double airing broadcasters such as MN25 (2), TV9 (2), UBS (2) and TV5 (2). Because, election campaign ads are permitted a maximum of two hours per day to broadcast through each channel during the election campaign days, which means airing period was to double to 4 hours for broadcasters with its secondary channels. Thus, the regulation cited to broadcast election campaign ads through TV channels that only use air wave. However, with the release of additional regulations, election campaign ads were forbidden to be broadcasted through the above mentioned cable channels.
"The Communications Regulatory Committee runs under the authority of the Prime Minister and is a regulatory agency of the Government of Mongolia. Therefore, we will submit our requirement to discard this regulation to Prime Minister S.Batbold. There is no regulations that can be above the law. Speaking straightforward, we deem that the Mongolian People's Party is administering this action that is directly violating press freedom", said the Executive Director of "Shonkhor" TV, G.Munkhbayasgalan.
The Cable TV Broadcasting Union is to address the Prime Minister, the President and the Administrative Court of Capital of Mongolia regarding this issue.
Also, several minor political parties have expressed their support of these televisions. They said, at air wave broadcasting televisions, the cost of election campaign ads for one minute is at 800 thousand to 1 million MNT, which is an unaffordable price for independent candidates and minor parties.
They also said that this regulation, which indirectly halts advertisement time slots of cable televisions, is also violating rights of viewers.
Currently, out of 149 television channels that are operating in the country, a total of 16 TV channels broadcast nationwide, whereas there are a total of 39 television channels in Ulaanbaatar city.
Mongolian coal's long road to market
May 25 (Asia Times) Mongolia's national transition from a communist regime to a democratic, free market state has been a rocky one.
The loss of Soviet support following the collapse of the Soviet Union was an economic and demographic catastrophe for Mongolia.
As recently as 2008, a third of Mongolians lived below the poverty line. Mongolian democracy is a violent, murky business even today and dominated by successors to the Mongolian Communist Party.
Recently, the ex-president of Mongolia, Nambaryn Enkhbayar, was arrested on corruption charges and freed on bail after he embarked on a hunger strike that attracted the concern of Western governments and activists.
His arrest was widely viewed as part of a political vendetta by current President Tsakhia Elbegdorj, who himself faces accusations that he vaulted into the presidency by orchestrating a riot protesting Enkhbayar's alleged vote fraud in 2008.
Despite democracy, despite free markets, what has kept Mongolia from recapitulating the experience of Kosovo as a failure for Western nation-building, indeed what is setting the nation on a pace to become the fastest-growing economy in the world, is the fortuitous existence of a trillion dollars' worth of minerals beneath the under-populated surface of the country, and the insatiable appetite of a gigantic, capital-rich authoritarian neighbor, China, for these treasures.
In Mongolia today, hunger for coal, copper, gold and uranium wealth is at odds with democracy as the demands of international resource giants collide with a stubborn political culture of resource nationalism.
In time for the June 2012 parliamentary elections, Mongolia's grand khural is expected to pass a law subjecting the purchase by "state-owned entities" of controlling interest in strategic Mongolian mining enterprises to government approval (as well as a host of other key industries). (Mogi: this law has already been passed, not expected to pass)
The immediate provocation for the legislation was the sale by a Canadian company, Ivanhoe Resources (Mogi: hmmm), of its controlling interest in SouthGobi, an operator of coal mines in Mongolia, to a Chinese resource giant, the Aluminum Company of China (Mogi: another hmmm), known as Chalco.
The legislation overtly targets China. Vice Finance Minister Ganhuyag Chuluun Hutagt told Bloomberg that the country needed new investment laws to diversity its exports to countries other than China, which consumes a lion's share of Mongolia's coal and copper:
We don't want to be faced with one sovereign ... Our struggle to get political freedom was a long one and we cherish that. We will not let foreign government-owned entities control strategic assets in Mongolia.
This is not an unambiguous win for non-Chinese international resource companies.
After all, there are two ways to make money from ownership of a mining concession. One is to engage in the arduous, expensive, long-term and risky enterprise of operating the mine. Another is to sell it.
And the people who are willing to pay top dollar for a mine are the people who are already buying the product and have a powerful economic incentive for making a go of it ... like the Chinese.
So the Mongolian government's involvement in strategic industries can be looked at in two different ways.
On the one hand, it might hobble a deep-pocketed, overweening competitor to the benefit of other, grateful players; on the other hand, it might be seen as increasing the risk and diminishing the liquidity of investments in the so-called strategic industries, shaving precious points off the value of the assets, be they hard rock or financial paper.
Unsurprisingly, the investment community, which is politely slavering at the prospect of profitable deal flows from Mongolian mining initial public offerings (IPOs) and mergers and acquisitions, is not amused by the strategic industry law.
Dale Choi, of the pre-eminent Mongolia resource play investment firm Frontier Securities, told Bloomberg:
Investors don't like it when the rules of the game are changed after the game has started, and changed often at that ... It would be in the interests of Mongolian people to make a decision based on commercial factors, rather than geopolitical factors. 
The uncertain progress of the Tavan Tolgoi project illustrates the headaches facing Mongolia as it tries to reap its resource bonanza on behalf of its citizens even as the remorseless economic logic of globalization demands marginalization of their interests.
Tavan Tolgoi, in the Gobi Desert less than 300 kilometers from the Chinese border, contains over six billion tons of coal reserves, including 1.8 billion tons of coking coal, a premium and profitable item used in the iron and steel industry.
Nothing about Tavan Tolgoi is simple, except perhaps the physical process of digging the coal out of the ground (albeit with the usual environmental and cultural trauma).
Chalco is already buying all the coking coal that Tavan Tolgoi produces. But it has to truck the coal to China since the Mongolian government can't bring itself to approve the 300-kilometer railway that would connect to the Chinese rail system, thereby making China the only feasible buyer.
Mongolia's current anxiety about Chinese domination of its international trade channels (China accounts for perhaps 80% of Mongolia's export and import trade) is buttressed by a significant element of historical xenophobia.
The Mongolian republic's foundation myth (Mogi: myth?!?) dates back to the eviction of a detested Manchu viceroy in 1911 and China's political and ethnic domination of the parts of Mongolia it did hang on to - now the Inner Mongolia Autonomous Region (Mogi: hang on to?!?)- is an affront and warning to Mongolian nationalists.
Standing up to Chinese economic penetration is, therefore, good politics and probably smart geopolitics. Economics, however, is another matter.
Instead of simply linking Tavan Tolgai to the Chinese railway system, Mongolia is trying to cobble together a coalition of Chinese, Russian, South Korean and Japanese concerns that will develop part of the mine jointly with Mongolia and, most importantly, build an integrated transport network 5,000 kilometers from Tavan Tolgoi to the Russian export facility at the port of Vanino.
