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Sunday, July 22, 2012

[CPSI NewsWire: DP Controlled Coalition Government Begins Taking Shape]

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

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July 17

Can You Guess the World's Fastest Growing Economy? (No, It's not China)

July 16 (The Atlantic) Mongolia is part of a new class of countries that, like the Middle Eastern states that got rich selling oil to the West, have hitched their economies to resource-hungry China.

If you can make your way into the VIP room on the second floor of the Louis Vuitton outlet in Ulan Bator -- it's near the Burberry store, but the Burberry in Central Tower and not the one at the forthcoming Shangri La resort hotel -- you'll be handed a glass of champagne and asked to gaze upon a special, gem-encrusted saddle made just for this store. It symbolizes "the fusion of the brand's travel heritage and Mongolia's tradition of expert horseback riding," according to a Louis Vuitton press release, and it includes a special container for carrying caviar across the same Mongolian steppe that bred Genghis Khan.

This is the new Mongolia, and it doesn't always look like the old Mongolia. The ancient ways are still here -- though the yurt-like gers that have littered the steppe for centuries now sometimes carry satellite dishes and solar panels -- and why shouldn't they be? Neither Chinese nor Soviet dominance could change Mongolia's famously nomadic, individualistic culture. But, now that it has the world's fastest growing economy, according to NPR, no one is quite sure if Mongolia's breakneck transformation will prove for the better.

Mongolia's rise is about Mongolia, but it's also about an otherwise minor global player that has been pushed and pulled with the fates its two powerhouse neighbors -- China to the south and Russia north -- and rises or falls along with them. Mongolia was a dictatorial, underdeveloped disaster in its 70 years behind the Iron Curtain. Finally democratic and free market, it was perfectly positioned to join China's ascent, but also China's risks.

Mongolia has vast natural resources -- copper, gold, uranium, and perhaps most importantly coal -- and few citizens among whom to divide the spoils. Though it's over three and a half times the size of California, it has a population of only 2.7 million people, fewer than live in just the urban center of Fuzhou, China's 30th largest city.

With China's increasingly insatiable appetite for exactly the minerals that its norther neighbor boasts in abundance, Mongolia is joining a small class of once-impoverished Asian nations that are getting rich by selling to Beijing. Kazakhstan, which was never as Borat portrayed it but wasn't exactly Vienna either, has financed a gleaming glass capital and a nationwide modernization by feeding Chinese energy demands.

Countries like Kyrgyzstan and Uzbekistan are building their economies on China's import market. It's hard not to think of the Persian Gulf states that sold enough oil to the West to transform themselves, in only 50 years, from heavily nomadic and illiterate societies into countries so rich that they have a problem with too many Ferraris on their streets.

The problem is that Mongolia's wealth is not sustainable. If the Chinese economy takes a sudden downturn, as it might, the Mongolian economy could shut down almost overnight. Even if that doesn't happen, there's no question that one day, maybe in 50 years or maybe in 20, the coal mines will empty.

Now that so many Mongolians have abandoned their rural, from-the-land lifestyles to crowd into the rapidly growing capital city, they're dependent on the mineral economy. Many of them may not have an old way to return to should the new way fail them. And with inflation so high, a hard landing could be severely painful.

So, if Mongolia is profiting off of a Chinese version of the same model that made Middle Eastern oil exporters so rich, then it faces a similar challenge: to invest that money into more sustainable industries so that it will have something to fall back on when the buyers go away or the resources run out. There's nothing wrong with Mongolians enjoying the fruits of their new success, but if they put all of their money into gem-covered saddles, then Mongolia's first golden age in centuries could be short-lived.

Link to article

 

Tradition 'Wrestles' With Modernity at Mongolia's Naadam Festival

July 16 (Vanishing Cultures Project) It's a warm July afternoon in Ugtaal County in central Mongolia, and a crowd gathers on the open steppe under a rickety bandstand. I'm here with the Vanishing Cultures Project and videographer Lauren Knapp to document the traditions of Mongolian nomadic herders. In our efforts to research the effects of globalization on this traditional culture, we've found ourselves here this afternoon to record one of Mongolia's centuries-old surviving traditions.

As a Mongolian flag flaps lazily in the breeze, men on horseback and women bouncing babies in their arms gather on either side of a grassy causeway created by two lines stretched between wooden stakes. Suddenly, dark dots appear on the horizon, rapidly cresting the hill one after the other. The crowd's excited chatter rises by a few decibels, and as the dots come closer, their shapes become distinguishable against the electric green of the valley -- they are horses, and this is Ugtaal County's race of stallions. The crowd at the finish line begins to cheer the winners home.

Horse racing is part of the trifecta of "manly sports" that make up Mongolia's annual Naadam, a nationwide sports festival that is seeing a recent resurgence in popularity. The "three manly sports" of horse racing, wrestling, and archery are all ancient military arts that have been practiced for centuries as a requisite part of Mongolian warrior culture. Today, these sports are celebrated during Naadam -- named after the verb naada, "to play" -- as cornerstones of Mongolian heritage.

Like Ugtaal, every county and province hosts its own Naadam in early July to select finalists to compete at the national Naadam, which takes place on July 11-13 each year in Mongolia's capital, Ulaanbaatar. As a national holiday, shops close, workers head home, and people refer to it as the best time of the year.

"The three manly sports are a source of pride for Mongolians because they're such old traditions, and they've been happening for so many centuries," says Battulga, the mayor of Ugtaal. "Everyone waits the whole year to see these sports, and once Naadam is over, people start waiting eagerly for next year's Naadam."

The tradition of Naadam can be traced back to the 13th century, when Chinggis Khan threw them as celebrations of successful military campaigns. Returning warriors marked their victory by drinking, eating, wrestling, and showing off their manly skills. Eventually, this also became a way to train young men in the military arts. Centuries later, after Mongolia's socialist revolution of 1921, Naadam became institutionalized as the official celebration of the people's army, and it took on the organized form of competition that is seen at modern Naadams today.

"I have always participated in Naadam, every year," says Gantumur, a lifelong resident of Ugtaal. "There was a time when not many people participated in Naadam. But now it's getting better, more people are becoming involved."

Mongolia is experiencing a cultural revival: while an economy estimated by the International Monetary Fund to be the fourth-fastest growing in the world launches Mongolia onto the world stage, feelings of nationalism are driving people to reclaim a Mongolian heritage and identity that were actively effaced during the Soviet Era of the 20th century. And Naadam, as a direct line to Mongolia's rich cultural past, is a natural choice for a celebration and show of cultural pride.

Each of Naadam's three manly sports is steeped in historic tradition. Wrestlers wear an age-old costume of leather boots, open-front jacket, and briefs, all embroidered with traditional patterns. Archers compete in silk and brocade deels, the traditional Mongolian robe. As is the ancient practice, Mongolian horse races require child jockeys, and before each race children aged seven to twelve gather on horseback to sing the Giigoo, a folksong of praise, to their horses to urge them to do well.

But amidst the throwbacks to ancient culture, signs of modernization dot the holiday landscape both locally and nationally. Food trucks set up shop around the Naadam stadiums, selling Coca-Cola, plastic toys, and ice cream bars to the revelers. Teenagers on horseback chat on cell phones, and mothers in traditional deels strut by on spiked heels. All across the countryside, harbingers of an economy growing at break-neck speed make their appearance in Western commodities, fashions, technologies, and tastes. But as Mongolia ushers in this new market-economy culture, perhaps the traditions of the past will continue to inspire pride in the generations to come.

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Mongolia Democratic Party in coalition talks with anti-mining group

ULAN BATOR, July 17 (Reuters) - Mongolia's Democratic Party, which failed to win an outright majority in last month's elections, will discuss forming a new coalition government with a controversial party opposed to foreign mining, members said on Tuesday.

Mongolia has some of the world's biggest unexploited mineral deposits and is one of the hottest destinations for mining investment, resulting in its economy growing at more than double the pace of neighbouring China in the past year.

New Democratic MP Tsedevdamba Oyungerel told Reuters the party was in talks with the Justice Coalition to form the next government following inconclusive elections held on June 28.

"They (a five-member working group) are open to any party, but I think we are going to the Justice Coalition because they offered first," she said, but added nothing had been finalised.

The Justice Coalition consists of the Mongolian People's Revolutionary Party (MPRP) and the Mongolian National Democratic Party (MNDP), and both have sought to reverse policies they believe to be over friendly to foreign mining investors.

More than a quarter of the 76-seat parliament is now held by politicians who advocate local control of mines.

The broadly free-market Democratic Party won 31 out of 76 seats, eight short of an overall majority. The Justice Coalition picked up 11 seats, causing concern among foreign investors that a new dose of resource nationalism was likely.

The MPRP is led by former president Nambar Enkhbayar, controversial figure in Mongolian politics whose ongoing corruption trial has turned him into both a pariah for some and a hero for others.

He has called for the $13 billion Oyu Tolgoi copper and gold mine project with Ivanhoe Mines to be renegotiated to grant better terms to the government, and also wants to keep the coveted Tavan Tolgoi coal mine, potentially one of the world's biggest coal suppliers, in local hands.

Rio Tinto has a majority stake in Ivanhoe and has full operational control over the Oyu Tolgoi mine, which is due to start production this year.

"The DP assembly voted to create a coalition government with the MPRP-MNDP coalition. The next step would be for the sides (to) sit down and work on terms of (a) coalition agreement," Enkhbayar Batshugar, the former president's son, said in an email.

But sources said Enkhbayar could be a potential stumbling block in any coalition agreement. He and his family have angrily accused the current president, the Democratic Party's Tsakhia Elbegdorj, of fabricating graft charges against him in order to undermine his political fortunes.

The DP group in parliament has also nominated party chairman Norov Altanhuyag to serve as the country's next prime minister, said reports leading news portal news.mn.

The 54-year old mathematician and career politician has held several high posts, including Deputy Prime Minister in the outgoing government and Minister of Finance from 2004 to 2006.

Mongolia's economy, driven largely by mining development, grew at a roaring 16.7 percent year-on-year in the first quarter of 2012, according to the World Bank.

In the run-up to the election, nationalist politicians introduced a law to cap foreign investment, but it was later relaxed to allow overseas firms to own more than 49 percent in Mongolian deposits with parliamentary approval. Foreign state-owned companies need parliamentary permission to invest at all.

(Additional reporting by David Stanway in BEIJING; Editing by Michael Perry)

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July 18

Get Dirt-Cheap Critical Metals Exposure in Mongolia: James Passin

July 17 The Critical Metals Report: James, in your last interview with The Critical Metals Report in February, you believed that there would be a large number of mergers and acquisitions (M&A) this year. We have seen some activity, but nothing unprecedented. Is that investment thesis still intact?

James Passin: The European sovereign fiscal crisis, which has raised questions about the liquidity and solvency of some of the largest banks in the world, has delayed any merger wave. The availability of credit to fund corporate acquisitions is certainly tighter than it would be otherwise, and this has led to a level of defensiveness by cash-generating mining companies. However, at the end of the day, interest rates are low, there is credit available for the larger companies and equity valuations are cheap.

TCMR: Which commodities sectors show the most M&A potential?

"It's very clear that a long-term secular bull market started in Mongolia in 2006. I believe that this bull market will last for decades."

JP: There should continue to be a lot of M&A among mid- and small-cap oil companies. There have been some coal mergers that didn't really work from a capital markets perspective, and weakness in coal prices has slowed everything down, but the coal M&A story should eventually rebound. Consolidation will continue in the more obscure commodities as well.

TCMR: Firebird manages a portfolio of private equity funds that invest in Mongolia. How is the Mongolian government handling the country's growth?

JP: Regardless of any political theatrics, my expectation is that the Mongolian government will continue to create and implement policies that support growth and long-term stability in the country. It is critical that Mongolia continues to build the physical infrastructure, financial institutions, human resources and legal framework necessary to unlock the almost unfathomable immensity of its full economic potential. We think the relative political merits of Mongolia compared to other resource-rich frontier markets will become even clearer over time.

TCMR: Some investors will get skittish when they hear the words "investing" and "Mongolia" in the same sentence. How would you assuage their concerns?

JP: Frankly, it's hard for me to fathom why somebody would not want to make investments in Mongolia. The biggest risk, in my view, is to miss out on the great bull markets, where real wealth is generated. It's very clear that a long-term secular bull market started in Mongolia in 2006. I believe that this bull market will last for decades.

Compared to many other frontier markets, the political risk in Mongolia is less extreme. Mongolia has an ethnically cohesive society and a strong democratic political institution. Mongolia's young population is hungry for growth and entrepreneurial opportunities; the nation's vast untapped natural resources serve as a means to those ends.

At the height of the Mongolian Empire's historical power, Mongolia effectively dominated the entire world economy. In my view, it is irrational not to risk at least some capital in the new, emerging Mongolia—the world's fastest-growing economy.

TCMR: Firebird started in 1994 by investing in publicly traded companies in Russia. It later followed a similar strategy in the Baltic states. How did those experiences shape your current investing strategy in Mongolia?

"New technology increases the likelihood of success, decreases cost and results in higher returns. The application of technology will continue to have a transformative effect on Mongolia."

JP: My partners started investing in Russia right after privatization. That strategy proved to be brilliant in that environment: They would get in early and acquire shares while capital markets were still in a state of chaos. Anyone who was able to get exposure early and hold it made fortunes. The key was to get in before there was enough transparency to enable high-quality research from brokers, pipelines of investment banking products and all of the sell-side information that's available in developed markets. When that is absent, it creates the opportunity for those willing to risk capital to get cheap exposure to securities. Eventually, as the transparency increases, research increases and the ability of investors to properly value securities increases. That results in increased liquidity and M&A from international companies, while international listings create exits for early investors.

TCMR: What role is technology playing in creating investment opportunities there?