The objective is for Tavan Tolgoi to will find a home in Japanese and South Korean steel mills, and to get to those mills through Russia without being captive to the necessity of moving the product overseas through the shortest and most economical route-through Chinese railroads and ports.
Total projected cost: US$5.2 billion. Additional transport cost per ton: perhaps $100.
To bootstrap this diversification extravaganza, the Mongolian government already requires that Chalco resell 30% of its current Tavan Tolgoi purchases to three Japanese and South Korean trading companies. Reportedly, this portion is delivered to Chinese ports for export. Somebody is enjoying a windfall, as Mongolian coking coal is apparently selling for a third of the price of the Australian product currently fueling Japanese and South Korean steel mills.
Tavan Tolgoi itself is divided into east and west zones, East Tsankhi and West Tsankhi, each with its own challenges.
West Tsankhi is the joint development mega project based on foreign operators investing in and operating the mine and paying royalties to the mine owner, state-run Erdennes Tavan Tolgoi.
This is the piece wrapped up in the multi-national/railroad to Russia consortium idea which, it appears, only the Mongolian government loves.
The Mongolian government announced a jumbled up award to an unwieldy collection of companies but has been unable to work out the deal it is trying to impose - which probably requires a hefty up-front payment that somehow has to be divvied up between the disparate partners, each of whom has different roles, profit expectations, and willingness and capacity to pay.
In a recent display of bravado, the Mongolian government stated it might go it alone on West Tsankhi, while failing to address the question of how it would come up with billions of dollars needed to fund development.
East Tsankhi is the part of the mine that is already selling its output to China under the ownership and operation of state-owned Erdennes Tavan Tolgoi. Per government plan, Erdennes TT (Mogi: this guy should really start learning how google search works) will go public in a multi-billion dollar global IPO that will sell a 30% share (Mogi: I thought it was 19% now) to fund the further development and exploitation of East Tsankhi by some combination of foreign and domestic construction, equipment, and service vendors.
Mongolia has ambitious plans to list the IPO on three stock exchanges simultaneously: Ulan Bator (Mogi: man I hate when every journalist spells UB this way), Hong Kong, and London. The overseas exchanges are panting for the offering, which is expected to raise $3 billion. Underwriters are all clamoring for the business, leading to a fistfight between pinstriped antagonists in an Ulan Bator watering hole in 2010 and the generous decision of the Mongolian government to expand the number of underwriters to six in 2012.
However, the IPO has been delayed several times - and the most recent prediction for the share sale is early 2013.
Obstacles include uncertainty involving the award of West Tsankhi and the royalty revenue Erdennes TT would enjoy as a result. The biggest problem, however, is the sweeping decision to allocate 10% of the total stock of Erdennes TT to every one of Mongolia's citizens - a noble gesture - and another 10% to Mongolian corporate entities - a rather eyebrow-raising arrangement. (Mogi: ?!?!?)
The government has also decided to give Mongolian citizens the opportunity to sell their Erdennes TT shares to the state, though it is unclear if this will simplify the process or further complicate it. 
Mongolia is still somewhat deficient in the conceptual, legal, record-keeping and stock-holding infrastructure to administer this rather unprecedented process. Furthermore, the Hong Kong and London stock exchanges want a certain percentage of stock to be clearly out of the government's hands before they agree to host the IPO.
Add to that the inevitable to-and-fro of Mongolian politics.
The chief executive officer of Erdennes TT, B Enebish, glumly explained the current state of play to the UB Post:
[T]he company that is going public should have a clear investors' structure. But this is not the case for us. The Government made a decision to let the Mongolian public own 20% of TT. This means that the ownership of stocks are blurry because we do not know who will decide to keep or trade their stocks, or whether the Government will offer stocks to other companies or will they keep stocks themselves. We planned to resolve this in 2011 but the problem is still persisting even now.
Two years ago, a resolution was passed from the State Great Khural on trading 30% of the company's stake on stock exchanges. But another resolution [was] passed in January 2012 decreasing this percentage to 20%. (Mogi: this guy is already contradicting himself after a few paragraphs)
On foreign exchanges, more specifically the London Stock Exchange (LSE) and the Hong Kong Stock Exchange (HKSE), when a mining company is aiming to release on many different stock listings, it is required to that at least 20% of the company's stock is out. It means that we must determine exactly how many of our Mongolian citizens will return TT stocks for cash and make sure the stocks traded are more than 20% before proceeding to release TT stocks on foreign exchanges. 
Enebish tried to put a brave face on the delay, declaring that Erdennes TT could boost its value in the interim by plowing more investment into production in East Tsankhi, thereby begging the question of where the money would come from - since it wouldn't be coming from the IPO.
Since the IPO release has been postponed we see a definite need to find funding from a different source. We are discussing this with a number of investors, seeking to solve it through the sale of coal, presale of coal, and various loans.
Sale and pre-sale of coal most likely means deals with China, probably on concessionary terms.
Chalco, the same company that was subjected to the public crotch-kicking over its purchase of South Gobi, made a $250 million pre-payment to state-run Erdennes Tavan Tolgoi in 2011 for coking coal. At the price Chalco is paying-reportedly US$70/ton, a far cry from the $200+/ton for Australian coking coal - that is over three years' worth of exports. 
This cash is by no means a bonanza for Erdennes TT, or its investors.
Erdennes TT is obligated to help fund Mongolia's Human Development Fund.
The Human Development Fund is funded by revenues from resource exploitation along the lines of the Alaska Permanent Fund and the Norwegian sovereign wealth fund. In other words, it is a non-renewable resource fund, albeit with Mongolian characteristics - ie it has become something of a piggy bank for politicians to curry favor with the electorate while slighting the restructuring of the economy against the day, admittedly far in the future, when all the ores are gone.
In 2011, the payout from the fund accounted for 40% of the government's budget, raising the specter of "Dutch disease" inflation the fund is specifically designed to avoid. In 2012, the payout will be funded primarily by the Oyu Tolgai copper mine and the Chalco payment to Erdennes TT. 
The Chalco payment to Erdennes TT amounts to about half of the value of the $500 to $600 million social welfare payout (in cash and services) that Mongolian politicians have promised to make from the nation's Human Development Fund to Mongolia's 3.1 million citizens in the runup to the June 2012 parliamentary election.
In effect, then, Chalco is getting a bargain on coking coal while effectively bankrolling the Mongolian election-year giveaway meant to demonstrate the advantages of resource nationalism. 