JP: We find that automating more processes results in huge increases in efficiency and reduces waste. New technology in mineral exploration increases the likelihood of success, decreases cost and results in a higher return on invested capital. The application of technology will continue to have a transformative effect on Mongolia.

TCMR: Russia, the Baltic states, Mongolia—what's next?

JP: North Korea. It's no secret that Firebird Global II, which is one of the funds I manage, has investments there. North Korea is a very interesting country with a much larger population than Mongolia. It has huge known, but undeveloped, mineral deposits. It has a strategic location with deepwater ports and sophisticated manufacturing and technology emanating out of the military-industrial complex. The nation has the potential to be an economic tiger.

TCMR: What are some off-the-radar commodities where you continue to see investment opportunity?

JP: Beryllium is a metal that many governments deem "strategic." It is used in military aviation, has outstanding thermal properties and is also very lightweight and strong. It's also used as a copper alloy for pipes in deep gas exploration. It's transparent to x-ray radiation and reflects neutron radiation, which makes it very useful in various nuclear and space applications.

"Beryllium is going to play a critical role in enabling the movement of industrial activity beyond the earth's surface."

I have a very long-term, constructive view on space exploration, militarization and commercialization. Beryllium is going to play a critical role in enabling the movement of industrial activity beyond the surface of the earth. Some new energy platforms, like space-based batteries that convert solar energy into microwave radiation, will likely use beryllium as one of the component atoms in a matrix metal used as an absorbing medium. This might sound like science fiction, but once new energy technology becomes commercialized, it will proliferate quickly.

I would mention one company, IBC Advanced Alloys Corp. (IB:TSX.V; AALF:OTCQX), which was co-founded by Firebird Global Fund. It has acquired some various beryllium manufacturing and processing distribution companies, as well as some highly prospective beryllium exploration properties. It's building a vertically integrated beryllium business. The company has a low valuation in light of its revenues, cash-flow streams and near-term growth prospects. I believe that there is multi-decade upside for the company.

TCMR: IBC has a proprietary Beralcast technology, which combines beryllium and aluminum into an alloy. Is there any competition for that technology?

JP: Materion Corp. (MTRN:NYSE) has a product called AlBeMet. There are other alloys without beryllium that could be used in various applications. It is very difficult to find other composite metals that have the same performance characteristics as beryllium-aluminum composite metals, especially in military aviation. IBC's Beralcast, unlike AlBeMet, is castable, so it opens up the possibility of lower-cost applications in commercial aviation. That represents a massive growth opportunity. Furthermore, if IBC is able to make a discovery at its Spor Mountain extension property in Utah, it could build its own processing facility.

TCMR: At what stage is that property now?

JP: It's still in the early stages of exploration, but it is quite prospective. It completely surrounds Materion's Spor Mountain, which is the source of 60% of the world's beryllium. As a shareholder, our hope is that the property controlled by IBC contains an extension of the Spor Mountain property that is potentially even larger. There needs to be more exploration before we have any sense about its commerciality as a beryllium deposit.

TCMR: What other critical elements do your funds have exposure to?

JP: We have some exposure to fluorspar, which is needed to make hydrofluoric acid for processing uranium, making aluminum and other metallurgical processes. It's the ultimate source for hydrofluoric carbons, which are used as a refrigerant. It's ultimately an exciting play on refrigeration and air conditioning demand in China, which drives fluorspar production.

There are a lot of interesting opportunities outside of China, such as one of our Mongolian holdings, Berkh Uul JSE (BEU:MSE). It controls a formerly producing beryllium mine in the Delgerkhaan, a Mongolian fluorspar deposit. We're in the process of studying it and completing some exploration. We're looking at potentially getting the mine back into production.

TCMR: You get involved in these companies in a big way—this isn't just a 3–4% stake.

"Don't lose faith in ideas that are clear, but don't get captured into chasing ideas that are popular. Critical commodities will remain an important investment story."

JP: One of our core strategies is to take the largest possible stake in underperforming and severely undervalued companies. In particular, we will improve a company's affairs through activism and bringing in new management, ultimately enabling an exit for our funds.

TCMR: One could argue that there's less risk if you're effectively controlling the decisions that the company is making.

JP: Obviously, the key is to develop the backbone and professional expertise to support the decision-making process. I don't want to gamble that a stock is going to go up or down in the short term. I take a long-term strategic stake in a company and look for situations where there is a clear potential to consolidate fragmented industries and create the circumstances under which we can enable a revaluation and exit over time.

TCMR: Do you have some final thoughts for us?

JP: It's very important to take a long-term view and to get positions ahead of everyone. Don't lose faith in ideas that are clear, but don't get captured into chasing ideas that are popular. Critical commodity stories, especially commodities essential to new technological innovations, will remain an important investment story for the foreseeable future. There could be huge fluctuations in commodity and stock prices in the short term, so the key is being able to survive until the positions reach their true value.

TCMR: That is sound advice. Thanks.

James Passin joined Firebird in 1999. He co-founded and manages Firebird Global Fund, Firebird Global Fund II, Firebird Mongolia Fund and Firebird New Mongolia Fund. Passin is a graduate of St. John's College, where he majored in philosophy and classical literature. He serves on the board of directors of several Mongolian and Canadian companies, including Sharyn Gol JSC, Baganuur JSC, BDSec JSC, National Investment Bank of Mongolia and Undur Tolgoi Minerals Inc. Passin is also the chairman and CEO of Vanoil Energy, Ltd., a Canadian oil exploration company focused on Kenya and Rwanda, and the non-executive chairman of Fluormin Plc, a U.K. company listed on the London Stock Exchange's Alternative Investment Market. Passin was named "Fund Manager of the Year" at the 2012 Mines and Money Conference in Hong Kong.

Want to read more exclusive Critical Metals Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators and learn more about critical metals companies, visit our Critical Metals Report page.

DISCLOSURE:
1) Brian Sylvester of The Critical Metals Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None. 
2) The following companies mentioned in the interview are sponsors of The Critical Metals Report: IBC Advanced Alloys Corp. Streetwise Reports does not accept stock in exchange for services. Interviews are edited for clarity.
3) James Passin: I personally and/or my family and/or funds that I manage have a beneficial interest in the following companies mentioned in this interview: IBC Advanced Alloys Corp. and Berkh Uul JSE. I personally and/or my family was not paid by any company mentioned in this interview. I was not paid by Streetwise Reports for participating in this interview.

( Companies Mentioned: BEU:MSE, IB:TSX.V; AALF:OTCQX, MTRN:NYSE, )
Read more: http://feedproxy.google.com/~r/TheGoldReport-StreetwiseExclusiveFullArticles/~3/qZSiqe7yelA/13894#ixzz20w2aiJVi

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Round Table Pizza is First to Expand into Mongolia with Ten Restaurant Development Agreement

ULAN BATOR, Mongolia, Jul 17, 2012 (BUSINESS WIRE) -- Round Table Pizza, an American pizza restaurant icon known for gourmet quality and fresh innovation, announced the signing of an exclusive agreement with Mongolia International Food Holding to develop 10 restaurants in Mongolia. Round Table Pizza's entrance into Mongolia is a first for any major restaurant franchisor and reflects the growing importance of Mongolia in international commerce as it continues to develop its natural resources. The first Round Table Pizza restaurant is expected to open in Ulan Bator in September 2012. The announcement brings the total number of international Round Table Pizza restaurants operating or slated for development to 47.

"We continue to see increased interest from abroad as entrepreneurs recognize the value in our brand," notes Round Table Pizza CEO and President Rob McCourt. "We are eager to work with partners, like Mongolia International Food Holding, who have the skills and resources to bring our core values of dedication to families and serving a superb pizza to a larger global audience."

"We are excited to bring the great taste of Round Table Pizza to Mongolia," said Mr. Ali Ghali, CEO of Mongolia International Food Holding. "Round Table Pizza is dedicated to bringing its quality ingredients and superior tasting pizza to Mongolia. The food and beverage market in Mongolia is very promising and has a large potential for growth."

About Round Table Pizza

Founded in California's San Francisco Bay Area, Round Table Pizza was founded in 1959 to create a place where families could relax and share a superb pizza. Today Round Table Pizza remains true to its founder's vision with 450 restaurants across the western United States and the world. Round Table's signature tagline, "The Last Honest Pizza", describes its commitment to quality and authenticity.

About Mongolia International Food Holding

Mongolia International Food Holding ("MIFH"), based in Ulan Bator, was founded by partners from Mongolia and the Gulf Cooperation Council. MIFH is an investor, developer and operator of international fast food franchise businesses across Mongolia and Central Asia.

Upcoming Area Licensee Events

Round Table will be in Chile, Panama and Columbia in late August 2012 for an IFA trade mission. For details, contact William Gabbard at +1 303-829-4227 or wgabbard@edwardsglobal.com.

SOURCE: Round Table Franchise Corporation

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Conclusion of Kharkhorin Main Hospital Water Purification Project - Mongolia

July 17 (Appropriate Projects-Nicholas Swope) The project was to purchase and install a four-filter water purification system to provide safe water for the hospital.

Nicholas reports:

The water filter was successfully installed in a high traffic area in our hospital. The community members and the hospital workers were and still are very excited to drink the clean water. The clean water is primarily being used for drinking and secondarily used for cooking in the kitchen.

The dispenser has two valves, one that dispenses hot water and one that dispenses cool water. A local colleague and I have been counting the usage of each valve. The hot water valve is used 96% of the time and the cold water valve is used only 4% of the time. We hypothesize that cool water consumption will increase as people realize that drinking this cool water isn’t dangerous.

These are a few translated comments from community members:

“This is the first time I have drink water at the hospital, it is very nice.” 
“This water will be nice in the winter; while I am waiting for the doctor I can drink hot water.” 
“With this (filter) I don’t have to buy bottled water, it’s right here.”

A week after the installation I gave maintenance training to the two workers placed in charge of the dispenser as well as the office staff in charge of re-supplying the filters. This filter unit has high quality parts thus shouldn’t require much maintenance. Changing the filters is the only regular procedure to insure the clean water. All of the other parts are designed for years of use.

The next phase of this project is advertising and telling the community as a whole about this water filter. The filter purification descriptions will be printed and posted beside the filter. This will allow for easy readability when people are getting water.

It is important for this project to not only provide clean water to people visiting the hospital but to also get the community thinking about always using clean water. There will be a list of simple questions posted next to the water filter for people to think about. Examples would be: Does boiling your water remove the metals from the water? How many minutes does it take boiling water to kill the contaminants like giardia?

We wish to thank Nicholas for completing this project, and again extend our gratitude to the Elmo Foundation for providing the funding.

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Euromoney magazine named Khan Bank as the “Best Bank” in Mongolia

July 10 (Khan Bank) Khan Bank has been named as the  “ Best Bank “ in Mongolia by the world leading magazine named Euromoney in its Awards for Excellence 2012. This is the 6th year that Khan Bank won this award.

Based on bank’s financial strong balance sheet, success of the year, commitment to economic development as well as newly introduced products and service, Euromoney magazine announces “World’s best bank”, “Regional best bank” and “Best Bank” every year.

Khan Bank, with 500 branches and 260 ATMs connected with 100% real time network across all of Mongolia with more than 4000 employees, is the leading bank in Mongolia, providing comprehensive financial and banking services to its 1.8 million customers, fulfilled above requirements.

This year Khan Bank received numerous prestigious awards and to name some of them is the best bank award among the Top-5 commercial banks and “Excellence in Corporate Social Responsibility”.

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GIEWS Country Briefs – Mongolia

July 11 (FAO Global Information and Early Warning System on Food and Agriculture)

Reference Date: 11-July-2012

FOOD SECURITY SNAPSHOT

Good rains favour the current cropping season

Record cereal harvest was estimated for 2011

Livestock numbers have partially recovered but still remain below the pre-2009 natural disaster levels

Prices of rice and wheat flour have remained stable for several months but overall inflation is over 15 percent

Good rains favour the current cropping season

Planting of the 2012 main season crops, mainly wheat, was completed in May. Based on remote sensing data, good rains since the start of the cropping season (April-June) and satisfactory vegetation conditions, point to a favourable situation for the 2012 cereal crop.

Record cereal wheat in 2011

The 2011 wheat production was officially estimated at a record level of 435 889 tonnes, 26 percent up from the previous year’s good output, mainly reflecting an increase in the planted area.

Wheat and rice are the two main cereals imported. Owing to the record wheat harvest in 2011, the total cereal imports for the 2011/12 marketing year (October/September) are forecast at 116 000 tonnes or 19 percent below the previous year’s level.

Livestock numbers have partially recovered but still remain below the pre-2009 natural disaster levels

The total livestock and breeding animal numbers have recovered since theDzud in 2009/10 but are still below the pre-disaster levels. At the end of 2011, the total number of animals was 36.3 million down from 44.0 million at the end of 2009. Similarly, breeding stock heads are currently estimated at 13.1 million down by 2.2 million from 2009. The livelihood and food security of the affected half a million rural people because the 2009/10 Dzud are slowly being restored.

According to the National Statistical Office of Mongolia, the country experienced a growth in GDP of 16.7 percent in the first quarter of 2012, mainly due to favourable international prices of its export commodities, copper and gold in particular.

Prices of rice and wheat flour have remained stable for several months but the overall inflation is over 15 percent

The year-on-year consumer price inflation (CPI) in May 2012 was estimated at 15.4 percent. However, the price for wheat flour, the main food staple in the country, has remained relatively stable since November 2011 and in May 2012 it was almost 4 percent below the same month last year. The country imports about one-third of its annual wheat consumption requirements, and the recent price declines reflect the trend in the international markets in the past months.

Similarly, prices of rice show comparatively stable trends in recent months.

Bread prices, generally subsidized in the capital city Ulaanbaatar, are more stable and below the wheat flour prices.