Further complicating the Tavan Tolgoi situation is the expectation that the Mongolian People's Revolutionary Party of Nambaryn Enkhbayar, the hunger-striking ex-president, will do very well in the upcoming elections. He is running on the platform that Mongolia should keep all of Tavan Tolgoi to itself.
Counter-intuitively, not opening Tavan Tolgoi to foreign investment would probably strengthen the position of China. It appears that only China would possess the ability to continue stumping up hundreds of millions of dollars in pre-payments for coking coal without holding equity in the project or sharing the risk with other investors or stockholders.
It may not be happenstance that at the same time Chalco was acquiring SouthGobi - a transaction that will probably be subject to a Mongolian government ruling and possible rejection under the new strategic asset law-it was acquiring a 30% share in Winsway Coking Coal Holdings Inc.
Winsway is a Hong Kong trading company staffed to a considerable degree by ex-Minmetals personnel. Minmetals is the minerals and metals trading arm of the Chinese government foreign trade apparatus, in charge of moving material, not making it.
Winsway's main business is not investing in coal mines, despite its name. Its job is running the non-stop parade of 40-ton trucks that carry coal from Mongolia across the dusty roads of the Gobi Desert to China.
Chalco's $308 million investment in Winsway looks like a sizable hedge against the possibility that the Tavan Tolgoi investment/IPO project will continue to be dogged by political gridlock, and Mongolia will continue to hemorrhage coal across the border to China at concessional rates in order to finance its national ambitions.
It is also a sign of the difficulties of reconciling the tension between globalization and resource nationalism, and a warning signal for Mongolia's future.
1. Chalco Targeted as Mongolia Seeks to Limit State Deals, Bloomberg, May 17, 2012.
2. The 666,000 MNT will be distributed to elders and disabled civilians from next week, Info Mongolia, May 18, 2012.
3. Click here for the UB Post story.
4. Click here for a story by Info Mongolia.
5. Mongolia's Quest to Balance Human Development in its Booming Mineral-Based Economy, Brookings, January, 2012.
6. Chinese, Mongolian companies sign $250m coal deal, China Daily, Jul 29, 2011.
Peter Lee writes on East and South Asian affairs and their intersection with US foreign policy.
Wildfires cost Mongolia 3 million U.S. dollars so far this year
ULAN BATOR, May 24 (Xinhua) -- Mongolia has suffered 134 forest fires since early this year, causing direct economic losses of more than 4 billion tugriks (3 million U.S. dollars).
Statistics released by the National Emergency Management Authority on Thursday show about 120,000 hectares in total have been burned.
It said 14 forest and steppe wildfires are still spreading in the country, urging local authorities to strengthen fire fighting and prevention work.
Local media said that police were investigating the causes of the wildfires and 117 suspects had been interrogated.
Initial investigations indicated most of the wildfires were caused by human factors, the reports said.
Meanwhile, Mongolia has asked China and Russia for help in fighting the fires.
Mongolia has suffered a long drought this spring, leaving dry forests and steppe that are at risk of catching fire.
Lack of firefighting personnel and equipment as well as the scarcely populated territory make it hard for Mongolia to control wildfires.
May 23 (Oxford Business Group) New rail links with Russia and China and a planned overhaul of the road network underline progress in Mongolia's plans to use the recent surge in resource growth to improve infrastructure and transport. However, there are concerns that political wrangling could delay the implementation of ambitious projects.
In early April, state-owned Mongolian Railways received five new locomotives and 245 freight wagons from China as part of a soft-loan deal. Delivered with decorations commemorating the 805th anniversary of the Mongol Empire's founding, the rolling stock symbolises eagerness to improve transport links with China as the scale of Mongolia's mineral wealth becomes clearer.
Ulaanbaatar plans to build a new 270-km link from its Tavan Tolgoi coking coal mine – located in the South Gobi desert – to the Chinese border by 2013. While exports to China rose 37% year-on-year (y-o-y) to 17.5m tonnes between January and November 2011, international media reported in February that the current rail link between South Gobi and China, used to export millions of tonnes of coal each year, is "overwhelmed", adding that "foreign investors say their future could depend on easing the bottleneck".
With an eye on easing congestion on the route, in March, Mongolia Mining raised $600m in a bond offering for the construction of a 240-km rail link between its Ukhaa Khudag mine and the Mongolia-China border at Gashuun Sukhait. The link is expected to be complete by 2014.
Despite the new links, Ulaanbaatar is wary of overdependence on Chinese demand, with Mongolian Railways also planning to construct a 1000-km rail link from its Tavan Tolgoi coal mine to a port in Russia's Far East. In February, officials revealed that the link will take two to three years to build and will cost $2bn-2.5bn.
The Russian link is part of $5bn plans approved in 2011 to quadruple the domestic rail network to boost commodity exports. The existing Trans-Mongolian Railway connects the Trans-Siberian Railway from Ulan Ude in Russia to Erenhot and Beijing in China through Ulaanbaatar, with the Mongolian section spanning 1110 km.
Despite the importance of the new links, railway officials have complained over a political stalemate stalling implementation. According to Purevbaatar Luvsandavag, the vice-chairman of the Mongolia Railway Authority, the government has not raised the $50m required to fund a series of feasibility studies and projects designs drawn up in 2011.
"We still do not have permission from the government to announce an open tender to build the railways, and in general, there is still a deadlock when it comes to funding and building infrastructure," Purevbaatar told Reuters on the sidelines of the Coal Mongolia conference in Ulaanbaatar.
Purevbaatar further added that the government had sought funding for the projects through overseas equity markets, instead of the railway authority's preferred option involving public-private partnerships with investors from Japan and South Korea.
In March, the cabinet introduced an implementation plan for state policy on the railways, with the government planning to create a state-run dominant shareholding company that will control 51% of basic railway structure and the rest to be offered as shares on domestic and foreign stock exchanges.
Although railways are vital in linking the 1.5m-sq-km country, revenues from coal and other minerals are also expected to fund far-reaching upgrades in road and air infrastructure. In April, the cabinet identified a list of "urgent" roads and bridges to construct as part of its new building programme, with a total of 5572 km of roads and 900 km of highways connecting the capital to the country's aimags, or provinces.
In the same month, city officials revealed $280m in plans to build bus lanes on existing roads to ease congestion, while adding that a metro service was being mulled as part of efforts for the current public transport system in the capital to be "greatly enhanced".
On April 23, construction began on a new international airport in Tuv province to satisfy the rising international passenger and freight transport volume. Prime Minister Sükhbaatar Batbold said at that the groundbreaking that a $358m soft loan from Japan would fund the new facility. The airport, located 60 km outside of Ulaanbaatar, will ease pressure on the existing Chinggis Khaan International Airport.
Expected to be complete by 2015, the new airport will be able to service all larger modern aircraft and afford better protection from wind shear than Chinggis Khaan. The airport is expected to have a capacity of transporting 1.65m passengers and 11,900 tonnes of freight annually.
The government's wide-reaching plans to facilitate commodity-based travel will help ensure longer-term and broad-based growth. Improving passenger services and minimising political wrangling will also go a long way in this regard.
FACTBOX-Key political risks to watch in Mongolia
ULAN BATOR May 24 (Reuters) - As June elections approach, mining investors in Mongolia worry that their contracts might be targeted for a fresh round of renegotiation after the poll.
Former president Nambar Enkhbayar, who was arrested in April on corruption charges his family says were fabricated, is the most popular figure fighting the June 28 election, according to opinion polls.
He wants to review a landmark 2009 deal that gave 66 percent of the huge Oyu Tolgoi copper project to Canada's Ivanhoe Mines IVN.TO, and also says the 7.5-billion tonne Tavan Tolgoi coal mine - expected to be listed on overseas stock exchanges next year - should remain in Mongolian hands.
Politicians are under constant pressure to be seen to getting a good deal for the country from resources investors.
The priority for Mongolia is the development of its tiny economy, and foreign investors want to know if the government can create a stable legal environment while handling the pressures exerted by impatient citizens as well as its two giant neighbours, Russia and China.
Following is a summary of key political risks to watch:
The outcome of the June election will determine the investment climate, and the pace at which Mongolia's huge mineral deposits are brought to production.
Enkhbayar leads the Mongolia People's Revolutionary Party (MPRP), a breakaway faction of the ruling Mongolia People's Party (MPP). His party is expected to press for laws demanding more from foreign investors, which could delay mine development.
Few of its major projects are progressing smoothly. Mongolia wants to launch a $3 billion initial public offering of the Tavan Tolgoi or "Five Hills" coal deposit. State-owned Erdenes Tavan Tolgoi had been planning to list 29 percent of the company in London and Hong Kong by May, but it cannot until Mongolia's parliament passes a securities law.
An initial proposal to hand development rights in the project to China's Shenhua, Peabody of the United States and a Russian-Mongolian consortium was rejected, and the government is trying to devise another deal that will include Japanese and South Korean partners.
After struggling for years to find the right investors, Mongolia might yet choose to develop Tavan Tolgoi's western block on its own, an executive with the state-owned firm in charge of the project said in April.
The current government has abandoned its idea of renegotiating the contract for the Oyu Tolgoi copper-gold mine, after earlier saying it wanted to look again at a 2009 deal with Ivanhoe Mines. The project will be taken over by Rio Tinto , which already owns 49 percent of Ivanhoe and, as of mid-January, was cleared to buy more. (nL3E8CI61)
Some politicians have called for the prime minister to resign over his handling of the Oyu Tolgoi contract.
In mid-May, Mongolia's parliament passed a controversial law aimed at capping foreign ownership in "strategic" industries such as mining, but investors expressed relief that the legislation was weaker than first anticipated.
The bill was watered down considerably since first drafted by a group of backbench lawmakers who were alarmed by a decision by Canada's Ivanhoe Mines to sell its 58 percent stake in coal miner SouthGobi Resources to the Aluminum Corporation of China (Chalco).
It stipulates that foreign investors are allowed to own a maximum of 49 percent of companies involved in the mining, finance, media and telecommunications sectors before being subject to scrutiny by a government panel, but it now only applies to deals valued at above $75 million, or ones involving state-owned companies like Chalco.
What to watch:
- Parliamentary elections in June. Shenhua Energy Co Ltd, China's largest coal producer, has said its negotiations to invest in Tavan Tolgoi are likely to restart after the vote.
- Whether the government can produce an investment agreement for Tavan Tolgoi that will satisfy foreign partners and keep the public happy, and whether it can do it in time.
- More inward investment. In November, commodities trader Trafigura and private equity investor Origo Partners Plc OPP.L, formed a joint venture to develop Mongolian coal and iron ore deposits for export, and in February Goldman Sachs bought a 4.8 percent stake in a Mongolian bank.
THE RESOURCE "CURSE"
Mongolia's dependence on mining has alarmed environmentalists and opposition politicians, and the country is already showing classic symptoms of "Dutch disease", including soaring inflation and high interest rates.
The government is trying to bring in structures that will protect it against fluctuating commodity prices, and wants to use the proceeds from mining to pay for infrastructure, health and education, and develop other sectors.
It is under pressure to spread the wealth, and has already extracted pre-payments from foreign firms involved in both the Tavan Tolgoi and Oyu Tolgoi projects in order to give money to the public.
What to watch:
- How Mongolia uses the income from its mining projects. It has set up education and fiscal stabilisation funds, but it has also promised direct dividends for Mongolian citizens.
- How it deals with rapid economic change as well as inflation as foreign investment transforms the country's mainly rural economy. The International Monetary Fund warned in November that Mongolia's economic policies are creating inflationary pressures. ID:nN1E7AR1RR]
GETTING ON WITH THE NEIGHBOURS
Many of Mongolia's 2.7 million citizens are concerned about growing Chinese and Russian influence, and their fears were not allayed by the plan to hand the majority of Tavan Tolgoi's western block to Chinese and Russian interests.
China already dominates Mongolia's economy, buying 90 percent of the country's exports in the first half of 2011.
Mongolia's reliance on Russia and China for fuel, power and transportation also poses a major risk to its mining sector. Russia has been known to turn off supply taps, and China is not averse to closing crucial railway links.
Mongolia also depends on Russia's railway network to fulfil plans to deliver coal to Japan and South Korea. Mongolia's plans to build itself a railway network capable of transporting coal to foreign markets is likely to be delayed, officials said in February.
What to watch:
- Will efforts to ease dependence on China merely increase Russia's hold, and vice versa? Is the Chinese market for coal and other minerals its only option in the short term?
- How will the government handle growing nationalist sentiment, and fears about the role of foreign firms and workers?
N.Enkhbayar's court hearing postpones
May 24 (news.mn) The court hearing of ex-president N.Enkhbayar's case postponed till June 4. The court hearing started at 10 am in Sukhbaatar District court. N.Enkhbayar's lawyers Mr. O.Baasankhuu and Mrs. B.Oyunchimeg came to the court but ex-president N.Enkhbayar didn't appreared.
According to the press officer MPRP, headed N.Enkhbayar, ex-president not able to came because of health condition. The source said N.Enkhbayar's lawyers demanded to call to court hearing two more people, which connected to the privatization of the Sukhbaatar printing house- MP Kh.Narankhuu and L.Sergelen.