In May 2012, prices for beef and mutton were 66 and 75 percent higher respectively than a year earlier, due to increased demand and the exceptional livestock losses following the Dzud in 2010. The prices in Ulaanbaatar capital city market follow the usual seasonal lows during October-December and highs during May-July.

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Mongolia's new rulers may put world's richest coal deposit beyond reach

July 16 (mining.com) The coalition that will rule Mongolia for the next four years – the Democratic Party and a splinter group of the former majority party called the Mongolian People’s Revolutionary Party – is stacked with resource nationalists after an election that placed rising inequality in the nation of fewer than three million people front and centre.

The Democratic Party which campaigned on sharing more of the spoils of mining with Mongolian citizens won the majority of seats while the MPRP – led by a former president Nambaryn Enkhbayar – bases its whole doctrine on taking back foreign-owned mines.

Foreign investment nearly quadrupled to $5 billion last year according to official government data and as "mining money pours in, Ulan Bator has the air of a boom town with cranes and building sites dotting the horizon, a shiny Mercedes dealership and a Louis Vuitton boutique,"Euronews reported during Hilary Clinton's visit to the country last week when she called Mongolia a democratic model for Asia.

Enkhbayardescribed as a larger-than-life character and the country's most popular politician, is currently facing corruption charges which he says was only brought to keep him out of politics.

According to the Financial Times blog Enkhbayar advocates making Tavan Tolgoi – the world's richest met coal deposit holding some 6 billion tonnes – 100% state-owned.

Enkhbayar told Reuters as votes were counted: "For an initial period of 20 years it can be privately owned, because it was privately discovered. (Foreign companies) can invest in it, get their money back and make a profit but starting from the 21st year they should give it back to the Mongolian side."

The statements for the foreign press are tame compared to what the MPRP told voters on a campaign website. In the vernacular the party called ruling politicians the pawns of “shadow masters” referring to the foreign owners of Oyu Tolgoi and scaring to death the "few oligarchs who are getting filthy rich from this [Tavan Tolgoi] deposit.

In March Mongolia put on hold plans to privatize its Erdenes Tavan Tolgoi coal-mining company which controls the bulk of Tavan Tolgoi.

The country was hoping to raise $3 billion putting the valuation for the company at $15 billion through a listing in London, Ulan Bator and Hong Kong by selling a roughly 20% stake to investors.

The state would've held onto 51% and distributed the remaining shares to Mongolians. Rather than wait for an IPO, it put in place a program before the elections whereby citizens could sell allocated shares back to the state for  $750 (a cool million in the local currency, the tugrik) in cash. More than half of the country opted for the cash, handing the government a bill of roughly $1 billion, or 10% of the country’s economy, Globe & Mail reported at the time.

Also in March Mongolia stopped all talks with international miners on developing the western Tsankhi block of Tavan Tolgoi which on its own holds 1.2 billion tonnes after a shambolic bidding process that stretches back as far as 2007.

Mongolia is walking a diplomatic tightrope with Tavan Tolgoi. Aside from closer ties with China it wants to use the project to strengthen its longtime political and cultural links with Russia and at the same time make room for the US as a geopolitical balancer in Asia.

Mongolia’s National Security Council rejected a development deal struck with US giant Peabody Energy, Shenhua and a Russian-Mongolian consortium mid-September 2011, just two months after they were announced as winners. At the time losing bidders from Brazil, India and South Korea raised serious concerns and Japan went so far as to call the bidding process ‘extremely regrettable’.

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TEXT-Fitch Revises Winsway's Outlook to Negative on Profit Warning

(The following was released by the rating agency)

HONG KONG, July 18 (Fitch) Fitch Ratings has revised Winsway Coking Coal Holdings Ltd's (Winsway) Outlook to Negative from Stable, due to its worse-than-expected performance resulting from current coking coal price volatility. The agency has also affirmed Winsway's Long-Term Foreign Currency Issuer Default Rating (IDR) and its senior unsecured rating at 'BB' respectively.

Winsway warned on 17 July 2012 that the company will record a loss for H112, mainly due to lower coking coal prices on weakening demand from steel mills and coke plants under sluggish economic conditions. The company has adopted a strategy of lowering inventory levels to improve its cash balance and to fend off difficult market conditions. Winsway's financing costs for H112 are also higher, albeit one-off, because of its Grand Cache Coal acquisition which concluded in March 2012.

Fitch views that Winsway's destocking, while increasing cash at hand, could hurt profitability in a declining price market as a result of the depletion of higher-cost inventory. Further, the agency does not expect Winsway's current operation to be flexible enough to fully defend itself from a sluggish steel industry. Fitch expects Winsway's profitability and cash generation capability will be affected if coking coal demand does not recover and put a floor under prices.

The ratings may be downgraded if sluggish coking coal demand continues to cause earnings volatility and to impinge on its cash generation capability on a sustained basis. The Outlook may be revised back to Stable if the company is able to manage the industry downturn and hold up its profitability in spite of a difficult operating environment.

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Is there a real estate bubble in Mongolia?

July 18 (CRBE Kazakhstan, Almaty Office and InvestKZ.com) Over the past decade, cheap credit and rising commodity prices in resource rich emerging economies across the world have caused real estate prices to soar in the urban centers of these frontier market countries. Yet, in the aftermath of the 2008 world financial crisis, huge sell offs rocked the property markets of emerging economies across the world as FDI and bank lending temporarily skidded to a halt.

Kazakhstan was one such country that encountered an unforeseen property bubble and financial crisis after nearly a decade of high growth. Driven by an influx of oil related FDI and easily accessible mortgages, land prices in downtown Almaty, Kazakhstan’s largest city, surged a whopping 8000% between 2002 and 2008 while the cost per meter of apartments in the downtown area rose 833% in the same time period*.

However, as the American subprime crisis took effect in 2007 and 2008, the housing bubble in Kazakhstan began to burst, and it did so quickly. By the summer of 2008, housing had dropped 40% from its peak levels and construction developers found themselves with unsold and unsellable apartments in their complexes. A full-fledged banking crisis had occurred in Kazakhstan, and developers struggled to find the financing necessary to finish partially constructed projects. Oil prices had dropped to all time lows, and to top it off, massive currency devaluation ensued, pumping up the cost of construction imports such as lumber, steel, and cement by as much as 20%.

As a country, Mongolia shares many commonalities with Kazakhstan. Both are resource economies, former Soviet satellites, and have similar cultural heritage. In a similar fashion to Kazakhstan, when the price of copper crashed in late 2008 during the global financial crisis, Mongolia's government had to call in the International Monetary Fund for help. Thus, the real question becomes: is Mongolia following a similar “boom and bust” path as Kazakhstan, and if not what differentiates the property markets between the two countries?

The real estate market in Mongolia, especially in the central business district of Ulaanbaatar, has already seen significant capital appreciation, but it is nowhere near to the 30-fold increase in Kazakhstan real estate prices prior to Kazakhstan’s bubble bursting in 2008. More importantly, mortgages for would-be apartment owners became accessible in Kazakhstan in 2002 – the start of their period of high growth. In Mongolia, however, mortgages are just now becoming accessible to the general public and most commercial banks still require down payments of 30% or more up front.

The financial industry in Kazakhstan played a large role in stimulating the property bubble by enabling unqualified creditors to take out mortgages that they couldn’t afford. The global financial environment of cheap credit and competition among national banks encouraged dependence on short- and medium term borrowing through the bond market, rather than dependence on banks’ own internal deposits and savings. In this quantity-driven environment, the way to success was through more borrowing abroad and more lending at home while quality became a secondary matter. This is a phenomenon we have yet to observe in Mongolia.

Clearly, speculation and Dutch Disease contributed to Kazakhstan’s real estate bubble. It was not just one, but many factors, such as oil price fluctuations, inadequate risk management, and currency devaluation that led to the unsustainable nature of Kazakhstan’s real estate market and economy as a whole. Even though the mining industry is certainly not free of risks, it is undeniable that mining will bring a ramp up in GDP and wage growth, and consequently induce higher real estate prices. The news that the government is considering raising state employee wages 53%, doubling state employee wages from 2008 in 4 years time, does not discourage this thesis.

As Mongolia’s property market heats up even more, Mongolia must find the right balance between enabling growth by lowering lending standards and encouraging new home ownership while also managing risk across the mining and financial sectors in the long term.

If you’d like to learn more about news in Mongolia, visit Mongoliana, Mongolia’s premier news source for all things Mongolia. If you’re interested in investing in real estate in Mongolia, check out Mongolian Properties, Mongolia’s leading property developer and real estate agency.

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BILATERAL TREATY MAY BE SOLUTION TO MONGOLIAN STALEMATE

July 17 (allens.com.au) In brief: Partner David Wenger (view CV) and Senior Associates Anthony Lepere and John Koshy look at a major resources company's significant announcement that it has filed a notice of investment dispute on the Mongolian Government under the bilateral investment treaty between Singapore and Mongolia.

HOW DOES IT AFFECT YOU?

A recent announcement by SouthGobi Resources Limited illustrates the possibility of relying upon a bilateral investment treaty as a means of dispute resolution in Mongolia.

Foreign investors should carefully consider the structure of their proposed investments in Mongolia, given the possible availability of bilateral investment treaties.

THE ANNOUNCEMENT

SouthGobi Resources announced to the Toronto and Hong Kong Stock Exchanges on 11 July 2012 that SGQ Coal Investment Pte. Ltd (SGQ) has filed a notice of investment dispute on the Mongolian Government under the bilateral investment treaty between Singapore and Mongolia. SGQ is a wholly owned, Singapore incorporated subsidiary of SouthGobi Resources that owns SouthGobi Resources' Mongolian operating subsidiary, SouthGobi Sands LLC.

In the announcement, SouthGobi Resources noted that:

·         its management has determined that it has exhausted all other possible means to resolve an ongoing investment dispute between SouthGobi Sands and the Mongolian authorities;

·         the notice of investment dispute consists of, but is not limited to, the failure by the Mineral Resources Authority of Mongolia to execute the pre-mining agreements associated with certain exploration licenses that include the area known as Zag Suuj and certain areas associated with the broader Soumber Deposit;

·         the notice of investment dispute triggers the dispute resolution process under which the Mongolian Government has a six-month period from the date of receipt of the notice to satisfactorily resolve the dispute through negotiations; and

·         if negotiations between SouthGobi Resources and the Mongolian Government are not successful, then SouthGobi Resources will be entitled to commence conciliation/arbitration proceedings under the auspices of the International Centre for Settlement of Investment Disputes.

BACKGROUND

Foreign investment in Mongolia

We recently reported that the Mongolian Government has moved to regulate foreign investment in sectors of the economy of strategic national importance. There are also specific provisions that apply where the foreign investor is a state-owned entity. Those provisions are contained in the Law on Regulation of Foreign Investment in Business Entities Operating in Sectors of Strategic Importance (theLaw). The Law establishes a generally applicable regulatory regime under which foreign investment in Mongolia might be refused on national interest grounds.

Bilateral investment treaties

A bilateral investment treaty (BIT) is an agreement between two states under which each undertakes to promote and protect investments made in its territory by people and companies from the other state. BITs generally promote the following key rights and principles:

·         neither contracting state will expropriate, nationalise, or otherwise take over, investments made by nationals of the other state in its territory;

·         the right to fair and equitable treatment for investors, which imposes a corresponding obligation on contracting states to:

o    maintain a stable legal and regulatory framework;

o    respect the legitimate expectations of investors; and

o    deal with investors on a consistent and transparent basis;

·         each contracting state shall ensure that investors from the other state are subject to treatment no less favourable than that which it accords to investors from any third state; and

·         the right to require contracting states to observe obligations entered into.

Bilateral investment treaties in Mongolia

Mongolia has concluded 43 BITs, of which some 37 have come into force. Mongolia concluded a BIT with Singapore on 24 July 1995, and the treaty came into force on 7 January 1996.

Article 1 of the Mongolia-Singapore BIT defines 'investment' to include 'business concessions conferred by law or under contract, including any concession to search for, cultivate, extract or exploit natural resources'. Article 2(1) provides that the Mongolia-Singapore BIT shall apply to investment in the territory of Mongolia made by companies incorporated in Singapore. Accordingly, the activities and operations of SouthGobi Sands may fall within the scope of the Mongolia-Singapore BIT, and the incorporation of SGQ in Singapore may confer standing on SouthGobi Resources to rely upon the Mongolia-Singapore BIT.

As with most BITs, the substantive rights under the Mongolia-Singapore BIT are complemented by a procedural right to enforce them through a system of international arbitration supported by the World Bank.

The substantive rights under the Mongolia-Singapore BIT reflect the key rights and principles typically seen in most BITs. In respect of expropriation, the Mongolia-Singapore BIT provides protection against expropriation or nationalisation of an investment except where such measures are taken:

·         for any purpose authorised by law;

·         on a non-discriminatory basis;

·         according to its laws; and

·         in exchange for compensation.

Such compensation shall, subject to the laws of the contracting states, reflect the value immediately before expropriation and shall be effectively realisable and made without unreasonable delay.

FUTURE DEVELOPMENTS

We will continue to monitor future developments in this area. If SouthGobi Resources and the Mongolian Government cannot reach a mutually acceptable resolution to their dispute within six months, or if the Mongolian Government refuses to negotiate with SouthGobi Resources, then either party may submit the dispute for conciliation or arbitration by the International Centre for Settlement of Investment Disputes. The centre was established by the Convention on the Settlement of Investment Disputes between the States and Nationals of Other States, which came into effect in Washington on 18 March 1965. Both Singapore and Mongolia are signatories to this convention. While the details of conciliation or arbitration proceedings are likely to be confidential, the commencement of such proceedings would probably be disclosed and would, in itself, be a significant development.