FORMER PRESIDENT N.ENKHBAYAR RELEASED A STATEMENT
May 23 (InfoMongolia) Last weekend a video footage of N.Enkhbayar shot during his detention period in Tuv aimag and at the Second General Hospital in Ulaanbaatar that shows images of N.Enkhbayar behaving improperly and using some curse language was broadcasted on several Mongolian TV channels raising much ruckus in Mongolian society.
Hence, yesterday on May 22, 2012 the MPRP made a statement regarding the video.
In the statement, "The MPRP is demanding the General Executive Agency of Court Decision (GEACD) to release the full length footage. MPRP is deeming that this footage of illegal investigation procedure was trimmed and was edited, the dates and time of the video is uncertain, the video has been made with a purpose to fling dirt at N.Enkhbayar's struggle for justice, was prepared well in advance and is a politically ordered footage by the opposing powers and has been consciously broadcasted before the election by paying money to certain media organizations. If the GEACD recognizes this video as evidence against N.Enkhbayar, we are demanding the GEACD to release the full length video to public".
Moreover today on May 23, 2012 N.Enkhbayar released a statement regarding his detention, case and the video footage. In his 5 page long statement he notes that his health is improving little by little thanked to physicians who were doing all their best in curing him and said that he would stand strong against injustice and current political oligarchy until the very end.
The court hearing of his case will be held tomorrow on May 24, 2012. As of today he is in the first of the list of candidates from the MPRP and MNDP "Justice" Coalition to run for the Parliamentary election in the electoral districts by proportional system.
The court's decision will give final answer whether he participates in the election or not.
Facing Trial, Ex-Mongolia President Calls Charges a Political Ploy
ULAN BATOR, Mongolia, May 23 (New York Times) — As he prepared to go on trial for corruption on Thursday, this country's previous president lay in a wrinkled hospital bed, where he was recovering from a 10-dayhunger strike he waged to protest being held in detention by the current government.
Gaunt, barefoot and dressed in hospital-issue white pajamas, Nambaryn Enkhbayar bore little resemblance to the populist leader who dominated Mongolian politics until he was defeated in 2009 by Tsakhia Elbegdorj, who now runs the country (Mogi: NYT still thinks the President runs things in a parliamentary democracy). But even in his apparently frail state, Mr. Enkhbayar angrily dismissed the charges against him and criticized the timing of the trial as a ploy to remove him from the political arena just weeks before parliamentary elections.
Mr. Enkhbayar and his supporters in Mongolia and abroad view the trial as worrying evidence of the country's slide away from rule of law and a fair and open democratic process. By contrast, his opponents describe Mr. Enkhbayar's prosecution as long delayed justice for a man they say routinely twisted the law for his own benefit when he was prime minister and later president.
Tethered to an IV, Mr. Enkhbayar called on the authorities to postpone the trial as a sign of their commitment to due process.
"If this is a political case, let's do it now," he said in fluent English. "But if we live in real democratic country and this is not just political theater, let's take more time." Landlocked between Russia and China, Mongolia contains vast troves of natural resources like coal, copper and gold that have attracted intense interest from mining giants around the world and turned the nation into a pawn in a global game involving China, the United States, and Russia. Washington has lauded the country for its smooth transition from Soviet satellite to thriving democracy, though the controversy surrounding Mr. Enkhbayar's prosecution has drawn widespread criticism from, among others, Amnesty International and Senator Dianne Feinstein, Democrat of California.
After losing to his rival three years ago, Mr. Enkhbayar broke away from the party of the current prime minister and founded the Mongolian People's Revolutionary Party, which has formed a coalition seeking to challenge the government in next month's elections.
Mr. Enkhbayar, in his first interview with a Western news organization since being released from detention, cast his trial as part of a conspiracy hatched by greedy government officials seeking to prevent him from reclaiming their ill-gotten treasure for the broader public.
"Mining is the reason they're so cruel and antidemocratic in trying to prosecute me," he said. "Copper and gold have made people crazy."
In a dawn raid by police officers in April that was broadcast live, Mr. Enkhbayar was taken to jail by authorities who said he had repeatedly ignored their attempts to question him about alleged corruption charges going back a decade. To challenge his prosecution, Mr. Enkhbayar's family and supporters hired a team of international and Mongolian lawyers. Rather than tackle the merits of the charges, which they say are stale and insubstantial, the lawyers have focused on procedural irregularities in their efforts to free him.
Mr. Enkhbayar claims that the government broke Mongolian law by preventing him from meeting privately with his lawyer. "They put up a glass wall between us and forced us to speak through a phone, which was obviously tapped, and watched us via a camera," he said.
His lawyers say that following his release last week for medical treatment and the sudden announcement of a court date, the government delivered 50 binders of states' evidence just days before the trial, too little time for them to review the material and prepare a defense. "It is impossible that he could have a fair trial in these circumstances," they wrote in a statement about the flaws in the case.
Those who support the prosecution say Mr. Enkhbayer is no innocent victim but simply trying to regain power to get his own hands on Mongolia's mineral wealth.
"This is really a case of him finally being brought to justice after years of the people being too afraid to file complaints," said Oyungerel Tsedevdamba, a Stanford University-educated member of the current president's Democratic Party.
Ms. Tsedevdamba said that during Mr. Enkhbayar's time in power the police were much more brutal than today and that the government arrested journalists for writing critical articles under a law banning slander of the state. This case, she said, proves that Mongolia has made significant progress.
"When they came to arrest him nobody was beaten and the press could broadcast openly," she said. "Those are marks of democracy in action."
Mongolia's vibrant media has watched Mr. Enkhbayar's detention and trial closely, and much of the controversy has unfolded in the glare of cameras. For weeks, tales of his deteriorating health and desperate pleas from his family members boosted his party, said Sumati Luvsandendev, director of the Sant Maral Foundation, a political polling organization in Ulan Bator. "The arrest created an image in people's minds that the government was using our criminal code for political purposes," he said.
But in an age of 24-hour news and social media, Mr. Enkhbayar's latest actions caught on video seems to have turned the public against him. The government recently broadcast images of him walking around and acting aggressively toward medical personnel. That has fractured the image of a frail victim mistreated by the authorities.
"His team was portraying him as half dead but footage shows him in quite good shape," Mr. Luvsandendev said. "How he was portrayed in the local media has really damaged his credibility. It's one thing to be accused of corruption and another to be ridiculed."
Mr. Enkhbayar's supporters, in response, publicized a report from a medical commission set up to assess his health condition that suggested he needed more time for his body to recover. "Even though his health is improving, internal organs are still in a critical state," it said.