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FMG Mongolia Fund lost 2.8% in June 

July 18 (FMG Mongolia Fund) June was an important month for Mongolia as elections took place on June 28th.  There were numerous headlines prior to the election but it seems the two major parties will likely form a coalition government.  The Democratic Party (centre-right) won the general election with their strong democratic modernization and anti-corruption drives. However they fell short of gaining a majority in parliament, with 31 seats secured but less than the 39 required for majority. The Mongolian People’s Party (MPP) (centre-left ex-communists) won 27 seats.  Both parties are concerned about development, resource sector management, economic diversification and social issues. Ideological divide between the parties is very small. Eleven parties and two coalitions contested the elections and the turnout at elections was somewhat low at just over 65% of voters.

The Mongolian Stock Exchange (MSE), announced that on July 2nd the trading hours of the exchange will span 3 hours, from 10am to 1pm.  The National Statistics Office of Mongolia recently reported the strongest Q1 GDP in 10 years at 16.7% y-o-y verses 9.8% one year ago.  The growth was driven by the mining sector, commodity exports and government spending. Mongolia’s mineral exports, a 94% share of total exports surged 20% y-o-y while coal exports jumped +81%, iron ore +43% and crude oil +63%.

Although greater Mongolian stocks are down 45% year to date, we see the current sell off as a significant buying opportunity.

FMG Mongolia Fund lost 2.4% in May

The Fund lost 2.4% compared to the MSE Top 20 (Mongolia Top 20 index) that lost 3.7%.  The performance discrepancies among the Fund’s portfolio that owns 10 names is incredible.  To shed some light on the volatility seen in the Mongolian stock market, we can report that the best performing stock we own gained 5.6% during the month ( a cement producer)  while the worst lost 32% (a  mining company).

The Mongolian economy had its best first quarter in a decade. The economy grew in real terms by 16.7% y-o-y in the first quarter (in nominal terms GDP growth rate stood at 30.2% y-o-y). The growth is mostly driven by the mining sector, commodity exports and government spending. Industry and construction expanded 8.4% year-on-year in real terms, services 18.6%, agriculture 13.6%. Economic growth in first quarter is traditionally somewhat slow as the activities are subdued in mining, construction, agriculture and some other sectors. In 2011, the economy expanded 9.8% in 1Q and accelerated to 17.3% year-on-year by the year end.
The elections are taking place on 28th June so we will report on the outcome and what this means in the next monthly update.

FMG Mongolia Fund lost 3.2% in April

The Fund started to invest its cash during the month.  The model portfolio now consists of 10 stocks and the mining sector makes up about 43%, followed by consumer stocks 39%, construction 10%, finance and real estate at 4% each.

The fund has only bought MSE (domestic) listed stocks in Mongolia. The benefit of our small fund by assets is that we can establish positions among the most attractive domestic growth stories in Mongolia before larger pools of foreign money can enter the market.  Mongolia grabs more and more headlines as we saw the huge mining company, Rio Tinto, take over Ivanhoe that possess huge cobber and coal mining rights in Mongolia. The Chinese have also been trying to buy Mongolian mines outright this month, but the Mongolian Government wants to retain control, at least for now. 

Nobody can compete with the cost-advantage Mongolia has of being located right next door to China, the number one consumer of commodities.

Some recent examples from Mongolia:

China opens a new power plant every week where coal is the source for producing the energy.

Mongolia has 17% of the World’s supply of rare earth metals.

In Ulanbaatar one restaurant group has seen turnover increase by 800% in a year!

The Mongolian government is planning to set up a new $600m sovereign wealth

A Fund, to be launched in July, after the June elections have taken place, Bloomberg reported. The new fund will be used to finance pensions, Also plans to increase the size of its existing stabilization fund from $300m to $500m.

The Mongolia Stock Exchange will be modernized with the help of the London Stock Exchange team currently on the ground in Ulanbaatar.

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July 19

China's Grungy Ambassadors to Mongolia

July 19 (The Walt Street Journal – Ron Gluckman ) Could a Chinese rock band help resolve millennium-old tensions?

History was made last week when a grunge rock quartet performed in Ulan Bator. Banana Monkey only played two songs at a concert that opened the Mongolian national holiday of Naadam, the Olympics of the Steppes that Genghis Khan started. Still, they were China's first band to ever play in Mongolia's main public square during this auspicious festival.

What might seem like a few small steps for the globalization of rock is actually a giant leap forward for Mongolian-Chinese relations, otherwise fraught with tension almost since the beginning of time. Everybody knows the Great Wall was built as a barrier against the Mongols; they invaded anyway, and the two neighbors have been battling ever since.

So China gets little love in Ulan Bator, despite being Mongolia's largest trading partner and a catalyst for a mining boom that has made Mongolia's economy one of the world's fastest growing. Anti-Chinese graffiti is dabbed on the streets of Ulan Bator, and an alarming rise in neo-Nazi groups and the anti-China violence they espouse has alarmed officials on both sides of the border.

"Everybody warned us about the danger of going to Mongolia," said Qiang Fan, guitarist of Banana Monkey, during a show in Beijing before the Mongolian tour. "We've never played outside China. We're a little excited and a little scared. A lot of people say the Mongolians hate the Chinese, but we don't know."

His education came quickly and in shocking fashion. Soon after Banana Monkey finished its short set at the capital square, Mongolia's most famous rapper Gee launched into "Hujaa," his fervent anti-China diatribe. Hujaa is an extremely derogatory term for Chinese that has enormous currency in modern Mongolia.

"I think it opened their eyes," said Brian Offenther, who brought Banana Monkey to Mongolia, and organized a week-long Rock Naadam tour that included TV appearances, charity events and shows at clubs in the capital and the northern city of Darkhan. "But all in all, I think it went very well."

A native of Florida now living in Shanghai, Mr. Offenther previously volunteered with the Peace Corps in Darkhan, Mongolia's third-largest city. Later, he managed bands and covered nightlife in Ulan Bator, where he discovered what xenophobia could be like. A Mongolian Nazi once pulled a knife on him at one rock show. "He said something nasty about foreigners in Mongolia."

Mr. Offenther has brought Mongolian bands to perform in China before, and has even taken Shanghai bands composed of Westerners to Mongolia. But taking a band of Chinese men to Mongolia is something he had never done before, and he admits he was unsure of the idea for a long time. "When you live in Mongolia, you are exposed to attitudes about the Chinese, which are quite negative," he said. "They see China as this giant that is swallowing up Mongolia."

Jack Weatherford, an American cultural anthropologist, explains why this mistrust goes back a thousand years. Some of the oldest carved stones in Mongolia "basically warn against going to China." He added that a local insult is, "you're not Mongolian. It can be worse, like, you are not human, you are Chinese."

Nearly 90% of Mongolians have negative attitudes about China, according to a poll by the Sant Maral Foundation. Some even fret that the Chinese will steal Naadam, also celebrated in China's Inner Mongolia province. Last year, a massive stadium opened for Naadam in Ordos, Inner Mongolia, at a reported cost of $100 million. Formerly part of Mongolia, Inner Mongolia boasts six million Mongols, which may be twice the population of Mongolia but is a tiny minority in that province due to massive Han Chinese immigration. That makes Mongols among the smallest ethnic minorities in China.

Strangely, this provided greater encouragement for Mr. Offenther when he was pondering this cultural crossover. "Most Chinese have never been to Mongolia. If you tell them you were in Mongolia, they say, oh yeah, Huhat (in Inner Mongolia). They don't even realize there is a whole country of Mongolia."

So what did Banana Monkey make of the experience? It played to a crowd of 3,000 Mongolians, and 10 times more on live television. Qiang Fan, the guitarist, termed it all educational and uplifting. "Everyone we met was friendly," he said. "I hope there will be more Chinese young rock bands playing there, bringing our new culture to young Mongolians."

Mr. Offenther hopes to make Rock Naadam an annual event, and increase cultural exchanges. "I'm not naïve. I know rock shows won't cure 800 years of cultural differences," he said. "But I'm hopeful."

Mr. Gluckman is a Beijing-based writer.

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Electricity Exports to Mongolia, China Up Sharply

July 19 (The Moscow Times) Eastern Energy Co. increased electricity exports to Mongolia by 89 percent year on year to 166 million kilowatt-hours in the first half of 2012, the exporter said in a statement.

The company is a wholly owned subsidiary of state electricity holdingInter RAOand is the operator for electricity exports in the Far East.

Eastern Energy said its contracts with Mongolian partners went into effect in 2011 due to the expansion of its region of operations within the Inter RAO group, Interfax reported Thursday.

More than 263 million kilowatt-hours of electricity was exported to Mongolia in 2011, and exports are expected to increase to 320 million kilowatt-hours in 2012. Mongolia uses Russian electricity primarily to cover peaks in demand and to supply power to isolated border areas of the country.

The main customers in Mongolia are the National Electricity Transmission Grid Co. and Western Regional Energy System.

Eastern Energy was set up specifically to supply electricity to China and is the only holder of a contract to export Russian electricity to China.

For its exports to China, the company buys surplus power in the Russian domestic market.

Eastern Energy boosted power deliveries to China by 57 percent year on year to 984 million kilowatt-hours in the first half of 2012, the company said.

Construction of the new 500-kW Amur-Heihe power transmission line, which was finished at the end of last year, made it possible to increase export volumes, the company said.

Eastern Energy plans to export 2.6 billion kilowatt-hours of electricity to China this year, compared with 1.2 billion kilowatt-hours in 2011.

Deliveries are being made under a new long-term contract Eastern Energy signed with the State Grid Corp. of China in February. The contract calls for transportation of 100 billion kilowatt-hours of electricity to China over 25 years.

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Audio: FELLOW ALICIA CAMPI GIVES RADIO INTERVIEW ON MONGOLIAN ELECTIONS

June 29 (East-West Center) Renowned Mongolia expert and EWC Visiting Fellow Alisha Campi gave context to that country’s recent elections in a radio interview with UK-based Monocle Daily. “The relatively low turnout rate,” she said, “indicates that for the Mongolian people, in many cases, they don’t think there is a big difference between the two parties.” Listen to the entire interview here.

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Video: Mongol TV takes small steppes

July 20 (C21TV) THE C21 INTERVIEW: Nomin Chinbat, CEO of Mongol TV, tells C21TV about the development of the country’s television market and the challenges of fostering formats when piracy remains rife.

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Video: Mongolia looks for medals' shine

July 17 (Youtube) Amid the sand dunes and dirt tracks of the Gobi Desert, Mongolia is staking its place at the heart of the Olympics by providing metal for the medals that will be handed out in London.

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Mongolia coalition takes shape, fans fears of resource nationalism

July 20 (Reuters – Micheal Kohn) - Mongolia's Democratic Party (DP), which failed to win enough seats in last month's elections to govern alone, has agreed to form a coalition with populist fringe parties in a move that could worry foreign investors, local media said.

The broadly free-market DP won 31 of the 76 seats available in the June 28 poll, eight short of an overall majority, causing concern among foreign investors that the party would be forced to make concessions to the growing number of "resource nationalists" in the country's parliament.

The new government, to be led as prime minister by DP chief Norov Altanhuyag, will include minority parties such as the Mongolian People's Revolutionary Party and Mongolian National Democratic Party, which both want to limit foreign investment in the booming mining sector, said local news portal news.mn late on Thursday. The coalition deal was struck earlier in the day.

The two smaller parties, which campaign together as the "justice coalition", also want to restrict the number of years a foreign firm can operate in Mongolia and have called for the coveted Tavan Tolgoi coal project to be kept under 100 percent Mongolian control.

They have also demanded a renegotiation of a 2009 government agreement which gave Canada's Ivanhoe Mines, now controlled by mining giant Rio Tinto, 66 percent ownership of the $13 billion Oyu Tolgoi copper-gold project.

"We anticipate substantial pressure for policies to be more populist and resource nationalist which in return will result in (an) elevated level of volatility for global Mongolian resource equities" Ulan Bator-based Frontier Securities said in a note to investors late on Thursday.

"Therefore investors would be well-advised to diversify their Mongolian portfolios."

The new coalition also includes the Civil Will and Green Party, which one analyst described as more closely aligned to the main DP's moderate stance on foreign investment. He said it could help dilute the influence of the nationalist parties. 

"CWGP's policies are closer to those of the DP and reducing the presence of the 'justice coalition' is better news for foreign investors," said Luke Leslie, head of Mongolia and mining investments with private equity investor Origo Partners .

The DP, which will make up 75 percent of the new government according to news portal news.mn, replaces the administration of outgoing Prime Minister Sukhbaatar Batbold of the Mongolian People's Party, which ruled during the nation's communist era.

Riven by a factional split, it will go into opposition for just the second time in its 91-year history.

In 2010, the Mongolian People's Party dropped the word "Revolutionary" from its title to distance itself from its communist past. Later a breakaway faction led by former president Nambar Enkhbayar set up a new political party with the original name: the Mongolian People's Revolutionary Party.

Enkhbayar is currently on trial for five counts of corruption stretching back to his tenure as president and earlier as prime minister. His trial has been postponed several times and it scheduled to convene again at the end of July.

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Memorandum of coalition government signs

July 20 (english.news.mn) Three day negotiation between DP and Justice coalition ended yesterday. Head of working group of negotiation MP Kh.Battulga and other members of Justice coalition-B.Terbishdagva, Ch.Ulaan, G.Gankhuu, S.Demberel of Civil Will-Green Party and Ch.Saikhanbileg of DP informed journalists.

Three political parties who has seats in parliament- DP, Justice coalition and Civil Will Green Party will join in coalition and will form new government said Kh.Battulga. Representatives of three parties a signed a memorandum of establishment of coalition government.