The Economist missteps on the Steppe
By Oyungerel Tsedevdamba, Ulaanbaatar, Mongolia
April 29 (Ardchilal.com) I admire The Economist's ability to cover stories from around the world. I understand that it must be quite difficult to write with accuracy reports about every country, especially when it is too expensive to maintain resident reporters everywhere. So, I never expect absolute accuracy from any media covering the world stories. However, in the era of the Internet and cheap telecommunications, I do expect more precision than was possible in the 1990s for example.
The Economist's recent story on Mongolia, "Steppe in an ugly direction" was, I regret to say, poorly researched. So, I decided to do some fact-checking just to let The Economist know that it needs to respect its readers in Mongolia with more accurate reporting.
Fact One that The Economist missed: The Mongolian public was surprised at the high degree of obstruction of justice from Enkhbayar and his supporters, and the low degree of respect for law that Enkhbayar himself helped create during his years in government.
When police and the Anticorruption agency officials came to arrest Enkhbayar on the night of April 11, Enkhbayar's bodyguards obstructed the arrest. One of them pointed a gun directly at the Anticorruption Agency officer, who responded by pulling his own gun. Special Force police officers quickly disarmed Enkhbayar's bodyguard. His pistol was loaded and ready to shoot. In this process Enkhbayar's car window was broken.
The next obstruction the Police faced was Enkhbayar's supporters. At the gate of Enkhbayar's residence, police officers encountered scores of heavy-set guards blocking all entrances to the compound. Enkhbayar's backers pushed and pulled the police, knocking off their hats, slapping their faces and cursing at them. All of this was televised live by Mongolian television stations (including pro-Enkhbayar TV 9) and can be viewed on Youtube. No need for The Economist to go to the expense of sending a reporter all the way to far Mongolia. Heaven forbid. All one needs to do is turn on a computer, go to Youtube and look.
I wonder whether British police would have shown the same degree of restraint if, for instance, Rupert Murdock was indicted, and in response recruited scores of beefy guards to block, shove, and kick the police coming to arrest him – or if the Occupy Wall Street people had pushed and kicked the police away.
As for Enkhbayar's supposed respect for the law, the Mongolian public was shocked to learn he had been summoned to give testimony to the Anticorruption Agency some 10 times since October 2011 and each time declined to appear. That kind of brazen disrespect for the law is not tolerated from ordinary citizens in either Mongolia or Great Britain. We rightfully wondered how Enkhbayar felt entitled to just say "no" when summoned to testify. The Anticorruption Agency had heard enough "no's" from Enkhbayar when he was asked to put his shoes on and just picked him up and carried him out of his compound in his socks.
Fact Two: "The small hotel" and "a local newspaper" that The Economist talks about are big deals in Mongolia. Just look at their location. The "local newspaper" is housed in an historic building located in the most expensive location in city of Ulaanbaatar. It is less than 50 meters east of Parliament and by no means "small". Would any London "local newspaper" building be considered a small deal if it were located next to the Houses of Parliament?
Fact Three, timing: The Economist is quick to conclude that the timing of Enkhbayar's arrest shows that it must be politically motivated. The timing of the arrest is, indeed, critical but for quite different reasons. The timing dilemma confronting Mongolian law enforcement was created by the Parliament. When law enforcement agencies attempt to investigate allegations of corruption the train often leads to the doorsteps of Mongolia's newly rich oligarchs some of who can be found comfortably ensconced in Mongolia's Parliament -- as the costs of contesting a seat in Parliament are prohibitive for anyone other than the most wealthy or well-connected. During 2010-2011, the General Prosecutor's office twice investigated MPs, ultimately charging them with misusing their powers and mishandling government money. However, they were not arrested because Parliament had given its members immunity from prosecution and decided not to lift that immunity in their cases. The obvious message for politicians who are likely to be charged with a crime is, "get yourself elected to Parliament as soon as possible". The Mongolian public hates this of course and blames law enforcement for letting politicians slip from their grasp by not acting in a timely manner. In Enkhbayar's case, law enforcement faced a serious time dilemma: To arrest him before the election while he did not have parliamentary immunity or to delay and run the risk of enabling him to hide behind his parliamentary immunity perhaps for years. I wonder what would the British anticorruption agency do in that situation.
Fact Four: The Economist totally "missteps" in its conclusion about current president Tsakhiagiin Elbegdorj. He is still the most dedicated democrat that Mongolia can find. He opened up public hearings and debates for the first time ever. He courageously established a moratorium on the imposition of the death penalty. He called upon his male colleagues to support women in politics. He has undertaken sweeping initiatives to reform Mongolia's weak judicial system. He actively participates in budget reforms initiating citizens' participation in budget planning. And most importantly, he remains a passionate supporter of a free media. TV9 Television, which devoted 90% of its news hours in support of its patron, Enkhbayar, during his presidential campaign and the months following, is under threat of being closed for its questionable origins involving the use of Japanese donations of equipment intended for Mongolian Buddhist organizations. However, it is President Elbegdorj and his team that has become the most effective guarantor of media freedom. The President's draft law on press freedom is striking confirmation of his democratic agenda and stands in marked contrast to the law draft put forward by the Ministry of Justice and Interior which is under the political control of Parliament's dominant party, the Mongolian People's Party (the old Mongolian People's Revolutionary Party whose name Enkhbayar's new party has co-opted).
When the day before his arrest Mr. Enkhbayar released internal government transcripts of the July 1, 2008 post-election disturbances, the Mongolian public was proud to read how Elbegdorj, alone, demanded a halt to the brutal beatings and arrests of hundreds of young men, demanding the arrest of the killers who shoot demonstrators, and demanded the prompt restoration of the free media after Enkhbayar had ordered the independent media (television and newspapers) shut down for a period of four days. The transcript suggest nothing like what The Economist concluded. I believe the document's English language version is still available on the UB Post's website. Obviously The Economist did not bother to google the transcript and read it.
Because I do want to continue reading Mongolia reports on The Economist, I would like to offer a small bit of advice regarding your future reporting on Mongolia. Please find more varied sources for your stories. Do not continue to rely on a handful of over-consulted and poorly researched books and biased few. One of well-known historian's grossly inaccurate and biased book on the history of Mongolian democracy begins with an inaccurate story. Instead of describing the Youth Cultural Center's modest square, it describes Sukhbaatar Square as if it was the first anti-communist rallies began there. Those who actually participated in the Youth Cultural Center's Square demonstration laugh at that book, pointing out that its sources who pretended they were there on December 10, 1989 were nowhere near the square. A few years back, only a few of the old time elites were able to converse in English and therefore become main sources on contemporary history of Mongolia. Nowadays, the English language is in everyday use here. The Economist should take advantage of this new reality and diversify its sources.
MONGOLIA-BRITAIN BUSINESS MEETING TO BE HELD
Ulaanbaatar, Mongolia, May 24 /MONTSAME/ The business forum of Mongolia and Britain will take place on July 30-31 in London. It has been co organized by Mongolia's national chamber, commerce and industry, the Embassy of Mongolia to Great Britain and north Ireland of Kingdom.
The Great Britain and north Ireland of Kingdom is the best of the stock exchange market in the world. This country has been increased by cooperating with Mongolia's companies. The business forum can be continued with future in economic and business spheres.
Part 4 of 4: Old Ways Disappearing In The New Mongolia
Mongolia, the land of Genghis Khan and nomadic herders, is in the midst of a remarkable transition. Rich in coal, gold and copper, this country of fewer than 3 million people in Central Asia is riding a mineral boom that is expected to more than double its GDP within a decade. The rapid changes simultaneously excite and unnerve many Mongolians, who hope mining can help pull many out of poverty, but worry it will ravage the environment and further erode the nation's distinctive, nomadic identity.
Last of four parts
May 24 (NPR) Mongolia is a country of tremendous contrasts. Consider this: Two out of every five Mongolians make their living herding goats, sheep and camels.
But last year — according to World Bank estimates — Mongolia's economy grew faster than any other on the planet, driven by a mining boom.
The Central Asian nation seems to be racing from a nomadic culture to an industrial one practically overnight. To appreciate how this transition — and its inevitable tensions — play out in the lives of ordinary Mongolians, spend a few hours with Bat-Erdene Badam and his family.
Bat-Erdene, 47, is a lifelong herder who lives in a ger, or a yurt, in the middle of the Gobi. He spends each spring combing cashmere from his goats. On a recent day, a goat lies stretched out on its side in a ger, its horns tethered to the ground. A fellow herder rakes off tufts of white cashmere with what looks like a gardening tool as the goat yelps in fear.
Bat-Erdene sells the cashmere for about $20 a pound. Combings from his 300 goats should bring in more than $6,000 this year.
That's decent money in the middle of the Gobi, a mix of moonscape, mountain and increasingly arid grassland in southern Mongolia. But Bat-Erdene's three children have no interest in the family business.
"Young people stopped herding animals," says Bat-Erdene, leaning against the wooden gate of a corral filled with goats. "There are lots of employment opportunities for them in the mining business. Therefore, I could probably say that the generation of herders is ending with me."
A Mix Of Old And Modern
Bat-Erdene heats his felt tent with an iron stove. Rugs cover the dirt floor, and the walls of his corral are constructed of bricks made from goat and sheep droppings.
But he also rides a motorcycle, uses a cell phone and watches limited satellite TV on a small black-and-white set powered by solar panels.
On a recent day, the romantic comedy How to Lose a Guy in 10 Days plays silently in the background.
Bat-Erdene lives with his wife and a high-school-age son. Their daughter attends college in Mongolia's capital, Ulan Bator, about 300 miles away, and their other son, Uuganbaatar, drives a dump truck at a coal mine.
"Two or three years ago, my elder son used to help us out," says Bat-Erdene, who wears a gray cap and a brown sweater that zips up the front. "Now, he's really tired of being a herder, because we depend too much on the weather and climatic conditions."
Rising temperatures are drying out Mongolia's grasslands, while severe weather is taking a toll as well. In recent years, heavy snow and drought killed more than 400 head of the family's livestock, more than half of their herd at the time. Bat-Erdene says for a new generation, herding seems too unstable.
"When someone has a regular job, it doesn't matter if there's severe weather or not," he says. "He can do his work, no matter what."
A Blessing And Curse
Bat-Erdene's son Uuganbaatar began working at the coal mine about a year ago. He's 22 and, like many young Mongolians, painfully shy.
In an interview outside the gates of the mine, he studies a water bottle he's holding and kicks the ground with his black Air Jordans. The mine is completely isolated in the desert, but Uuganbaatar says he has more friends there and there's more to do.
"I watch TV," he says. "There's a recreation room with ping-pong and pool and there's a computer room."
The camp TV is a big, flat-screen. Uuganbaatar follows sports on the Internet, especially the NBA. His favorite team is the Orlando Magic with its towering center, Dwight Howard.
Mining has been good for Uuganbaatar. He makes $500 a month — in a country where the annual per capita GDP is about $2,500 — and Mongolia's mineral reserves are so vast, he could probably spend the next several decades working them.
But his father sees mining as a threat. Mines need water to process minerals and the mine that employs his son plans to tap into an aquifer beneath the family's grazing land.
The local government had designated the area as protected, but Mongolia's central government has an ownership stake in the mine, and last year, it decided otherwise.
Resignation About The Future
Bat-Erdene is bracing himself.
"It was a very hard hit for us, because it is only going to speed up desertification and we can see how desertification is already moving at a very high speed," he said, surrounded by parched clumps of grass.
Rising temperatures and decreasing annual rainfall has led to more sandstorms, and surface water sources such as rivers and lakes are drying out a rapid rate, according to the Mongolian government and nongovernmental organizations. Mongolian officials say that about 70 percent of Mongolia is now suffering from desertification.
Officials at the mine say it will draw from a deep aquifer and won't affect herders' wells, but Bat-Erdene doesn't believe it.
"Animals will be thirsty, people will be thirsty, it will be very hard," he says. Bat-Erdene supports his son's new career in what is becoming Mongolia's national industry. As to the dispute over water, he doesn't bring it up.
"It wouldn't change anything," Bat-Erdene says, "so we don't talk too much about it."
A New Era for Mongolia's Herders
May 22 (Mongolian Economy) It is typical for desolate, rural areas to go uninhabited. There are almost no other sounds than the bleating of sheep and goats as well as the barking of dogs. Herders live widely spread over Mongolia's vast territory. Some of them occasionally meet in these remote spots while tending to their herds, giving them the chance to exchange some news and information. That news, however, could be weeks or even months old.
Electricity is a main instrument of any developing society. However, without it herders live as if they were blind, deaf and dumb to the world. Sometimes they enter a regional town centre to call on their children who study there and can hear current events then. But most of the time, herding mothers just say their prayers and give their best wishes to heaven. Candle lights are the only rays of light in the dark. When those lights dim, the countryside seems even more silent.
From old to new
Herders in Tsagaanburgastai of Altanbulag Soum, Tuv Aimag, are already settled in their spring camps, where the bells of newborn cattle jingle. The first buds of flowers have appeared and trees have started to sprout their greens. Blades of grass begin to cover the hill and mountain tops, and the world seems to look all the more beautiful for all this green.