“DP, Justice coalition and Civil Will Green Party respecting Constitution of Mongolian and the nation have agreed to establish coalition government during the term of newly elected parliament. The coalition government will implement mail programs of political parties election platform next four yeats, such as “Mongol citizen” program of DP, “Life” program of Civil Will-Green Party, “Five revolution to save Mongolia” of Justice coalition’ said in memorandum.

Three parties also have agreed to participate as one subject in local election in autumn and presidential election in 2013.

New government structure will be 75:25. 75 per cent belongs to the DP and remaining 25 to other two parties.

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MPP demands negotiation, session broke

July 20 (english.news.mn) The negotiation between Democratic Party (DP) and Justice coalition ended yesterday and today, on July 20 decided to continue plenary session of new parliament. Session announced start at 11 am but Mongolian People’s Party (MPP) members didn’t appeared at the session.

The session suppose to elect Speaker and discuss nomination of Prime Minister.

But MPP’s group argued DP group haven’t negotiated with MPP as said in the Constitution. But DP’s members insisted to continue session to the D.Demberel, former Speaker, who chaired the session. “MPP group explained Constitution wrong. DP has majority seats. As said in certain laws we did negotiation with other parties, MPP members just came and attend the session” said MP S.Bayartsogt.

The session took a break.    

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Farewell, MONGOLIA

By Ambassador Jonathan Addleton

July 20 (english.news.mn) As my posting in Mongolia draws to a close, I want to publicly thank Mongolians living across the country – from Dornod to Bayan Ulgii – for their interest, hospitality and support. 

I will remember many things about Mongolia.  But, perhaps more than anything, I will remember the vastness of the steppe; the beauty of the mountains; the brilliance of the night stars; and the personal kindnesses extended by so many Mongolians at every step of the way.  A sense for the fascinating history and unique culture of this great country will also linger, long after my formal assignment in Mongolia concludes. 

In fact, it has been my privilege to live and work in Mongolia twice – first as USAID country director (2001-2004) and now as Ambassador (2009-2012).  On each occasion, I was able to visit all 21 of Mongolia’s provinces. 

My wife Fiona shares my deep appreciation for Mongolia and our three children Iain, Cameron and Catriona have spent much of their early childhoods in this country, carrying with them memories that will last a lifetime.  As a family, we have slept in gers and camped beside lakes and rivers in every corner of this spacious and beautiful land.  We have also learned from the many Mongolians we have met, at times sharing in their customs, celebrations and rich traditions. 

Earlier this month, we had the unforgettable opportunity to welcome Secretary of State Clinton to Mongolia, a historic visit in which she met with President Elbegdorj, Prime Minister Batbold and Foreign Minister Zandanshatar and also addressed the Executive Meeting of the Community of Democracies as well as the International Women’s Leadership Forum.  

Looking back over the entire span of three years, I am especially gratified by the many concrete ways in which the ties between the United States and Mongolia have become both deeper and stronger: 

-- In 2009, the US Embassy sponsored three Fulbright scholarships for higher education in the United States; for 2011, the figure reached sixteen, including ten scholars funded by the Government of Mongolia.  At this point, at least 1,200 and perhaps as many as 2,500 Mongolians are studying in the United States. 

-- Recently, the first Mongolian was admitted to the prestigious United States Military Academy at West Point.  Over the past few years, many more Mongolians have received private scholarships to attend leading American universities including Harvard, Stanford and Yale. 

-- In 2009, US exports to Mongolia barely reached $40 million; for 2011, the figure surpassed $313 million.  Over the past three years, General Electric opened an office in Ulaanbaatar; Bloomberg Television established a presence in Mongolia; Wagner-Asia launched branch offices in Darkhan and Khan Bogd; and Mongolia signaled its intent to move its national airline MIAT toward an all-Boeing fleet.  Major American companies such as Peabody are now poised to make a highly positive mark, joining with Mongolian partners to bring high safety standards, the latest technology and a long-term commitment to developing Mongolia’s mineral sector in a way that is ethical and reflects concern for the environment.    

-- In April 2010, our Embassy received the first ever “Green Embassy of the Year Award” from the US Department of State, in recognition of our attention to environmental concerns. 

-- In June 2010, Mongolia was one of the first four countries world-wide to receive a large grant under the Ambassador’s Fund for Cultural Preservation, sponsored by the US Department of State -- $585,000 to help preserve and protect Amarbayasgalant Monastery, located in a beautiful valley in Selenge aimag, five hours north of Ulaanbaatar. 

-- In June 2010, the Los Angeles based band Ozomatli visited Mongolia, attracting some 20,000 Mongolians to hear their music in Sukhbaatar Square.  To this day, the Ozomatli concert remains the single largest cultural event that the United States Embassy has ever sponsored in Mongolia. 

-- In November 2010, we welcomed into our home a group of disabled Mongolians representing the Mongolian NGO Wind Bird, returning from a memorable trip to discuss disability issues in the United States.  Throughout my tenure, Fiona and I have sought to ensure the involvement of disabled Mongolians across the full range of Embassy-sponsored programs in Mongolia. 

-- In March 2011, it was my privilege to travel to Kabul to spend several days with the Mongolian soldiers serving there.  The emergence of Mongolia as a “peacekeeping nation” is a remarkable development, most recently resulting in the deployment of the first of what will eventually be 850 Mongolian soldiers serving in the world’s newest nation, South Sudan. 

-- In April 2011, the Embassy launched a $25 million renovation project, symbolizing our continued and enduring commitment to partnering with Mongolia in a wide range of areas. 

-- In June 2011, President Elbegdorj met with President Obama in the Oval Office of the White House in Washington, DC.  During this same visit, he also opened Mongolia’s first Consulate in San Francisco. 

-- In August 2011, Vice President Biden visited Mongolia – the first such visit by a sitting American Vice President in 67 years.  This visit also inaugurated our Embassy use of Facebook and Twitter. 

-- In January 2012, the Mongolian National Archives presented to me – which I in turn presented to our Library of Congress in Washington, DC – a facsimile copy of the travel pass given in 1862 to a “Mr. Felosi,” marking the 150th anniversary of what was very possibly the first American citizen to ever visit Mongolia. 

-- In June 2012, the Millennium Challenge Account (MCA) in Mongolia received the MCC’s first ever “Country Commitment Award”, given in part to recognize the special attention that MCA has paid to gender concerns. 

Over the past year, Americans and Mongolians have together celebrated several notable anniversaries, including the 20th anniversary of Peace Corps in Mongolia; the 20th anniversary of USAID in Mongolia; and the 25thanniversary of the establishment of diplomatic relations between our two countries. 

In celebrating that 25th anniversary of diplomatic ties, I am often reminded of a statement made many decades ago by an American diplomat named A.W. Ferrin.  Serving as a commercial officer in Peking, he argued in as early as 1918 that the United States should establish a diplomatic presence in Urga, as Ulaanbaatar was then known.  According to his message back to Washington, if the US were to open such an office, it would become “a most helpful factor in the development of a wonderful country”. 

Throughout my three-year tenure in Mongolia, I have sought every day to fulfill the promise of that early aspiration – to indeed do my best to ensure that, as a proud partner and friendly third neighbor, the United States would indeed prove to be “a most helpful factor in the development of a wonderful country.” 

Thank you once again for the many kindnesses that we have received over these last three years.  As a family, we wish the people and country of Mongolia every success in the years ahead.  We also sincerely hope that relations between the United States and Mongolia will continue to prosper.

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Italian Visa Centre in Mongolia

July 20 (English.news.mn) As part of the strengthening of bilateral relations with Mongolia, in order to provide better service to tourists, students and entrepreneurs who wish to visit Italy, the Embassy of Italy in Beijing has opened a Visa Center in Ulaanbaatar. Mongolian citizens can therefore obtain any useful information and apply for visas to Italy.

The Ambassador of Italy to China and to Mongolia, Attilio Massimo Iannucci, said: "The opening of an Italian Visa Center in Mongolia is a meaningful sign of the interest of Italy to Mongolia, as it inaugurates a stable presence of Italy in Ulaanbaatar. The Mongolian citizens who are interested in visiting Italy are welcomed address this Visa Center in order to obtain a visa. With the opening of a visa center, the Embassy of Italy will be able to facilitate further exchanges of  Mongolian students, businessmen and tourists to Italy, with important advantages for the bilateral relations."

For more information about the contacts of the Centre and the documents needed to apply for a visa, please visit the internet site: www.vfsglobal.com/italy/mongolia.

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“Education and Development”

July 20 (UB Post - Paul Sullivan, Georgetown University)

If one were to look at just about all of the countries that developed their economies, not just grew them, one would see great strides in education. I do not mean just university education or graduate schools development. Some of the most important educational development can be found in primary education and what we in the United States call the “Three Rs”, which are reading, writing and arithmetic. Never mind that they do not all begin with R. It is the point that these three skills are some of the main building blocks of development of any country. 

One of the problems of deciding what to put a government’s money toward involves what is the return to that money. For education the real return, if it is done correctly, could take many generations. Immediate returns to Mongolia, for example, would look a lot better investing in mining and refining, for example, but the serious long term returns can be found in the intangibles, such as education and the development of creative and critical thinking. 

By education I do not mean rote learning. I also do not mean just copying the ways other countries educate their children and young adults. It is important for Mongolia to find its own way. For example, educating the children of nomadic herders might best be done via the internet and long-distance learning. There may also be great benefits to home learning in some Mongolian environments. 

However, it is very important that all of the children of a country at least have the opportunity for improved education. The real key to a better life for anyone is education. Without it, especially the basic “Three Rs”, a person would be lost in any competition in many fields in Mongolia and certainly with the rest of the world. 

Some in leadership in Mongolia may want to look at how Ireland moved from a relatively poor and agricultural country to an information economy which became globally competitive. I was in school at Trinity College in Dublin when the Irish focus on education really started to take off in the late 1970s. 

What an eye opener. The incredible stress the government put on statistics, computer training, and engineering really paid off. Indeed, they did get caught up in the housing bubbles of the mid-2000s and the financial problems of the Euro zone. However, they will be able to recover a lot faster now with such an educated population than if they did not have one. 

China’s economic development had a lot to do with major policy changes directed at investments, incentives, and so forth. China also massively benefited in the development of its international competitive advantage via its increased investments at many levels of education. It also built on a long history of respect of education that was lost for a while during its “Great Leap Forward”, but was regained after the educational and other policies that Deng Zhao Peng and others forwarded. 

The United States in its early years was fairly poorly educated on average. At the time of our beginning as a nation our literacy rate was about 35 percent. We had very few good universities and our primary and secondary education systems were a wreck or non-existent. Over the years through very good leadership at the local, state, regional and federal levels we have developed the most powerful higher education system in the world. 

China is coming up fast, but how many of their universities can truly compete with Harvard, Yale, Stanford, MIT, Georgetown, Columbia, Princeton and the like? The answer is: more and more as time passes and Americans should wake up to that. 

The French have their great universities. So do the Germans, the English, the Swiss and others in the EU. Norway and the other Scandinavian countries have superb universities. 

Can one think of a great university in Sudan, Kenya, or n the Democratic Republic of Congo? 

India is another education powerhouse with its IITs and other excellent universities. These universities have helped develop, amongst other things, high tech centers such as Bangalore. This was done in a similar fashion to how the Route 128 Technology Corridor was developed with the help of Harvard, MIT, Brandeis, BC, Tufts and others. Silicon Valley in California likely would not be there without Stanford, Berkeley and other great universities nearby. 

Also important in the development of the great universities in the US has been the amazing investments by the private sector and philanthropists over the years. Stanford, Yale, Carnegie Mellon and more were named after industrialists. The University of Chicago and other universities are there in great part due to the financial and other help from the Rockefeller family. 

Maybe the major investors in the natural resources sector of Mongolia should also invest in the most important natural resource of any country: its people. 

Mongolia can look at the many ways education has developed in many other parts of the world. It can also import some of those methods and scholarship, such as via an American University. I taught at the American University in Cairo for 6 years. I am still in touch with many of my former students from even 20 years ago. I know how much that university has added to Egypt. AUC, as it is called, is one of the brightest lights of the education scene not only in Egypt, but for the entire region. If such a university could be started in Mongolia it could make a very big difference in many ways. 

Education, education, education….

It can make all the difference if it is done right – even if it does take a long time to see results. 

Americans and Mongolians need to take note of the strong connections between competitiveness and education. They are not static. We all need to continue to worker harder and smarter on this.

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Mongolia's first wind farm nails finance with help of $85m loans from EBRD

Mongolia’s first wind farm achieved financial close this week with the help of loans from the European Bank for Reconstruction and Development (EBRD), say lawyers working on the deal.

July 20 (Recharge News) The 50MW Salkhit wind farm, 70km southeast of the capital Ulaanbaatar, is expected to supply up to 5% of Mongolia’s electricity when it becomes operational later this year.

EBRD and the Netherlands Development Finance Company (FMO) have put up $85m of debt financing for the $122m project, says legal group Norton Rose, which advised the institutions.

The Salkhit wind farm is being developed by Mongolian project company Clean Energy. It will use GE 1.6MW wind turbines, ordered last year.

EBRD, FMO and GE Pacific Private acquired equity interests in Clean Energy in March, says Norton Rose.

Jeffery Barratt, a partner at Norton Rose, says: “Reaching financial close of this project is a significant milestone for Mongolia’s energy sector as it seeks to reduce reliance on fossil fuels.

“The project is likely to act as a template for further private sector interest in the country’s renewable sector, and demonstrates the benefits that the Mongolian government has derived from putting in place a number of important legal and regulatory measures to support the development of renewable energy.”

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The meat industry: Well done

July 19 (mongolianeconomy.mn - B. Enkhtsetseg) Lan Leach /Technical Assistance Team Leader/

What specific actions has your organization done to improve the quality and efficiency over livestock?