The Batchuluun family have been living in the Tsagaanburgastai spring camp and Baamiin Bulga winter settlement for over 40 years. They have a daughter named Oyuntulkhuur and a son named Gan-Od. The family has lived over 30 years without electricity. But today, they are able to enjoy music videos. One big and another smaller battery charger sat underneath their 15 inch television with many electrical wires and cables running in all directions. The two thickest cables follow the ger's pillar up to the light fixture that hung above them. The family was first able to bring electricity to their home after the 100,000 Sun Rays project was implemented in 2002.
"When we didn't have electricity, it was if we were like the illiterate. We didn't have any news or information about anything", said Batchuluun. "We were able to hear some recent news from our children if they were back from the city. I used to ride to the town centre only to hear the cashmere prices. But now we can see not only domestic news but global news as well by watching television".
Today Mongolian herders can now easily trace where their lost cattle have gone to, or hear any news about their sons and daughters.
"When I was a child, it was hard for me to do my homework, because we didn't have electricity", said Oyuntulkhuur.
"A herder's work never ends, you know. It becomes dark before you even notice. Doing homework by candlelight was the reality of our life together. We bought candles from town centres, and we had to save them".
Their son Gan-Od could not fathom life without electricity, however. "It's unimaginable to live without mobile phones or television", he exclaimed.
Who knows, one day herders might use iPads, surf the internet. Herders could only dream of having a mobile phone 10 years ago. It is not so unlikely that these dreams too might come true in the future.
The 100,000 Sun Rays project enabled herders to benefit from the use of electricity and walk hand-in-hand with global development. The project has sparked new development for modern-age herders. There might have been many ups and downs during the implementation of this project, but in the end it brought light into the dark lives of many herders in barren areas. Now you can see two or three cars, a small satellite dish and solar panels outside the many gers of herders.
The history of light
Herders switching on light bulbs in their homes instead of lighting candles became a common thing in 2000. This was a prelude to the government-initiated 100,000 Sun Rays project. Its last phase for this project for the procurement of electricity for herder in rural areas project began in 2008. The project delivered over 25,000 solar panels. The developers of the project said it is not any easy task to accomplish. For example, herders often do not know how to use a solar panel, misplace them, or leave the battery charger out to freeze or spend all its energy.
This project grants nearly every household in Mongolia electricity. Surprisingly, 100,000 solar panels would not be enough for the over 170,000 Mongolian herding families roaming the countryside. The project team conducted a survey prior the programme's implementation, and found out that 10,000 herders live with candles in the 21st century. The rest of them have energy provision.Although today herders can get news and information, they still cannot use a refrigerator, vacuum cleaner, or washing machine.
"This simple project has allowed herders to learn to use solar panels and battery chargers, and given them the opportunity to understand the value of electricity", said Ch. Batbayar, the head of the renewable Energy Department of the Energy Authority.
"Thus, we need to implement more efficient projects. Maybe we can bring refrigerators to these people. During hot summers herders have no other choice than to consume meat in a short period of time. The government and its agencies have to take this matter into consideration".
Can Mongolia become the heart of the world?
May 22 (Mongolian Economy) Sustainable development: These words are just as important to the energy sector as any other. Currently, Mongolia is highly dependent on fossil fuels to meet its energy demands. For example, Mongolia extracts 90 percent of its power supply from coal. When there is additional demand, Mongolia imports energy from its neighbouring countries. Experts warn that this dependency is a weakness to the national security of its energy sector. Well then, is this stable development?
"Sustainable development in the energy sector means a reliable supply for consumers", said the director of the Energy Regulatory Committee, T. Tserenpurev. "Electricity must be supplied to where, when and to whom most need it".
"Further development to the energy sector is a concern for every country. To create sustainable energy development that is suitable to Mongolia, it must develop new policies based on the experiences of other countries and find what suits its policies, strategy and development model best".
The whole world has declared its love for the colour green. The topic has become the talk of the town. The world strives to create a green energy sector with emphasis on renewable energy. The International Renewable Energy Agency (IREA) estimates that 50 percent of world's energy consumption would be generated from renewable energy by 2050.
Mongolia has the capacity to meet all of its energy needs with its renewable energy resources. Mongolia has the second biggest desert in the world after the Sahara, which could provide plenty of solar energy. The Gobi also has great potential for wind power (See Table A). These resources are being utilised little by little.
For example, Newcom is constructing the nation's first wind power plant, which will have a 50-megawatt capacity. There is also the 100,000 Sun Rays project, which was first introduced in 2000. This is just the beginning. Chief Executive Officer of Newcom Group B. Byambasaikhan has said Mongolia could become a paradise for renewable and recycled energy.
Tserenpurev echoed that thought, explaining Mongolia's wind and rays are key to stable development.
"Mongolia has enough renewable energy resources from solar and wind. It only needs development", he said. "However, it's even more important that we develop hydro-electrical plants. As a matter of fact, big hydroelectric plants are considered to be the most efficient method to supplying consumers with reliable energy sources. It also happens to be the reason for the stable development of energy".
Mongolia owns seven power and heating plants that together produce four billion kilowatts of energy every year. However, the nation has imported energy from Russia for the last 40 years whenever consumption has exceeded production capacities.
Consumption in Mongolia is expected to exceed production by 1,128 megawatts during the peak loads by 2020. Although Power Plant No. 5 will have been commissioned by then, energy production still will not be able to keep up.
"Importing energy from Russia isn't as bad as we thought since everything, including the energy sector, is globalising", said Minister of Mineral Resources and Energy D. Zorigt. "However, as we start to think about sustainable energy development, we must reduce our dependency. We must hurry up with the construction of big hydroelectric plants if we are ever to do so."
Talk surrounding construction projects for hydroelectric plants on the Selenge, Orkhon and Egiin Rivers has lingered since 2000. Yet, as usual, politics has halted any progress.
Recently plans to build a chain of hydroelectric plants at the banks of the Selenge River have become a topic for debate. Those working in this sector have carried with them the hope that their dream of having a hydroelectric plant might finally come true ever since President Ts. Elbegdorj proposed to Kuwaiti officials that the two nations cooperate on such a project. The Energy Regulatory Committee is currently procuring the necessary technical details.
Vice Minister of Mineral Resources and Energy T. Enkhtaivan once said in an interview that Mongolia is capable of making up for all it has loss in the past 100 years in just six years time with its potential hydro-energy resources. If this dream comes true, then Mongolia is one step closer to securing its energy needs.
Today, all of the world's combined energy sources are barely enough to supply the world's 10 billion inhabitants. What can we do as that number continues to grow?
The answer is renewable energy, inexhaustible resource from nature. Mongolia happens to have a lot of it. Thus, if we use our resources wisely enough, then Mongolia could become the heart of the world.
"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
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