It’s a good question, and we’re often asked that by many different people. First of all, it has to be remembered that our project is not a civil engineering project. We’re not constructing a school or airport. Fundamentally, it’s technical assistance, and technical assistance, by definition, means provision of information, advice, and so on. A lot of our work is teaching, training, and the dissemination of information. 
But I think what that EUR 9.3 million budget, a large portion---EUR 3.4 million—was specifically for equipment. The equipment was various types ranging from computer hardware and software, laboratory wares, freezers and refrigerators, up to very high-tech analytical equipment used in state laboratories, for example. Now that equipment complements a technical assistance that was primary aimed at improving the production of supply of livestock products: meat, milk, hides and skins, wool, even cashmere. 

That’s the objective, to try and improve the production and therefore the markets and incomes for herders and herder households. Those contributions sometimes directly working with herders themselves, but very commonly indirectly by working with veterinarians who treat animals that belong to herders, and to changers and traders who buy some livestock products and the processors of livestock products, including the processor operators, the slaughterers, meat processors, dairies and so on. 

So we have direct and indirect inputs, such as teaching training to veterinarians. We’ve provided a lot of training to veterinarians to improve their skills. It’s not just generally, but to enable the skills so they compare more similarly to international standards. We try to provide levels of skills which are defined by international organizations. The most important one in the livestock sector is the OIE, The World Organisation for Animal Health.

Do you believe your goals are being achieved well?

The monitoring and evaluation is done by various people. 

Some of it’s done internally by the Ministry of Food, Agriculture and Light Industry; some of it’s done externally by the government’s audit department. 

We also do our own internal monitoring. We have our own short-term specialists working in that capacity. But perhaps most important, there is within the EU a special department whose own responsibility is monitoring and evaluating projects. That employs specialists trained in their areas who use fairly sophisticated methods to determine what’s been done. It’s not just to check that the money’s been spent, not just to check that teaching and training courses have been presented, but to go a bit further, and to measure not just to measure the inputs, but the actual impacts. The presentation of a teaching and training course is nice, but did that teaching and training result in something. Were the people on the training able to take advantage of that information and do something better that would not have been possible before? 

That type of very sophisticated monitoring has been undertaken three times, 2008, 2009 and just recently in 2011. So far, the project has been rated very highly. And it’s not just in terms of efficiency and effectiveness, but, most importantly, in terms of sustainability. All projects expect to complete what they’ve been contracted to do. But if they can do something extra to provide for longer-term impacts and sustainability, that’s even better .

How would you rate the level of laboratory testing on livestock? 

The short answer to that is it’s improving all the time. Some of the laboratory resources in Mongolia are very good and compare to international standards. The State Central Veterinary Laboratory in Ulaanbaatar has very skilled staff and some very good physical resources, including some of the equipment I mentioned from our project, and so on. With their resources they are able to examine samples of livestock products and determine incredibly small levels of contaminants, whether they’re antibiotics or residues of various sources in the meat.

Some of the provincial laboratories are now very good. In the places where we’ve been working - Bulgan, Darkhan, Erdenet, Sukhbaatar and Zuunmod - the provincial laboratories are now able to make determinations of things like Brucellosis, and so on. Perhaps it’s not as many samples as they would like, but that’s a problem anywhere in the world. I think any laboratory you would speak to would like more resources, more money, more staff, and more time. These resources are always limited, but the fact is in Mongolia they are getting better. If I compare the situation in Mongolia four years ago, at the start of our project, and think about the state of the laboratories where we work, it’s completely different. I should mention at the places where our project has been working there has been a lot of support from the provincial administrations, who have both provided extra funding (not our project funding) and have provided their own resources to refurbish laboratories, increase their size, increase the standards, and so on.

Can Mongolia attract consumers worldwide?

Yes, it can, and our project has done a lot of work on this. It’s not a simple problem nor a simple opportunity to take advantage of if you’re talking about meat for the catering trade within Mongolia, for tourists and people at expensive restaurants and hotels. There is perhaps potential for an export market but there’s got to be a lot of development in meat inspection. Most countries, certainly in Europe, if the meat is imported from other countries, the meat has got to be accompanied by some sort of certification to ensure that it has been inspected by qualified veterinarians, that has been produced with approved processes, and, perhaps most importantly, that there is some scope for traceability.

That takes me back to one particular point in our project: The project has provided a computer-based identification and registration system, which is a little bit like the identification system that was introduced last year or the general population. 

There is something like that available in Mongolia now for animals where they can be tagged with plastic label under the ear or a microchip under the skin. The information about the animal can be etched on a computer and in the future if there is a problem with the meat or the milk, it could be traced back to a particular animals and owner. That system is not being used at the moment, but the facility is there. I think in the medium-term future that will be introduced in Mongolia. That is essential for providing quality assurance, whether it is provided for consumers in Mongolia or consumers in export markets.

Meat production is still very low and many ask why can’t Mongolia export its meat products to other countries. What is your take on this problem?

I think a lot of the problem is this distinction between productivity and production. There is a lot of meat produce in Mongolia, but then there are a lot of animals, so of course a lot of meat is produced. 

But individually, if you look at the amount of meat produced per animals, the production per animal is rather low. There are a few reasons for that. Generally the environment in Mongolia is marginal. You don’t have a lot of rainfall and you don’t have very abundant pastures. The environment in Mongolia is good for keeping animals but only at a certain level. And in winter if you look at most livestock they lose some 30 to 35 percent of their bodyweight when they lose access to the pastures. So if you have an animal, perhaps a 150 kilogram cattle, which goes, over the course of the winter, to only about 100 kilograms—it’s lost a third of its body weight. 
That’s meat which might have been exported. If you work out the amount of meat lost over winter across the whole country because of the animals losing weight, any economist would see that as a huge waste of meat.

Do you think Mongolia’s problem with prices will be a problem when it begins to export to other countries? Are Mongolian meats too expensive for markets abroad?

The topic of price is very important and the fact is when Mongolian producers see the price of meat in Europe they see a very high price. Then they look at home and see the price is very low in Mongolia and think, well if the price here is very low and the price in Europe is very high then it’s a good business. All you have to do is move it from here to there and you have a very big profit. I think at the moment things like high-quality beef is around MNT 65,000 a kilogramme [compared to MNT 7,000 in Mongolia]. Can you believe that? It’s a big difference. There are even higher prices. There is a very famous Japanese type of cattle that is called Wagyu. It’s very famous because it’s quite distinctive. This is MNT 336,000 a kilogramme. Then you have to think, why is the price so high in Europe? The price is high because production costs are much higher. When you go to a supermarket in Europe to buy a kilogram of meat, you’re not just buying a kilogramme of meat. You’re buying quality assurance. If you buy a very expensive car, you’re buying a reputation that goes behind it. When you buy a brand new BMW or Mercedes you know that car will last you a very long time, and if there is a problem there is a guarantee and you can take it to garage to have it repaired.

In Britain when you buy a kilogramme of meat you have this quality assurance, which you are paying for, that provides you with assurance that if there is a problem with this or that, the problem can be traced back to the company, to the slaughter house, and to the original owner of the livestock.

What markets can Mongolia target?

We shouldn’t forget about Russia. Russia has been a target for export traditionally in the past but that is a rather low-quality, low-value market. But if Mongolia wants to market high-value meat then that will be a challenge because you’re talking about markets in Europe. There are markets in the Middle East, but those are thought of as middle level in terms of value. On the export of meat, I think one thing should be added. Understandably there are some concerns. Of course for many people in Mongolia, herders and so on, the prospect of exporting meat is attractive because they should get some good, high prices. But if meat is being exported, then because production in Mongolia is limited, there could be some impact on the amount of meat available for the local market and the prices could go up. Exporting meat is attractive but it could have implications on the domestic market. 

With respect to this incident in February when meat prices went up, doubling, the government introduced a prohibition on exports of meats. These things are not simple problems. Promoting one sector of an industry can have an impact on other sectors. It’s complicated.

What measure should be taken to promote this industry?

In my experience the fundamental problem for all businesses in Mongolia is the cost of borrowing. About six month it was about in the region of 23 or 24 percent a year. That interest rate is very high. There are not many countries in the world where you have to pay so much for borrowing to run a business. Most businesses need to borrow money because it’s just a part of business. If you’re having to borrow at 24 percent and you’re competing against other countries where they can borrow money at 8 or 9 percent then that makes a big difference on your profitability. This is a problem in particular for Mongolia because in China I believe they can borrow at 5 or 6 percent. That makes a big difference to your profitability even before you start to produce meat or milk. The cost of borrowing is very important and I think that will be the number one problem.
Things have improved. I think four or five years ago the cost of borrowing was even higher. It’s an example of things that are improving, but it’s a factor.

What can Mongolian producers in Mongolia interested in attracting international buyers do to promote the export of their products?

The priority issue is to look at the marketing and the markets. In our project, when we work with the private sector, we always promote the preparation of a business plan. Part of a business plan is development of a marketing strategy. That process of preparing a business plan gives you an opportunity to go through various things in your mind. Then you can start to think about where you will get your materials from.

Going back to the meat sector, in most business one of the most important considerations of the cost of borrowing, is secure access to raw materials. If you are running a business, you need to be able to best sure you can get to your raw materials. In Mongolia the supply of meat is rather seasonal, with most animals being slaughtered in late autumn or early winter. That immediately makes a problem for any normal commercial enterprise. It means you’re only working for a few months every year, and that’s true for most slaughter houses in Mongolia. 

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Any Future for Mongolia’s coal

July 19 (mongolianeconomy.mn – B.Bayartogtokh) The strength of Mongolia’s economy comes from coal. Today coal feeds the state budget instead of copper. The export of coal has increased rapidly, comprising 98.5 percent of the foreign trade of mineral resources and 46.8 percent of total exports. 

Coal-mining firms are prominent taxpayers that act as a main pillar to the economy and create new jobs with high salaries. It is, therefore, undeniable that the coal sector has become the driving force of the economy. 

Participants at the Coal Mongolia-2012 expo called coal the speedometer of Mongolia’s economic growth. However, society demands answers to questions regarding coal production, its effect on the environment and rural development from the owners of those companies.  As we already know, Mongolia has become the closest and the cheapest coal distributor to China. 

China, the biggest market for raw materials in the world, is a leaking pot. Currently Mongolia does not have any other options for export other than China.

“There are reports of around 23 mining resources and 7.8 tonnes of coal reserves that had been legalised last year”, said Ts. Garamjav, vice minister of mineral resources and energy. 

Mongolia’s estimated coal reserves are 175 tonnes. The minister of the minerals sector noted this figure could grow in the future. Mongolia is ranked 15th in the world for coal resources. Could you confidently say that Mongolia could become the Saudi Arabia for coal? 

There are 85 officially registered coal mines in Mongolia, however, the quality of coal varies. Neighbouring China has always been particularly interested in Mongolia’s coal. But China will keep the fires burning even if Mongolia decides to no longer sell to it because China has other suppliers such as Australia and Indonesia to rely on as well. What would Mongolia gain if it no longer exported coal to China? As executive director of the Mongolian National Mining Association N. Algaa said, Mongolia’s economic growth would slow down and the country would suffer. 

Caution

In his speech “The Strategic Development of the Coal Market”, Randolph Koppa, president of Trade and Development Bank of Mongolia, said that in the coming years the future of Mongolia’s coal will depend on the development of China’s economic and industrial growth. He also predicted by 2016 Mongolia would be able to export 50 million tonnes of coking coal to China. At present, a tonne of coal costs USD 50 compared to USD 100 last year. Koppa said if the Chinese economy keeps growing this way the price for coal could rise above USD 100. 

China is the world’s leading consumer of coking coal. China’s iron industry last year grew by 9 percent compared to 6 percent growth worldwide.  The Chinese economy grew by 8.9 percent while Mongolia’s economy grew 17.5 percent last year. 

The amount of coal exports has stirred growth in national foreign trade. However, growth is always accompanied by a fall, said Koppa. The question is whether Mongolia can have a soft landing. Coking coal prices are falling on the global market. The Central Bank of China has adjusted its policy rate. The growth of manufacturing in China is also contracting. These could affect Mongolia’s coal sector as well. Thus, the coal kingdom might be short-lived. But those setbacks might also be temporary. 

Erdenes Tavan Tolgoi, which holds a coal resource of 6.4 billion tonnes, has plans to offer its shares on the foreign market by 2013. The company’s reserve is just a fraction of Mongolia’s 162.3 billion tonnes of coal. China has always been a big investor in Mongolia, investing USD 6.3 billion last year .

“About 11 percent of China’s coal imports come from Mongolia. Coal exports to China rose by 23 percent in 2011, compared to 2010”, said Wang Xialong, the Chinese ambassador to Mongolia during the Coal Mongolia conference. 

China would like to increase its coal imports from Mongolia, but the growing price of coal and export taxes has given coal producers cause for hesitation. Greater taxes on coal would likely reduce trade. In addition, Chinese importers would lose interest in Mongolian coal products. 

In addition to taxes, the coal industry is growing anxious about the heavy clouds forming over the Chinese economy. They are afraid that its pace of coal consumption might be coming to an end. 
However, taxing coal seems like a good idea to many. 

To increase its competitiveness in the world coal trade, Mongolia should develop its infrastructure for transportation instead of putting export taxes on its valuable coal. In addition, the country must expand its coking factories to create value-added products, say investors. Although the Mongolian government has said it would support the export of coal production, no significant actions have been taken yet.

A Dim Light in the Darkness  

Mongolia’s coal exports might slow in coming years as China loses interest in buying Mongolia coal. However, there are signs pointing to the contrary as well. According to China’s development plan for 2012 through 2017, construction will exceed that of the United States by eight times. As urban development grows to 54 percent, construction will grow as well. 

“According to China’s five-year plan, steel demand is expected to rise by 6 percent annually,” said Koppa in his speech on the development of the coal market. “Although some of its economic factors might face some turbulence, as mentioned in the hypothesis of China’s coking coal imports, the country’s domestic coal exploitation will reach its peak”. 

China’s steel industry consumes 380 million tonnes of coking coal every year. Most of its mines are open-pit. However, China’s desire for imports will not wane. It is expected to import 100 million tonnes or even 200 million tonnes of coal. India is set to import up to 60 million tonnes and could be the next big coal market after China. 

However, Mongolia could focus on China exclusively and secure its profit by reducing transportation expenses and producing higher quality coking coal.

At the Coaltrans Mongolia international conference Arshad Sayed, president of Peabody Energy of India and Mongolia, said that although other energy resources are available coal remains firmly seated on the energy throne. He added, “50 percent of the world’s energy is provided by coal. Nuclear and gas fuels supply the other half. Coal has been the main supplier of energy for the last 10 years. About 30 percent of preliminary electricity usage is derived from coal”. 

“In Asia coal is the main provider of energy. At present, coal makes up 49 percent of global energy. Coal is an important fuel. Thus, an energy paradise could be built in Mongolia”, said Sayed. 

N. Enkhtaivan, director of the foreign trade and economic cooperation at the Ministry of Foreign Affairs and Trade explained how Mongolia’s coal trade is too narrow: “Mongolia was admitted to the World Trade Organisation in 1997, allowing the country to trade with 157 countries. However, Mongolia has never been more open to other countries than China”. 

“China itself is a big market for raw materials, especially for mining products. The world is rushing to export their products to China. If Mongolia decides to cut its supply to China, then we will lose our good fortune. We don’t even have the capacity to supply its huge demand. The most important policy is to have added value on our products”.

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Was London the right choice?

July 18 (mongolianeconomy.mn – B.Bayartogtokh) The chosen shortcut for Mongolian Stock Exchange turned out to be affectless. The best management of the London Stock Exchange did not bring the hoped changed into the Mongolian Stock Exchange. Although, its outer facade has been improved no one really knows what is inside the building going on. Such numbness made some wonder if London was really the right choice for Mongolian stock Exchange. As for yesterday, not a single share was sold at the Stock Exchange. “The London Stock Exchange has proclaimed Mongolian Stock Exchange as its Asian strategic partner”, said Kh. Altai, executive director of Mongolian Stock Exchange. However, the experimenting months are still continuing. When would Mongolians benefit from profits from London Stock Exchange? They probably have to wait for little longer. The “Millennium IT” system, the world’s fastest trading network, hasn’t done the expected magic for a half year. Apart from London Stock Exchange, other international Stock Exchanges have adopted the IT system. However, they have begun to refuse using it any longer. “International Stock markets have started shifting to other improved systems”, said T. Tsogtayar, Board Director of Mongolian Stock Traders’ Committee.

Over 90 percent of total investments into the Mongolian Stock Exchange is devoted to system innovations. The State Property Committee has signed the “Master Contract” of “Strategical cooperation agreement” on the 7th April 2011. If Mongolia’s choice was the right one, its Stock Exchange would be the best in Asia in five or ten years. “It would create an image of a Stock Exchange that is based on mining and small, medium enterprises. Canada, Australia and London exchanges are centres of mining share trading. Mongolia could become one of them”, said B. Bold, Board Director of Mongolian Stock Exchange.

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THE FIRST SESSION OF THE PARLIAMENT OF MONGOLIA WAS DELAYED FOR UNCERTAIN PERIOD

July 20 (InfoMongolia) the first session of the State Great Khural (Parliament) of Mongolia was supposed to start at 11:00 am, but members of Mongolian People's Party (MPP) have not attended the session, only members from Democratic Party (DP), Civil Will Green Party (CWGP), "Justice" Coalition (MPRP-MNDP) and independent candidates were present comprising 44 members out of 76 with 63% of attendance. Currently, there are 69 members of the State Great Khural (Parliament), who took an oath; these are 31 from DP, 25 - MPP, 8 - “Justice” Coalition, 2 - CWGP and 3 independent candidates gained seats respectively. The Constitution of Mongolia, it states that the eldest member of the Parliament will chair the first session, accordingly member of the MPP group at the Parliament D.Demberel chairs the session.

The reason of absence at the session by the members of MPP was explained by MPP group Chairman N.Enkhbold at 12:00 pm, where he stated, “In the term of any political force who could not gain the 39 seats out of 76 in the Parliament making the majority, the issue to elect the Speaker of the Parliament must be discussed with other party or coalition. (DP with 31 seats has a full right to form a Coalition Government.) But DP did not discuss with us, instead sent a letter yesterday night which was left at the Reception Desk of MPP Headquarter. The issue to elect the Speaker of the Parliament was not negotiated with MPP, thus we deem that it will breach the law, therefore the members of MPP did not attend the session”. In other hand, DP authorities said, “Democratic Party sent a letter regarding the issue and it is satisfactory, hence we deem there is no reason to negotiate with MPP”. Also, Parliament member Ch.Saikhanbileg added, “However, at the time members attending the session with over 60% of attendance, thus there is no necessity to ask the MPP members. We should continue the meeting despite they will not come into the session hall, otherwise we ask you (D.Demberel) to call them to attend”. Parliament member D.Demberel, who is chairing, replied, “We have to discuss the matter of electing new Speaker of the Parliament all together. If approve the new Speaker in absence of half of the members, how we will work further”. Moreover, D.Demberel announced to take a break until the issue will be discussed and negotiated among parties.

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THE CABINET OF MINISTERS OF MONGOLIA WILL BE FORMED BY 75:25

July 20 (InfoMongolia) A three-day negotiations between Democratic Party (DP), Civil Will Green Party (CWGP) and "Justice" Coalition merged from MPRP and MNDP on establishing the Coalition Government has ended yesterday on July 19, 2012 and the Chairmen of working groups of the parties and coalition Kh.Battulga, S.Demberel and Ch.Ulaan and other members Ch.Saikhanbileg, G.Gankhuu and B.Terbishdagva called a press conference to inform the conclusion that they have agreed upon at the negotiation. In the statement, “None of the political forces, who had run for the 2012

Parliamentary Elections, claimed enough seats to form the Cabinet alone. So we had to accept the election results and had to seat on negotiation table to form a Coalition

Government with other political parties and coalition, who gained seats in the Parliament”, said Kh.Battulga, Chairman of the DP working group. As a result of the three-day negotiation, the three political powers reached an agreement on forming a Coalition Government and released a manifesto that was read by Kh.Battulga at the press conference held yesterday on July 19, 2012.

Further continued, "Hereby with the manifesto, we are declaring that we agree to form the Coalition Government and collaborate sustainably in the 4-year office term, adhering to the Constitution of Mongolia and preferring fundamental interests of Mongolian people. The Coalition Government by the DP, CWGP and “Justice” Coalition (MPRP-MNDP) will draw up its action plan basing on the DP's "Mongol Khun-2020" Action Plan and reflecting some clauses of the “Life” Plan of the Civil Will Green Party the and the "Five Revolutions to save Mongolia" Action Plan of the "Justice" Coalition. A procedure of the Action Plans implementation will constantly be reported to public openly”.

The Chairmen of working group of DP, CWGP and “Justice” Coalition Kh.Battulga, S.Demberel and Ch.Ulaan have signed on the manifesto. Most interestingly, the three political forces are not only to form the Coalition Government, but also are jointly to run for the Presidential and Aimag and Sum Citizens’ Representative’s Elections. The new Cabinet of Ministers of Mongolia structure will be 75:25, where 75% will be formed by DP and CWGP and the remaining 25% by the “Justice” Coalition. A possibility to join the Coalition Government is still open for the three independent candidates, who claimed seats in the Parliament, said officials. The first Plenary Session of the State Great Khural (Parliament) with new members started today at 11:55 am on July 20, 2012 where the main issue was to elect a new Speaker of the Parliament; further nominate candidates for the Prime Minister and draft bill on the structure of the Cabinet of Ministers accordingly. The session of the Parliament that started could not continue and took a break for uncertain period, we will inform shortly the reason and ongoing situation.

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DISAPPOINTED MEMBERS CREATE WING AT MPP

Ulaanbaatar, Mongolia, July 20 /MONTSAME/ Current leaders of the Mongolian People's Party (MPP) must leave their posts in respect of the party's rules.

It was said in a demand sent to the party's leaders by several members of the MPP's conference and supporters who said they formed a so-called "The first wing of People's Party" at the MPP on Thursday.

The wing wants the MPP to recognize their existence, include their proposals into agenda of the party's Conference, thoroughly study reasons why the party's participation in the parliamentary election "was so poor", run the Conference and Session's meetings no later than this June and early September, make the party members involved comment the pre-election activity, and to consider together the party's organization, policies and decisions.

The wing people said they want to receive a response to their demand until July 24.

Link to Montsame

 

TYRANNOSAURUS BATAAR IS TO BE DELIVERED INTO MONGOLIA BY U.S. MILITARY AIRCRAFT

July 19 (InfoMongolia) the US lawyer Robert Painter, who is defending the Mongolian side in the case regarding the "Tyrannosaurus Bataar" dinosaur skeleton that had been sold at an American auction, has held a press conference at the Civil Hall under the President of Mongolia.

According to the Lawyer, the “Tyrannosaurus Bataar” fossils are to be returned to its homeland of Mongolia after 1-2 months. He also said that a U.S. citizen named Eric

Prokopi, 37, had smuggled the dinosaur skeleton from Great Britain under a false label of “Reptile Skeleton”. Mr. Robert Painter then continued, the skeleton was probably delivered to Great Britain through Japan in 1920, or later. Eric Prokopi had repeatedly committed crimes as such and had repeatedly had illegal assets confiscated on an attempt to enter an auction.

Also, new information was given by the Lawyer that another dinosaur skeleton of Mongolian origins had been discovered and confiscated last month, as it was about to be sold in the State of California, US. The “Tyrannosaurus Bataar” dinosaur skeleton is to be transported at the expenditure of the U.S. Government by a U.S. military aircraft.

Link to article

 

THE SECRETARY-GENERAL OF THE UNWTO IS TO MAKE AN OFFICIAL VISIT TO MONGOLIA

July 19 (InfoMongolia) The Secretary-General of the United Nations World Tourism Organization (UNWTO), citizen of Jordan, Taleb Rifai is to make an official visit to Mongolia on July 20-24,

2012. The former Minister for Nature, Environment and Tourism of Mongolia L.Gansukh had invited the Secretary-General to Mongolia during Mongolia’s participation as

“Convention and Culture Partner” in the “ITB-2011” International Tourism Trade and Fair held in Berlin, Germany, on March 09-13, 2012.

During his visit, Mr. Taleb Rifai will meet the President of Mongolia Ts.Elbegdorj, where he will exchange thoughts of the development issues of Mongolian tourism and

UNWTO-Mongolia partnership matters. Furthermore, he will hand the “Open Letter” to the Mongolian President, where there are notes regarding the significance of the

tourism sector in social and economic development. Also, the UNTWO delegates will make a speech at the seminar on Mongolian tourism marketing.

The World Tourism Organization

The World Tourism Organization (UNWTO) is the United Nations agency responsible for the promotion of responsible, sustainable and universally accessible tourism.

As the leading international organization in the field of tourism, UNWTO promotes tourism as a driver of economic growth, inclusive development and environmental sustainability and offers leadership and support to the sector in advancing knowledge and tourism policies worldwide. UNWTO’s membership includes 155 countries, 7 territories and over 400 Affiliate Members representing the private sector, educational institutions, tourism associations and local tourism authorities.

Mongolia was admitted by the World Tourism Organization as a member state in 1990.

Link to article

 

July 20

Ivanhoe Mines Successfully Completes Rights Offering

Early Results Indicate Approximately 100% of Available Common Shares Subscribed, Generating US$1.8 Billion in Gross Proceeds

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 20, 2012) - Ivanhoe Mines (TSX:IVN)(NYSE:IVN)(NASDAQ:IVN) today announced the completion of its rights offering, which expired on July 19, 2012, as scheduled. Based on preliminary results that are subject to confirmation of amounts that will be received from brokers using guaranteed delivery procedures, Ivanhoe estimates it will receive gross proceeds of approximately US$1.8 billion from the rights offering. The proceeds will be used to advance the construction and development of the Oyu Tolgoi Project.

Based on the preliminary results, Ivanhoe expects to issue a total of approximately 260 million new common shares through the rights offering, which would represent approximately 100% of the maximum number of common shares available under the rights offering.

Rio Tinto exercised all of its respective rights issued to it in the rights offering.

Dr. David Klingner, Chairman of Ivanhoe Mines, said, "The Ivanhoe Mines Board of Directors extends its sincere appreciation to all shareholders who participated in, and contributed to, the success of the rights offering."

Ivanhoe expects that the rights offering will close on July 26, 2012, to accommodate those who exercised rights using guaranteed delivery procedures. Ivanhoe intends to mail new common shares acquired through the rights offering to registered subscribers on or promptly after the scheduled closing of the offering.

Link to release

 

UPDATE ON OYUT TOLGOI COPPER PROJECT IN NORTHWEST MONGOLIA

July 20 ---

On 9 July 2012 General Mining Corporation Ltd (GMM) announced that, through its wholly owned Mongolian subsidiary, Golden Cross LLC, it had secured a joint venture on the Oyut Tolgoi (not to be confused with Oyu Tolgoi in the south of Mongolia) Copper Project, which project adjoins licences GMM presently holds.

As previously advised, Golden Cross LLC can earn a 60% interest in the Oyut Tolgoi licence of 587 hectares by meeting certain expenditure obligations before February 2013 in respect of the tenement, including production of a resource estimation report.

In order to avoid any speculation as to the extent of the expenditure obligation and any consequent need to raise further funds, the Company advises that the expenditure obligation to earn that 60% interest is US$300,000.

The Company is in negotiation with third parties with regard to potential involvement with this project.

In addition, GMM is in the process of finalising its plans with regard to the work to be undertaken in order to be able to earn the 60% interest in the Oyut Tolgoi Licence.

GMM expects to be able to make an announcement shortly with regard to the exploration activities that it will undertake on the project and on GMM’s other wholly-owned exploration projects in Mongolia over the next six months.

We look forward to informing the market as these exciting developments occur.

Link to release

 

Mongolia's Democrats form coalition government

ULAN BATOR, Mongolia, July 20 (Ganbat Namjilsangarav for AP) -- Mongolia's generally pro-business Democratic Party is forming a coalition government with smaller populist parties, raising concerns about policy changes for foreign companies eager to join the country's mining boom.

Three weeks after legislative elections, the Democratic Party announced late Thursday that days of bargaining yielded an agreement with a group of smaller parties. The coalition will combine the 31 seats the Democrats won with the other parties' 13 seats, giving the group 44 of the parliament's 76 seats.

The election was largely fought over how to spread Mongolia's mineral wealth, which fueled a 17 percent economic growth rate last year and has attracted global mining firms to the remote, still-poor country sandwiched between Russia and China.

Near the top of the new government's agenda will be deciding which foreign companies will take part in developing the massive Tavan Tolgoi coal field, which lies 200 kilometers (120 miles) from energy-hungry China. U.S., South Korean, Japanese as well as Russian and Chinese companies have expressed interest in the project.

While the Democrats will be the coalition's biggest voice, the agreement is a victory for former President Enkhbayar Nambar. Though he was barred from running because he faces corruption charges, Enkhbayar's splinter Mongolian People's Revolutionary Party and an affiliate group provided 11 seats and gave the Democrats a majority.

Enkhbayar's party platform called for better terms for Mongolia with foreign investors on the large-scale mining projects.

Under the coalition agreement, the parties have agreed to work together through 2016 and cooperate in next year's presidential election. Incumbent President Elbegdorj Tsakhia, a Democrat, is expected to run for re-election.

Link to article

 

Wet climate may have fueled Mongol invasion

Researchers say climate was ideal for growing the grass needed for warriors' horses

July 20 (LiveScience) Beginning in the 13th century, the Mongol Empire spread across Asia and into the Middle East like wildfire, growing into the largest contiguous land empire the world has ever seen.

Historians have long speculated that periods of drought pushed the Mongol hordes to conquer their neighbors, but preliminary new findings suggest that theory may be exactly backward. Instead, consistent rain and warm temperatures may have given the Mongols the energy source they needed to conquer Eurasia: grass for their horses.

This idea, bolstered by the discovery of tree rings that preserve a climate history of Mongolia back to the year 657, is still in the preliminary stages of investigation. LiveScience spoke with Amy Hessl, the dendochronologist, or tree-ring researcher, who along with collaborators Neil Pederson and Baatarbileg Nachin first discovered the preserved trees hinting at the weather during the era of the Mongols.

LiveScience: How did you find the trees that held the Mongolian climate record?

Hessl: We were funded by the National Science Foundation and the National Geographic Society a few years ago to look at how climate change is impacting wildfire activity in Mongolia. So we had driven by this lava flow that looked reminiscent of other places I know of in the American West that have really long climate records from tree rings. The trees growing on these dry, exposed sites tend to grow until they're really old. And then once they die, the wood decays slowly. It allows you to reconstruct environmental conditions going back a very long time.

We drove by this lava flow, and I was like, "Whoa, that looks like an ideal place." So we went back, and even when we did sample, we didn't think we had anything that great. We were just throwing these pieces of wood back and forth to each other, like, "Oh, we'll make this one into coffee table art." We weren't taking it real seriously.

LiveScience: How did you realize that you'd found something important?

Hessl: I gave them to my colleague Neil Pederson [of Columbia University's Lamont-Doherty Earth Observatory]. He didn't look at them for months, until finally he didn't have anything else to do, so he started to date them. I started getting these texts from him on a Friday night and he was like, "I'm back to the 1200s."

Finally, I get this text that just had three numbers on it, 657. I was like, "What was that, does he want me to call him at 6:57 in the morning?" It turned out to be the date of the oldest, most inner ring, 657 C.E.

There are certainly other tree-ring records that go back much farther, but this is special for Mongolia because it clearly covers the period of the rise of [Mongol Emperor] Genghis Khan. [Fight, Fight, Fight: The History of Human Aggression]

LiveScience: How can tree rings tell you what the past climate was like?

Hessl: These trees are growing on this lava, and there's very little soil development, so they're really, really water-stressed. When the tree rings are narrow, that tells you that during its growing season there was very little water available. The bigger the rings, the wetter it was.

LiveScience: What sort of climate patterns did you see as the Mongol Empire arose?

Hessl: It's very preliminary, but in the couple of trees we have in that time period we can see that the rings are not only wide, but they're consistently wide for the time that overlaps with the rise of Genghis Khan.

Our inference there is that this would have been an ideal time for high grassland productivity on the steppe, and that maybe translated into more livestock, especially horses for the Mongols.

To put it in perspective, each Mongol warrior had 10 horses at his disposal. Just right there, that's a huge amount of biomass that is required. In addition to that, when the Mongols expanded their range in their traveling and marauding, they brought with them large numbers of livestock that they used to feed themselves. Their whole military operation was basically predicated on the fact that they had large numbers of grazing animals. These climate conditions would have given them more energy to fuel their empires. [Top 10 Ways Weather Changed History]

LiveScience: What happened later on during the Mongol era?

Hessl: There's a well-known cold period that occurred after a volcanic eruption in 1258, and we can see this plunge into cold, dry conditions in Mongolia. At that same time, right around 1260, the Mongols moved their capital city out of the steppe and into Beijing, and we think it's possible that was related as well. We have a historian, Nicola DiCosmo of the Institute for Advanced Study, we're working with who is going to go back through all of the Chinese documents, Mongolian records and European accounts to try to see if there's information that would corroborate our findings or not.

LiveScience: Are you going back to Mongolia?

Hessl: I'm leaving in a week, actually! We're going to go back to the same lava flow and collect additional samples because we didn't really put our hearts into it the first time. We were only there for a few hours.

We've also identified some other lava fields in Mongolia that we think may have a similar ecological setting. We're also collaborating with some other people. One is Avery Cook Shinneman of the University of Washington, who studies lake sediments. She's going to be taking cores out of lakes in the Orkhon Valley, the seat of the Mongol Empire, looking for a little fungal spore that lives in livestock feces. What we're hoping is that we can get some general numbers and density of the livestock around these lakes going back in time.

LiveScience: What do you find interesting about linking past climate to history like this?

Hessl: It's fascinating to think about the energy sources that previous civilizations were dependent on, and when those energy sources were abundant how those societies responded, and when those energy sources evaporated, how did they adapt to that?

Society today is dealing with major threats to our primary energy source, so it's fascinating to me to look back on these earlier civilizations to see them going through the same transitions. It just puts our current situation in perspective.

Link to article

 

Misc

Olympics-Judo 'wrestler' mining for more gold for Mongolia

July 21 (Reuters) - Mongolian judoka Naidan Tuvshinbayar begins the day jogging through the glistening grasslands he says helped make him the country's first Olympic gold medallist.

Back in the training centre, set in verdant hills 1,400 metres above sea level, he wiggles his hefty frame to thumping house music, as he slams younger athletes into the ground one-by-one with a sly grin, occasionally giving them a playful headlock for good measure.

The media-friendly showman became a national hero when he earned the country's first ever gold medal in the men's -100 kg class at the Beijing Olympics, 44 years after Mongolia first competed in a Games.

A burly 28-year-old with a slight squint and cauliflower ears, Tuvshinbayar is now hoping to repeat that success in London, likely to be his last Games as a serious competitor.

"Of course, we athletes are competing for our country. And I'm competing to be an Olympic champion again, and have my country's name heard across the world," he told Reuters.

Tuvshinbayar only took up judo at the age of 18, after seeing the Asian Championships on television.

But like many of Mongolia's nomadic herders raised on the vast steppe, he grew up wrestling, as a young child with his family's livestock, and later in matches at traditional festivals.

He even refers to his chosen sport as 'judo wrestling,' which may account for a certain heavy-handedness in his style.

"In Mongolian families, there is nobody who is not interested in traditional wrestling. Since I was a young child, I wrestled, and that's where the preparation for becoming a judo wrestler started," he said.

"There are a lot of similarities. Wrestling is just wrestling," he added with a lop-sided smile.

Almost 400 contenders from 134 countries, up from 96 in 2008, will battle it out in the seven weight categories for men and women during seven days of competition at London's ExCel exhibition centre.

Khashbaatar Tsagaanbaatar has high hopes for the men's -66 kg class, while Munkhbaatar Bundmaa is pitted for a medal in the women's -52 kg class, having taken golds in both Paris and Moscow Grand Slams in 2011.

HUNTING SKILLS

Despite traditional heavyweights like Japan looming large, petite 26-year-old Bundmaa is unperturbed.

"I'm confident in myself. Going to the Olympics is not a small thing, and I will come back with a medal," she said.

Mongolia is also throwing its weight behind freestyle wrestling, boxing and shooting, all of which involve the traditional combat and hunting skills that 800 years ago helped build an empire that stretched as far as Europe.

"In our country, four kinds of sports have developed well: judo, boxing, shooting and wrestling," said Demchigjav Zagdsuren, President of the National Olympic Committee.

"At the last Olympics and in previous games, it was in these sports that we won medals. Our goal for London is to get at least four medals in these."

Once-impoverished Mongolia saw its economy grow by over 17 percent in 2011, thanks mainly to foreign investment in the huge mineral resources lying beneath its grasslands and deserts.

Rio Tinto, which runs the country's massive Oyu Tolgoi copper and gold project, sponsors the Mongolian Olympic team, and is providing Mongolian gold for the medals at London.

The country's growth has meant dramatic increases in sports funding, filling a vacuum left by near economic collapse following its split from the Soviet Union in 1990.

"Mongolia is now growing faster and sports are developing in step with the country," said Zagdsuren.

With considerable national pride resting on his broad shoulders, and a generation of younger athletes stepping up to fill his shoes, Tuvshinbayar is philosophical.

"If you think of it as pressure, it's pressure. If you don't, then it's not. Athletes should free themselves from that kind of thinking and try to find the joy in what they do," he said.

"If I had any doubts, I wouldn't be able to succeed."

Link to article

Related:

29 Mongolian athletes to attend the OlympicsUB Post, July 20

 

Chasing Ghengis Khan

July 18 (Mongolian Climate, Ecology & Culture Blog) People have been looking for 800 years. Looking for Chinggis Khaan, né Ghengis Khan. From the people searching for his birthplace to the people searching for his last resting place. After more than 800 years since his rise from the mountains of Mongolia, Chinggis lives on as a charismatic and almost mythical person. He seemingly rose from obscurity, quelled feuds between tribes, and created the largest land empire in world history. If you read beyond what you likely learned in high school or college, you will see his leadership skills were progressive and exceptional. You will learn that Chinggis has an influence on our world nearly 800 years after his death. From paper money to the pony express, from war strategy to the structure of the human genome, his life has touched generations of humans over the centuries.

When you begin working in Mongolia it is absolutely essential that you learn the importance of the man. Soviet communism attempted to quell his spirit and his importance in Mongolian culture. Mongolians were not allowed last names so everyone could be equal, so no one could trace their family history to the royal family. This, of course, did not work. In a culture that has songs and stories dating back centuries, if you, a native Mongolian, meet a stranger in the woods on the other side of the country and drink tea, break bread, and just lounge, you will soon break into a song that you and the stranger know from the depth of your soul. You will sing, smile, and enjoy a wonderful afternoon with this once distant, now close cousin. That kind of cultural bind does not break under any kind of political pressure. Perhaps it only made it stronger? See, in the late-1990s, soon after the fall of communism, Chinggis essentially rose from the ashes. He was everywhere in Mongolia – TV commercials for cell phones or a brand of vodka. And once you, as an outsider, spend considerable time in Mongolia, especially during Naadam and especially in the open Gobi steppe with people who still live as their ancestors did centuries ago, you understand the importance of the man and you will also begin to chase Chinggis. And, it is with this new project that our group of geographers, paleoclimatologists, ecologists, historians, and ecosystem modelers begin our pursuit of Chinggis Khaan.

Unlike other chasers who came before us, our search for Chinggis is not directly a pursuit of him as an individual. We understand he was an incredible leader who was the life force for the great Mongol Empire. Our pursuit is more contextual. We seek to understand the environmental conditions before, during, and after the rise of the Mongol Empire. In many ways, the success of the Mongol Empire is a historical enigma.  At its peak during the 13th century, the empire controlled areas from the Hungarian grasslands to southern Asia and Persia. Powered by domesticated livestock, the Mongol Empire grew at the expense of farmers in Eastern Europe, Persia, and China.  Two commonly asked questions of this empire are “What environmental factors contributed to the rise of the Mongols?, and “What factors influenced the disintegration of the empire by 1300 CE?  . For a long time (centuries?),  it was thought that drought partly drove the Mongols on their conquest in Eurasia. Luckily enough for us, a serendipitous collection of a few pieces of deadwood and old Siberian pine trees suggests essentially the opposite. Our collection of an annual record of drought, currently dating to the mid-600s CE, suggests that the early-1200s were unusually wet. Of course, these findings are very, very, very preliminary – we only have two trees through this time period.

Link to article

 

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"Mogi" Munkhdul Badral

Senior Client Manager / Executive Director

CPS International LLC

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Mobile: +976-99996779

Email: mogi@cpsinternational.mn

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

 

Disclosure/Disclaimer

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

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

 

 

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